Three Questions for the Third Week of the O’Bannon v. NCAA Trial

As the O’Bannon v. NCAA trial enters its third week, commentators are already predicting the fall of the “college sports cartel.” In the case, a group of about 20 current and former college men’s basketball and football players, led by former UCLA basketball player Ed O’Bannon, are alleging that NCAA restrictions, which prevent payment to players for use of their name, image, and likeness, violate federal antitrust laws.  They say that by exerting control over the athletes’ publicity, the NCAA deprives athletes of profitable use of their likeness and fixes the price of players’ names and images at zero in violation of the Sherman Act.  The players are seeking to enjoin the NCAA’s practices. 

The NCAA counters that the plaintiffs’ arguments are baseless.  They claim that their amateurism rules are necessary and the future of college sports will be jeopardized if amateur rules are overturned by the courts.  Much of the trial has been consumed by expert testimony, as both sides have put forth experts to opine about whether the amateurism rules are necessary for maintaining the public’s interest in college sports.  The NCAA also claims that the athletes have waived their right to use their own images, pointing to the NCAA bylaws and forms which must be signed by all players, authorizing the NCAA to use an athlete’s name or picture to promote the NCAA. 

Even before the judge issues her ruling in the case (expected later this summer), this case has highlighted many interesting questions related to antitrust law as applied to college sports.  First, is “promoting amateurism” a sufficient pro-competitive justification for the NCAA’s actions to survive antitrust scrutiny?  The NCAA argues that banning athlete compensation is pro-competitive, leveling the playing field among colleges and promoting the education of college athletes.  But the judge in the case has already shown she will not tolerate a general appeal to “amateurism,” noting that the term is generally difficult to define.  Instead, the NCAA is attempting to show how the compensation restrictions promote fair recruiting and athletic and educational integration. 

Second, is there a market for players’ licensing rights?  In order to prove a violation of the Sherman Act, plaintiffs must show that there is a market that is being harmed.  Executives from EA sports, a company that uses players’ likenesses in video games, have testified in the trial that they would have been willing to pay players for the use of their likeness, but were prohibited by NCAA rules.  Interestingly, in a related settlement, athletes have already settled claims against EA Sports, whereby about $40 million will be paid out to athletes whose images were used in the company’s games.  Under the terms of this settlement, payment will be much higher to some players—whose game avatars are used more frequently—than to others who are not prominently featured in the game.  This in itself may suggest that there is a market for individual players’ likenesses. 

Third, and perhaps of most interest for those of us who love college sports, what will happen if the NCAA is found to be in violation of the Sherman Act?  The plaintiffs are seeking an injunction in the case, barring the NCAA from forcing athletes to sign forms which give up the right to use their own likeness.  If the NCAA was enjoined from the use of this form, regulation could fall on the individual conferences, who could then determine how players’ likenesses may be used and whether their athletes could be compensated.  If each conference had its own rules related to player compensation and publicity, then a particular conference’s rule could arguably survive, assuming that conference did not have market power.  Alternately, athletes could begin to negotiate payments as part of the recruiting process and licensing agreements for use of their name and image. 

As the trial wraps up, we will continue to see the parties’ attempts to answer these (and other) antitrust questions in the case, and the judge’s ruling will determine whether college sports as we know it begins to look a little different.  Regardless of the outcome of the case, you may want to buy your favorite player’s jersey while you still can—some schools have already removed specific player names and numbers from their fan jerseys in response to the suit.