NCAA: Money Madness – Part 1

Photo by Oleksii S on Unsplash. This article is part one of a two part series.

From the basketball court to the Supreme Court, the NCAA is making headlines.

On June 15, 2020, a class action lawsuit was filed in the California District Court against the NCAA and its Power Five conferences, accusing these billion-dollar corporations of violating federal antitrust laws. This action was brought forward by college athletes fighting for the right to compensation for the use of their image and likeness. Regulations like the NCAA’s amateurism rules which strictly prohibit college athletes from receiving any compensation for the commercial use of their name, image, or reputation are at the forefront of legal scrutiny.

The issue at hand is whether the NCAA’s regulations unlawfully restrict trade and exchange in the college sport context. Antitrust is an area in law “designed to prevent monopolies by insuring freedom of competition.” The NCAA attempted to justify its regulations by claiming that the status of “amateur” was not categorically valid in the commercial setting, however, this may be challenged on two fronts.

First, with the growing media frenzy surrounding NCAA’s March Madness, the economic value of college players is rapidly increasing. From season tickets to online streaming platforms to prediction brackets, these students generate millions of dollars for their schools and the NCAA, evidently transitioning them out of what would have previously qualified as amateur status.

Second, it cannot be denied that the NCAA has a strong monopolized hold on the college sport market. The NCAA organizes and regulates conferences, school teams, and the players themselves. Within college basketball in particular, freedom of competition is highly controlled. As the NCAA’s popularity skyrockets, issues regarding right to image and compensation have emerged as athletes are finding themselves increasingly restricted by the amateurism regulations.

Over the last twelve years, the NCAA has made numerous appearances before the court on allegations of mistreatment and breach of antitrust laws by college athletes. The first notable case was back in 2008 in the case of O’Bannon.

Edward O’Bannon first took the NCAA to court for violating antitrust laws set out by the Sherman Act. After numerous attempts, O’Bannon was finally successful in 2015. This suit started when O’Bannon, a UCLA basketball player, found out that he was depicted in a video game by Electronic Arts (EA). In said game, there was an avatar “who visually resembled O’Bannon, played for UCLA, and wore [his] jersey number, 31.” O’Bannon never consented to having his image used in the video game, and EA, the multi-million dollar gaming software corporation, never offered to compensate for their use of him as a character. ­­

At the district court, Judge Claudia Wilken ruled that NCAA’s amateurism rules violated federal antitrust law, and ordered colleges to pay male basketball athletes up to $5,000 per year for the use of their image. The cumulative sum was to be paid after they graduated.

This decision was later appealed, and sent to the 9th Circuit Court for review. Here, a majority upheld Wilken’s ruling on the illegality of the NCAA’s amateurism regulations, but struck down the injunction to pay specific athletes up to $5,000 per year. This remedy was vacated on the grounds that Wilken failed to justify her reasoning for the specific sum of $5,000, and that this remedy of fixed compensation contradicted the purpose of antitrust laws.

The NCAA and O’Bannon appealed the case to the Supreme Court, however, both were denied a writ of certiorari. While the 9th Circuit Court reaffirmed the necessity to evaluate and change the regulations in the NCAA, progress has been slow, and contested every step of the way, but the recently filed class-lawsuit might just be that extra push needed to reform the NCAA.

This article is part one of a two part series. In part two, we’ll look at the taken so far to change the NCAA’s amateurism regulations and speculate on the potential actions either side may take going forward. Upcoming legislation and judicial rulings offer an opportunity to challenge the laws of amateur sports and the NCAA for good.

Written by Adele Zhang, a first-year student at Osgoode Hall Law School with an interest in sports and entertainment law, business law, IP law, and employment law. In addition to her studies, Adele acts as a 1L Representative for the Entertainment and Sports Law Association.