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UNDERSTAND THE RULES OF THE GAME

What is next for NCAA student-athletes? From O'Bannon onto Jenkins

Published 21 October 2016 | Authored by: Michael Rueda

On October 3, 2016, the Supreme Court of the United States declined to review the "O'Bannon" case.1 It left in place a September 2015 ruling by the United States Ninth Circuit Court of Appeals,2 which held that the National Collegiate Athletic Association (NCAA) and its amateurism rules are subject to U.S. antitrust laws. Specifically, the Ninth Circuit held that the NCAA is not prohibited from awarding athletic scholarships with a value of a school's federally regulated cost-of-attendance; but cash payments to student-athletes in excess of such amount, which are untethered to a student's education expenses, are not required.

The excess cash compensation under consideration by the Ninth Circuit was a payment of $5,000 per student-athlete per season for the use of the student's name, image and likeness (NIL). The decision was not a complete victory for either side and, after years of litigation, there is no significant practical change to the position immediately prior to the Ninth Circuit's ruling. Yet, the high profile nature of O'Bannon has provided heightened awareness and sensitivity to the concerns of student-athletes and prompted unilateral review and change by the NCAA. 

This article examines the practical implications of the O'Bannon decision and discusses the relevant related case of Jenkins, and a case that was recently merged with it, Alston. It also addresses certain steps taken by the NCAA in response to O'Bannon to preempt future litigation in response to certain concerns raised by student-athletes.

Specifically it looks at:

  • O’Bannon: case review and practical results of the Supreme Court's decision

  • It’s not over: further litigation relating to student-athlete benefits
    • Jenkins v NCAA
    • Alston v NCAA (now merged with Jenkins)

  • Author’s comment where amateurism in the NCAA now stands

 

O'Bannon

In 2009, former UCLA basketball player Ed O'Bannon, on behalf of the NCAA's Division I football and men's basketball players, brought a class action lawsuit in the United States District Court for the Northern District of California against the NCAA challenging its amateurism rules.3 The amateurism rules barred student-athletes from receiving a share of the revenue that the NCAA and its member schools earn from the sale of licenses to use the student-athletes' NILs in videogames, live game telecasts, and other footage. In particular, the NCAA prohibited any student-athlete from receiving financial aid based on athletic ability that exceeded the value of a full "grant-in-aid."4 Traditionally, the value of an athletic scholarship was capped at an amount known as full "grant-in-aid," which was limited to costs of tuition and fees, room and board, and required course-related books.

O'Bannon's counsel contended that these rules violated U.S. antitrust laws. The NCAA denied the charge and asserted that its amateurism rules were necessary to uphold the NCAA's educational mission and to protect the popularity of college sports. The District Court held that the NCAA’s amateurism rules were an unlawful restraint of trade in violation of U.S. antitrust laws. The District Court enjoined (prevented) the NCAA from prohibiting its member schools from giving student-athletes scholarships up to the federally regulated full "cost-of-attendance" at their respective schools. A school's full "cost-of-attendance" increased the value of an athletic scholarship to include the estimated value for things such as travel between campus and the student's home, clothing and food.

The District Court also enjoined the NCAA from prohibiting its member schools from giving a student-athlete up to $5,000 per year in deferred compensation for the use of the student-athlete's NIL, to be held in trust for the student-athlete until after they leave college.

Upon review, the Ninth Circuit held that the NCAA's amateurism rules are subject to antitrust scrutiny. However, the Ninth Circuit also held that the amateurism rules serve pro-competitive purposes – "integrating academics and athletics and preserving the popularity of the NCAA's product by promoting its current understanding of amateurism."5

But the Ninth Circuit determined that the rules were more restrictive than necessary to serve those purposes and that the NCAA could achieve its purposes in a less restrictive manner (i.e., providing athletic scholarships with a value of a school's federally regulated "cost-of-attendance" versus full "grant-in-aid"). However, this portion of the Ninth Circuit's decision had little practical impact. Prior to the decision, the NCAA had already passed legislation6 allowing schools to increase the value of an athletic scholarship to include each institution's federally regulated "cost-of-attendance." Although the Ninth Circuit's decision directly prompted no change with respect to increasing the value of an athletic scholarship, the determination secured a student-athlete's right to the increased value.

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About the Author

Michael Rueda

Michael Rueda

Michael Rueda is an associate in Withers' sports law team. Michael advises athletes, coaches, agents and companies on playing contracts, coaching contracts, and international player transfers; and sponsorship, endorsement, licensing and merchandising contracts. Michael was a member of the University of Connecticut 2000 National Championship Men's soccer team and continues to play soccer and compete in triathlons.

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