O’Bannon Ruling Raises New Questions Over Future of Money in Big-time College Sports


August 13, 2014

Sonny Vaccaro never really liked receiving phone calls from members of the legal team working on behalf of Ed O’Bannon and other college athletes locked in litigation with the NCAA.

Vaccaro, a longtime advisor to the athletes’ legal fight to receive compensation from the NCAA, worried that each call could be the one telling him the case had been thrown out.

But then he got the news on Friday that a federal judge in Oakland had decided in favor of O’Bannon and a class of current and former college players.

“It was like my world just changed,” Vaccaro said. “No more of those calls. She made a ruling … What she said is, you can pay them.”

The ruling by U.S. District Court Judge Claudia Wilken supported the athletes’ claims that they should have a share of the revenues generated by the sale of their names, images and likenesses in television broadcasts, video games and other platforms. After a three-week trial, Wilken found that NCAA rules limiting compensation for elite football and basketball players to the value of their athletic scholarships was a violation of antitrust laws.

But while the ruling caused a great deal of euphoria among athletes and supporters like Sonny Vaccaro, it also left many unanswered questions about the complicated and controversial role of money in collegiate athletics.

“It may just be psychological that the NCAA lost. It doesn’t seem to me that the sky has fallen yet,” said Richard Southall, an associate professor in the Department of Sport and Entertainment Management at the University of South Carolina and director of the College Sport Research Institute. Southall, who has written extensively on issues facing the NCAA, said the decision may not turn out to be such a big boost to athletes seeking a greater share of NCAA profits.

Wilken called the NCAA’s argument that restrictions on compensation were necessary in order to maintain its amateur tradition “unpersuasive.” But she generally accepted the NCAA’s position that limiting payments to athletes helps keep them integrated with the general student body and involved in educational life. She ultimately concluded that athletes having access to some additional funds would not disrupt the NCAA’s business model.

Wilken’s ruling did not mandate how schools should specifically carry out providing additional compensation. Rather, she said in her injunction that the NCAA could no longer prohibit schools from offering more to athletes than the current rules allow. If they wish, schools can now offer scholarships that meet the “cost of attendance,” which averages several thousand dollars more than the value of athletic scholarships. They can also set up a trust fund for athletes and allow the players to collect money in equal share at the end of their playing days. Under the ruling, the NCAA can cap trust fund payments at $5,000 per year if they pass a rule to do so.

“Schools may offer lower amounts of deferred compensation if they choose, but may not unlawfully conspire with each other in setting these amounts,” Wilken wrote.

Offering less money, of course, may limit the school’s ability to land a prized recruit. But that aspect of the ruling — permitting the schools to offer less or more, or package their scholarships in different ways — also prevents the NCAA from engaging in what critics deride as “price fixing,” and opens up a competitive marketplace.

Freed from having to limit a scholarship to tuition, room and board and books, schools will likely have greater abililty to vie for athletes with financial incentives rather than simply showing off a high-priced coach or sparkling weight room.

But because Judge Wilken did not give specific instructions on what schools must do, there remains much uncertainty about how her decision will play out on campuses.

“Adapting to [the injunction] requires adopting NCAA legislation, that’s why you’re hearing the murky and byzantine remarks,” said William Isaacson, one of the athletes’ lawyers. “If there was just one decision maker on the other side, they could pretty quickly issue a memo and change their systems. But they’ll have longer discussions than that.”

To further complicate matters, Wilken’s decision came a day after the NCAA Division I Board of Directors voted to give the wealthiest and biggest five conferences greater autonomy in setting rules. It remains to be seen how that stratification of the elite Division I plays out — and potentially impacts how the NCAA responds to the ruling.

So far, the NCAA has not signaled what its next move will be, other than to say that it disagrees with the decision. Legal experts who have followed the case say an appeal is an almost certainty.

And Wilken’s ruling very likely makes room for other lawsuits challenging the NCAA on other matters related to the role of money in college athletics.

Waiting in the wings, is what’s known as the Kessler case, named for Jeffrey Kessler, the attorney who helped bring free agency to the NFL. It could fundamentally reshape the NCAA. The case, still in its early stages, essentially seeks to bring the free market to the recruiting of high school athletes — no more caps on scholarships or on money held in trust; in other words, if a college or university wants a star player, it will have to pay up.

Donald Yee, an NFL agent, said that Friday’s ruling marks only one phase of the evolution of college sports. He said there are “larger things looming” beyond the Wilken decision.

Yee predicts it won’t be long before viable professional football and basketball leagues for young people fresh out of high school emerge.

“There’s no doubt in my mind there are entrepreneurs out there who see an opening there to create a completely new business model,” Yee said. “It’s no different for how Uber hit the taxicab industry. There’s going to be a version of Uber in the college sports industry.”

If that day comes, the NCAA will have real existential questions to confront. By comparison, Wilken’s decision in the O’Bannon case could seem quaint.

Zachary Stauffer, a contributor to various FRONTLINE projects, is based at the Investigative Reporting Program at UC Berkeley.

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