Pride Cometh Before The Fall: The NCAA vs. Ed O’Bannon

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Here he is, beaming with excitement after the victory is 1995. Now Ed is taking aim at the NCAA

O’Bannon is grinning, beaming, positively giddy with excitement and with good reason: he has just led the UCLA Bruins Men’s Basketball team to a championship in 1995 – the first in twenty years. This is his One Shining Moment and he is basking in all its glory.

Yet the lasting memory of O’Bannon in the minds of college basketball fans may prove to be quite different. For there is a very chance that history will remember him not as the man who helped make the NCAA, but the one who helped bring it crumbling down.

How?

O’Bannon is currently leading other former NCAA football and basketball players in an antitrust suit against the NCAA for using their likenesses long after they have stopped playing college sports. The NCAA holds that the players waive the rights to their own likenesses by signing Form 08-3a, which says:

You authorize the NCAA [or a third party acting on behalf of the NCAA (e.g., host institution, conference, local organizing committee)] to use your name or picture to generally promote NCAA championships or other NCAA events, activities or programs.

O’Bannon and lawyers such as Michael Hausfield hold that by forcing players to sign this in order to participate in NCAA events, the players essentially forfeit the chance to make money from their likenesses even after they graduate, making this practice a violation of the Sherman Antitrust Act. These former players scored what may prove to be a major victory on Wednesday when a judge ruled that in addition to seeking money for replays of old games and the use of their likeness in videogames and DVDs, these former players can also pursue money from current TV contracts.

The NCAA has already had more than a passing familiarity with the Sherman Antitrust Act, losing landmark back in 1984.

It may be hard to fathom now, but once upon a time the NCAA controlled the television rights for all of college football. There were no conference networks back then and no games were shown on cable. Instead, there was simply the Game of the Week.

That’s right, college football once received only a single TV slot each week. Not only that but the NCAA also got to determine which game was featured and took around 5% of the television money. The NCAA even went so far as to threaten schools that attempted to make (or continue) deals with networks on their own, as was the case with the University of Pennsylvania in 1951.

That system was abolished once and for all in 1984 when the US Supreme Court ruled in favor of the Universities of Oklahoma and Georgia in their case against the NCAA (NCAA vs. Board of Regents of the University of Oklahoma, et, al.), thus allowing schools to pursue their own TV contracts.[1] The Court reached its decision in large part because it found that preventing schools from negotiating their own TV contracts violated the Sherman Antitrust Act.

It is indeed ironic and perhaps quite fitting that the very antitrust act that allowed schools to seek their own TV deals back in 1984, may well come back to bite them some thirty years later. By forcing players to sign Form 08-3a before they can play in any NCAA event, O’Bannon believes the NCAA and its licensing arm “effectively fix the price of his likeness at zero”, which according to the Sherman Antitrust Act, would be illegal.

As mentioned earlier, the former players joining O’Bannon in the suit were also granted the right to pursue money generated in current TV broadcasting contracts, though on what grounds they believe they are entitled to them, I haven’t the faintest idea. Joe Namath may well have paved the way for Tom Brady, but he is not legally entitled to the money from the NFL’s current TV contracts with Fox, CBS & NBC. Similarly, Ed O’Bannon undoubtedly helped make March Madness the cultural phenomenon that it now is, but that doesn’t mean that he ought to get a slice of the $770 million pie like current NCAA basketball players.

Now rebroadcasts — like those airing on ESPN Classic — are another matter altogether.

Whether you believe current NCAA players[2] are fairly compensated for their services or not, you must concede that there is at least a framework for a deal. A player provides services to a university (their athletic performance) and in return receives compensation in the form of tuition, as well as room and board (scholarship). Okay, fine.

What doesn’t make sense is that the NCAA (and its schools) continues to benefit — to the tune of millions of dollars — from players long after those players have stopped playing in the NCAA. Schools essentially profit from players they no longer have to compensate. All because of Form 08-3a.

Defenders of this practice — those clinging to the last vestiges of collegiate amateurism as they know it — often choose to invoke the “Real World” argument here, which goes something like this…

In the real world, companies often own the rights to the work that their employees produce while they are on the clock. Therefore, the NCAA and schools should be allowed to use the work (i.e. their likeness) that players produce while on the clock (i.e. during games) even after those players stop playing.

It’s an interesting argument, though unfortunately it has a number of holes.

For one thing, implying that the NCAA is a company like Apple or Microsoft is more than a little misleading. Those companies are very clearly for-profit companies; the NCAA is a non-profit association.

In addition, there is a very clear distinction between a company paying their employees and a university providing scholarships for players. Employees are paid in cash, which they can use wherever they see fit. NCAA players essentially receive coupons, which they can only use at the school they attend. To say that the two are the same is categorically untrue. Not convinced? A district court jury in Texas actually rendered a decision on the matter and found that players are not employees in Waldrep vs. Texas Employers Insurance Association. This decision effectively prevented Kent Waldrep from collecting workmen’s compensation after he was paralyzed in a game against the University of Alabama.

Contrary to what people might think/hope/pray, the O’Bannon led lawsuit — which will in all likelihood soon be classified as a class-action suit — does not spell the end of the NCAA. Yes, they may have to pay a large sum of money to former college athletes for having used their likenesses long after those athletes had graduated, but the reality is, once the NCAA pays that sum it will stop using former players likenesses in subsequent video games (thereby freeing themselves from having to pay those people), and agree to give away a small portion of the money they make from rebroadcasts to former players who have since graduated. This will obviously eat into a portion of the NCAA’s revenue stream so they are understandably less than thrilled by this. However, it is also far from their worst nightmare.

The real problem is if this case reaches its trial phase (tentatively set for June 2014), it will generate a great deal of unwanted and mostly negative publicity for the NCAA. The discovery phase of this case has already been mildly embarrassing for them (like emails which showed that EA Sports game designers created players with current players in mind), but it has been playing out in the shadows for the most part. However, if this class action lawsuit ever makes it to trial, the lights will be shining bright. It would be ESPN’s version of the OJ Simpson trial because the very foundation of collegiate amateurism would be called into question. Pretty soon, people will wake up and start asking the real question…

Are current NCAA players being fairly compensated for their services?

Be sure to check out next week’s Part 2!


[1] The great irony of this is that most schools to this day still have not elected to negotiate their own TV contracts, preferring instead to do so as part of a collection of schools (aka a conference).
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[2] The term “student-athlete” should be avoided at all costs, in part because the NCAA coined the term not just to create a romantic ideal of the amateur athlete but also to avoid paying workmen’s compensation for injured players.
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About Ryan Hallagan

Ryan Hallagan recently graduated from the University of San Diego with a B.A. in Psychology and English and plans to parlay that education into writing about his greatest passion: the big business that is professional sports. He also enjoys writing short stories, obsessively listens to bands like The Gaslight Anthem and actively wishes that a time-traveling DeLorean really did exist, so that he could go back to 1975, far away from all of the terrible music he hears on the radio today. Follow him on Twitter @rallyforhally
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