O'Bannon: The NCAA Survives For Now

In a ruling with with huge implications for college sports as we know it, the Ninth Circuit held that the NCAA's rules banning student-athlete compensation are anti-competitive, but struck down measures that would have opened the door to athletes being paid for the use of their likeness reinforcing the value of amateurism in the sport.



The Ninth Circuit last month ruled 2-1 to strike down the NCAA's rules to prohibit athletes from being paid beyond mere scholarships allowing schools to now provide aid packages covering the "full cost of attendance," usually a few thousand more dollars than the typical scholarship package. Still, the court struck down part of a lower court ruling that would have allowed student-athletes to receive up to $5,000 per year in deferred cash payments for use of their name image and likeness.

As I wrote in a piece for Sports Law360, the ruling ended up being a big win for the NCAA as two of the judges agreed that payments “untethered to their education expenses” would destroy the amateurism model of college sports that differentiates it from professional sports leagues. U.S. Circuit Judge Jay S. Bybee wrote for the panel:
The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap. In finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs.
The move essentially just authorizes what the semi-autonomous "Power Five" conferences — the ACC, Big 12, Big Ten, Pac-12 and SEC — to do what they had already planned to do in the wake of the lower court ruling last year by U.S. District Judge Claudia Wilken. That ruling had caused some concern over whether amateurism in what has become a billion-dollar industry of college sports would would survive legal scrutiny.

A group of major athletic conferences released a statement praising the court's decision to strike down the deferred cash payments: 
The best way to help students be successful in college and in life is by providing an education that also includes benefits for our students who play sports, such as scholarships, health care, insurance and in many cases, the full cost of attendance. It’s important to remember that we’re talking about students, not employees. Our goal is for our students to learn teamwork and leadership through sports, and then graduate and be successful.
For a period of time it seemed like the NCAA's student-athlete, amateur model of college sports was in serious jeopardy. Not only had Judge Wilken issued her decision, but a National Labor Relations Board regional director ruled that Northwestern University football players were employees in approving their bid to unionize. But about one month before the Ninth Circuit decision, the full NLRB struck down that bid in a narrow decision. 

However, the Ninth Circuit's ruling did not find that the NCAA was exempt form antitrust scrutiny, which could keep the door open to more lawsuits in the future. Right now there is another multi-district suit winding its way through the federal courts known as the Grant-In-Aid Litigation being spearheaded by Winston & Strawn’s Jeffrey Kessler of Deflategate fame.

Further, public sentiment seems to be shifting in favor of paying student-athletes as fans and others view the current system. Once thought of as a good deal, a scholarship for an education, the quality of which can be debated given the time constraints and demands of top college athletes, seems small compared to the millions brought in each season by schools, conferences and the NCAA.

Still, while the long-term viability of the amateurism model of college sports may be in jeopardy, the Ninth Circuit's decision shows that it will be a gradual change.