Antitrust Law Aids College Athletes

September 8, 2014

NCAALast month, U.S. District Judge Claudia Wilken ruled in favor of plaintiffs suing the National Collegiate Athletic Administration (“NCAA”) for unreasonable restraint of trade regarding. 2014 WL 3899815 Specifically, Wilken enjoined the NCAA from barring member schools and conferences from offering Football Bowl Series football or Division I basketball recruits a limited share of revenues for the use of their names, images and likenesses. Judge Wilken did prohibit athletes from receiving endorsement money. Notwithstanding, some college athletes are set to receive funds in addition to their full grant-in-aid. The injunction is scheduled to take effect August 1, 2015.

Apart from the prospective monetary benefits for athletes, the other significant outcome of the ruling is the rejection of the NCAA’s defenses of amateurism and competitive balance. Critics have often decried what they viewed as the NCAA’s sham amateurism argument. Judge Wilken rendered the prized defense virtually impotent where name, image and likeness rights are involved. Specifically, in response to the NCAA commitment to amateurism, she responded:

This record reveals that the NCAA has revised its rules governing student-athlete compensation numerous times over the years, sometimes in significant and contradictory ways.  Rather than evincing the association’s adherence to a set of core principles, this history documents how malleable the NCAA’s definition of amateurism has been since its founding.

2014 WL 3899815, *30

The NCCA also asserted that its rules were necessary to preserve a competitive balance. To that assertion Judge Wilken responded:

Here, the NCAA has not presented sufficient evidence to show that its  restrictions on student-athlete compensation actually have any effect on competitive balance, let alone produce an optimal level of competitive balance. The consensus among sports economists who have studied the issue, as summarized by Drs. Noll and Rascher, is that the NCAA’s current restrictions on compensation do not have any effect on competitive balance.

2014 WL 3899815, *31

On August 21, 2014 the NCAA filed a Notice of Appeal with the District Court.  It was docketed in the 9th Circuit as case number 14-16601.  While we wait to see how this appeal pans out, you may be interested in reviewing a related case brought against the NCAA by high-profile attorney Jeffery Kessler, representing former Clemson football player Martin Jenkins.  [Please note: Although filed in the District Court of New Jersey 3:14-CV-01678, it was transferred in June to Judge Wilken as case number 4:14CV02758, but eventually ended up as part of the Multi-District case MDL-No.-2541 remaining with Judge Wilken.] Kessler’s complaint 2014 WL 1396975 alleges the NCAA implements an unlawful cap on compensation through scholarships.

For additional articles on the matter of antitrust law and compensation of college athletes, search Secondary Sources in WestlawNext:

COLLEGE SPORTS ATHLETE COMPENSATION ANTI-TRUST