NCAA On Life Support After Landmark Ruling

Just a few months after the National Labor Relations Board administrator’s shocking decision in favor of Northwestern football players seeking recognition as employees, yet another bombshell legal decision hit the world of college athletics Friday afternoon when Judge Claudia Wilken released her 99-page decision in O’Bannon v NCAA. Ruling in favor of the plaintiffs and finding the NCAA’s prohibition on compensation being paid to student-athletes for the use of their names, images, and likenesses, Wilken found the NCAA’s current model of “amateur” athletics to constitute a violation of § 1 of the Sherman Antitrust Act and thus placing the future of that model in serious doubt.

Although Wilken somewhat inexplicably ruled that the NCAA may still cap compensation while student-athletes remain enrolled at the full cost of attendance and may even cap post-graduate compensation at $5,000 per year of participation, the finding of an antitrust violation is real precedent that could have far reaching implications beyond the issue of compensation for the use of student athlete names, images, and likenesses.

When the NCAA decided nearly a year ago to fight on after both Electronic Arts and the Collegiate Licensing Company, co-defendants in the antitrust suit brought by a class of plaintiffs led by former UCLA basketball star Ed O’Bannon, it was effectively gambling the future of its entire organizational model on the outcome of the case. With Wilken’s unequivocal finding that the NCAA is a cartel operating in violation of the Sherman Antitrust Act, it appears that gamble has been lost.

For now.

There is no doubt the NCAA will appeal Judge Wilken’s decision and her entry of a permanent injunction which effectively eliminates the capping of scholarships at “full grant-in-aid” where that cap falls short of the full cost of attendance. The Ninth Circuit, which has in the past shown sympathy for the NCAA model in contravention of its usual disdain for institutional blight, will have the next say on the matter and how they decide will, at least in terms of legal precedent, be of far great importance than what Judge Wilken provided last week.

The history of antitrust cases involving collegiate and professional sports does not bode terribly well for the plaintiffs. Although the Supreme Court’s landmark decision in American Needle marks a departure from the trend, the normal response at the appellate level is to find in favor of the status quo. District court judges like to make a statement and those at the appellate level love nothing more than to shoot that statement down as fast as possible.

But the real value of this case lies not in the remedy ordered, a smogasborg of pro-plaintiff and pro-NCAA conclusions Judge Wilken slid into the end of her opinion, but rather in the holding of the case: the NCAA is a cartel operating without adequate justification to render its price-fixing scheme immune from Sherman Act violations. With regard to that issue, Judge Wilken unequivocally sided with the O’Bannon plaintiffs and has now left the NCAA in a position where it will need to make major changes to avoid finding itself facing similar antitrust suits on more fronts than it could possibly handle.

Because they are usually fact-dependent, remedies, which are often a function of the requests made by plaintiffs who may be reluctant to ask for too much, do not provide tremendous value in terms of setting precedent.

On the other hand, the holding of this case does set valuable precedent that goes beyond the narrow scope of the fact pattern at hand. No longer will the NCAA be able to hide behind its claims of upholding a tradition of amateurism or of protecting the opportunities available to student-athletes in every sport to participate at the highest level. Judge Wilken has clearly rejected those claims and should her ruling be upheld on appeal, that would set just about as damaging a precedent as the NCAA could possibly face, perhaps damaging enough to force the NCAA to become a mere shell of itself.

The bottom line is that the O’Bannon plaintiffs have finally broken through the glass door and have set the stage for massive changes in the landscape of intercollegiate athletics, particularly at the high-major level. Although the remedies Judge Wilken ordered may lack a solid logical basis and may not cure all of the issues facing student athletes as this moment in term, her ruling that the NCAA operates in violation of the Sherman Act by preventing schools from compensating student-athletes for the use of their names, images, and likenesses is real precedent that the NCAA will now have to find a way to work around as it faces the inevitable flood of litigation that follows a landmark ruling like this one.

Both because this ruling will inevitably be appealed and because its scope is narrowed by the facts at issue, this is merely the beginning. But between this bombshell ruling and the traction CAPA is having in its petition on behalf of Northwestern football players, it is clear that we are entering a major period of change in the world of intercollegiate athletics, one that the NCAA and its compatriots will have to enter with an open mind in order to survive.