Ed O'Bannon v NCAA Lawsuit Finally Reaches Courthouse

The highly profitable business of college sports faces a compelling legal challenge this week as the much anticipated Ed O’Bannon v NCAA has finally reached the courthouse.  Ed O’Bannon, a former UCLA basketball player, is the lead plaintiff in a lawsuit brought by several current and former collegiate athletes seeking to shake the foundation of the NCAA business model by having a federal judge declare that the NCAA and its member schools comprise an illegal cartel that violates antitrust law by prohibiting players from collecting revenue from their own likeness.  Alleging that the NCAA, which profits from use of player images, names, and likenesses through video game, DVD, and merchandising, has illegally muscled collegiate athletes out of the billion dollar sports industry, plaintiffs in O’Bannon are hoping to alter the landscape of collegiate sports and give players access to the money their efforts help generate.

O’Bannon Lawsuit Alleges NCAA is a Cartel

O’Bannon’s lawsuit originated when the former basketball star saw his image in a college sports video.  Upset that the NCAA was profiting while he was left out, O’Bannon filed suit in 2009 to prevent college sports from cutting players out of video game revenue, but during the intervening five years, the case has morphed from focusing on video games to challenging the core business model under which the NCAA operates college athletics.  Joined by several younger plaintiffs, who signed up while they were still in school, the central issue in O’Bannon now encompasses the NCAA’s uncompensated use of player names and likenesses across all mediums – video games, merchandising, TV broadcasts, etc.  Accusing the NCAA of acting as an illegal cartel engaged in price fixing schemes that exclude players from profiting from their own images, the O’Bannon plaintiffs are asking US District Court Judge Claudia Wilken to break up the one-sided business model of college sports, and allow student athletes to negotiate their own deals for use of their likeness.

O’Bannon and others are not seeking compensation, but instead are looking to change the way college sports operates by allowing players the right to negotiate licensing agreements. Arguing that the NCAA’s complete control over player images and likenesses has rendered the business of college sports anti-competitive to the determent of players, the plaintiffs propose an alternative model that allows players control over their own image and likeness.  Doing so will give student athletes access to a piece of the financial pie and influence in the negotiations of TV contracts, NCAA rule creation, and other important aspects of college sport management.

NCAA Defends the Business of Amateur Sports

Throughout the O’Bannon trial, the NCAA will cling to its argument that amateurism is critical to the success and competitiveness of college sports.  The NCAA will caution Judge Wilken that agreeing with the plaintiffs would create a situation in which big-money schools would buy up all the best athletic talent – causing an imbalance in on-field competition that would drive away fans and disintegrate collegiate sports.  The NCAA also insists that college players are fairly compensated with academic scholarships – a point that routinely draws ire from student athletes who allege that the NCAA’s insistence on academic compensation is fraudulent because many college athletes are forced to devote significant time to their sport at the expense of classroom experiences.

Related Lawsuits Indicate Change is coming in College Sports

Regardless of the outcome of O’Bannon, it is difficult to see the NCAA walking away from the case with its business model completely unscathed.  Already the NCAA has taken some significant blows to the way it conducts business, including:

  • March's victory for Northwestern Football in which a National Labor Relations Board (NLRB) judge determined that scholarship athletes were effectively employees and had the right to unionize.  The case is in appeal – delaying players’ ability to form a union – but should players prevail, allowing some to unionize will give them more access to the business of college sports.
  • A settlement last week between the NCAA and former players seeking compensation for use of their image in video games.  The NCAA paid a total of $20 million to former collegiate athletes who sued for violations of publicity law for use of images in video games.  Although this settlement is distinct from O’Bannon in that it sought compensation for past wrongs vs. made an attempt to change the business model of college sports, the settlement is none-the-less a significant shift in the NCAA’s policy on player compensation.
  • EA Sports, which has abandoned the college video game market, agreed to a settlement with the O’Bannon plaintiffs for $40 million to drop out of the lawsuit. The settlement compensates the O’Bannon plaintiffs for use of images and likenesses.

As O’Bannon v NCAA makes its way through court over the coming days and weeks, the testimony and arguments that will ultimately impact Judge Wilken’s critical decision can be followed by reading Sport’s Illustrated’s ongoing coverage.  With the NCAA’s stranglehold on the business of collegiate sports slowly eroding, expect Judge Wilken’s decision to contribute, either significantly or in part, to the changing landscape of college athletics.

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