Money and March Madness

The NCAA Lawsuit

The question of paying players in big time college sports has been raised for years. But now, nearly two-dozen former student-athletes are suing the NCAA. A win by the plaintiffs could potentially transform the business of college athletics.


The Lawsuit: An Introduction

O'Bannon v. NCAA, a lawsuit filed in July 2009 by former UCLA basketball star Ed O'Bannon on behalf of other former college athletes against the NCAA and the Collegiate Licensing Company (CLC), tackles the issue of using the "likeness" of athletes in rebroadcasts of games, DVD sales, photos, video games, etc., without compensation after an athlete graduates or stops playing in the NCAA. This likeness could be the athlete him or herself in DVD of a classic game, or a video game "version" of an athlete that almost exactly resembles him or her, save the name (these names can be easily downloaded and incorporated into the given game, however).

Michael McCann, a Sports Illustrated legal analyst and law professor at Vermont Law School, describes the suit's two main claims:

"First, by requiring student-athletes to forgo their identity rights in perpetuity, the NCAA has allegedly restrained trade in violation of the Sherman Act, a core source of federal antitrust law. Here's why: student-athletes, but for their authorization of the NCAA to license their images and likenesses, would be able to negotiate their own licensing deals after leaving college. If they could do so, more licenses would be sold, which would theoretically produce a more competitive market for those licenses. A more competitive market normally means more choices and better prices for consumers. For example, if former student-athletes could negotiate their own licensing deals, multiple video game publishers could publish games featuring ex-players. More games could enhance technological innovation and lower prices for video game consumers.

"Second, according to the plaintiffs, the NCAA has deprived them of their 'right of publicity.' The right of publicity refers to the property interest of a person's name or likeness, i.e. one's image, voice or even signature. Last year, when explaining why the NCAA has refrained from suing CBS over its use of player information in its fantasy sports game on CBS Sportsline.com, NCAA officials acknowledged that players' rights of publicity belong to the players, and not to the NCAA."

After the O'Bannon case was consolidated with other similar suits in 2010, it became known as In re: NCAA Student-Athlete Name & Likeness Licensing Litigation.

Its History

Ed O'Bannon was recruited to be the lead plaintiff in the suit by Sonny Vaccaro, the man who helped transform college basketball in the 1970s by brokering sponsorship deals with coaches and schools for companies like Nike, Adidas and Reebok. The companies paid the schools, and the coaches and players wore a single brand of shoes and apparel, setting into motion a multibillion-dollar commercial industry. Now an unpaid consultant for the plaintiffs and their attorneys at the firm Hausfeld LLP, Vaccaro says he owes it to the kids, whom he believes have been treated unfairly by the NCAA.

Filed in northern California courts in July 2009, the lawsuit faced a legal challenge from the get go when the NCAA filed a motion to dismiss. In February 2010, a San Francisco district court judge refused to grant the dismissal. In her opinion, Judge Claudia Wilken wrote: "'Accordingly, under a rule of reason analysis, O'Bannon pleads facts to make out a prima facie case that Defendants' conduct constitutes an unreasonable restraint of trade.'"

O'Bannon's lawsuit was consolidated a month later, in March 2010, with a suit brought on by former University of Nebraska quarterback Sam Keller against the video game company EA Sports. O'Bannon's portion represents the antitrust aspects of the suit, while Keller's represents the issue of publicity. Basketball legend Oscar Robertson joined the suit in January 2011.

Other notable athletes who joined the lawsuit include Alex Gilbert, Larry Bird's teammate on the '79 Indiana State University basketball team that lost to Magic Johnson's Michigan State team in one of the most famous NCAA basketball championship games of all time; and two members of the '66 NCAA Texas Western basketball team and two members of the Kentucky team from the same year. The championship game in '66 is well known: It was the first time an all-African American starting lineup (Texas Western) faced an all-white lineup (Kentucky). Texas Western came out on top, 72-65.

In many instances, the plaintiffs joining O'Bannon, Keller and Robertson are known for a single play, or for being a part of a sporting event that's iconic and regularly replayed.

The lawsuit, which is currently in the discovery phase, is thought to be the first of its kind to make it this far in the courts. However, it will likely be several years before there's a decision.

Update: On May 5, 2011, Judge Claudia Wilken dismissed EA Sports from the suit, arguing "that there was no evidence that Redwood City-based EA conspired with the NCAA to deny the players compensation." Both the NCAA and CLC remain defendants in the case.

Update: On July 28, 2011, Judge Claudia Wilken reenstated EA Sports to the suit, citing "'significant' new allegations that EA agreed to not offer payment to athletes once they left their college sports careers, in addition to NCAA’s rule prohibiting compensation of current student athletes."

Update: In October 2011, Celtics great Bill Russell sued EA Sports and the NCAA over using his likeness in the "Tournament of Legends" portion of a video game. His suit was later consolodated with O'Bannons.

A Document at the Heart of the Dispute

Before they can compete in a Division I sport, athletes must sign every year a seven-page Student-Athlete Statement, a form that states they are amateurs and give up any compensation for playing and that they promise to abide by all the rules in the NCAA Manual, including those dealing with amaturism and the use of athletes' images. According to the lawsuit, student-athletes "forgo their identity rights in perpetuity" in part because they are required to sign this document.

The NCAA's Position

Neither NCAA President Mark Emmert nor NCAA lawyers would discuss the lawsuit in detail with FRONTLINE because of the pending litigation.

However, NCAA spokesman Erik Christianson told The New York Times that "the NCAA does not license student-athlete likeness or prevent former student-athletes from attempting to do so. ... Likewise, to claim the NCAA profits off student-athlete likenesses is also pure fiction."

Law professor Michael McCann explained to FRONTLINE what the NCAA's argument might be in the case:

"The NCAA will say that they haven't licensed away or claimed in perpetuity the player's identity rights; that players could, on their own, sell their rights if they wanted to.

"They will also argue, I suspect, ... that, while there may be anti-competitive aspects of the arrangement that the NCAA has with the Student-Athlete Statement and the like, that on balance it's actually pro-competitive because it's created an efficient market for the NCAA to be able to enter into deals with vendors and entertainers that otherwise wouldn't exist, including classic sports, including video games, including licensing in apparel companies; that if the NCAA couldn't license away Ed O'Bannon's image, then Ed O'Bannon's image wouldn't be licensed away, because it would be too difficult for O'Bannon and other players to group together; that there's an efficiency to the NCAA being able to do so that makes the market actually better off."

Interestingly, the NCAA recently had its own internal battle about licensing and the "likeness" issue. A proposal introduced in 2010, titled "2010-26," would allow companies like Nike or Under Armour to use the likeness of college players in advertisements, according to The Chronicle of Higher Education reporter Libby Sander, who has been following the issue closely.

In a letter written to the Division I Conference Commissioners in October 2010, Big Ten commissioner James E. Delaney argues that the plan "provides virtually unlimited latitude for commercial entities to use current student-athlete's name/likeness/image to further their commercial endeavors," calling it "the essence of exploitation."

Sandler reports that, in January 2011, the NCAA "temporarily put the breaks" on 2010-26, citing disagreement among the 32 members of the Division I Legislative Council charged with voting on the amendment. The matter is up for another vote in April 2011.

What's at Stake

As for the stakes if the plaintiffs win the O'Bannon case, McCann writes: "The NCAA, along with its member conferences and schools, could be required to pay tens of millions, if not hundreds of millions, of dollars in damages -- particularly since the damages are trebled under federal antitrust law. … A victory would also necessitate substantial changes in the relationship between the NCAA and student-athletes."

For entertainment companies like EA Sports, the issue is both about licensing and free speech. An article in The New York Times about former Nebraska quarterback Sam Keller's portion of the suit explains how the lawsuit "gets to the heart of a highly contested legal question: when should a person's right to control his image trump the free speech-rights of others to use it?" Supporters of EA Sports on this issue include some big names, such as the Motion Picture Association for America and Viacom. Professional sports players' unions and the Screen Actors Guild are behind the plaintiffs.

According to some, including David L. Hudson Jr., a legal scholar quoted in the Times piece, the fight over likeness could reach unprecedented levels: "'I think it's an area that is crying out for Supreme Court review in the right case."

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Posted March 29, 2011; updated May 6, 2011; updated august 9, 2011; udated october 4, 2011

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