SBJ/June 23-29, 2014/In Depth

Antitrust cases have college sports on edge

Efforts by Northwestern University football players to unionize may have garnered the most national media attention, but sports law experts say that antitrust litigation before a federal court in Oakland has the potential to bring the most change to the NCAA’s model of college sports.

Athletic directors at major colleges around the country say they are more fearful of the antitrust lawsuits, including one brought by prominent sports antitrust lawyer Jeffrey Kessler, against the NCAA than they are about Northwestern football players unionizing.

Jack Swarbrick, the athletic director at Notre Dame and a veteran of 28 years with Indianapolis law firm Baker & Daniels, summed up the flurry of litigation in the college space. This month before a room of his peers at the NACDA convention in Orlando, Swarbrick said that five to 10 years from now, “We’ll look back on O’Bannon [player image use] and the attempts at unionization as insignificant.”

The bigger issue, Swarbrick said, are the antitrust suits, like the one brought by Kessler, that will examine the value of a scholarship.

“That’ll be the game-changer,” he said.

Sports law professors, including Gary Roberts, who teaches at Indiana University and formerly worked for Covington & Burling, the NFL’s outside law firm, agreed with that assessment. “The Northwestern thing is not a threat,” Roberts said. “It’s the antitrust case that goes to the heart of the NCAA system, not this labor case.”

Kessler, a partner at Winston & Strawn who has served as outside counsel to sports unions including the NFL Players Association and the National Basketball Players Association, filed Jenkins v. the NCAA. The lawsuit alleges that the NCAA’s rules prohibiting how much schools can offer student athletes to play college football or basketball are tantamount to price fixing.

Essentially, the plaintiffs in the case are seeking to create a free market that would redefine the value of a scholarship. Recruiting battles could come down to factors like additional financial aid, long-term health coverage or other benefits not presently included in the scholarship.

“Our case is designed to remove the restrictions from men’s basketball and football in Division I in all the schools so they can enjoy a free market to make their own decisions about compensation issues,” Kessler said.

“The media is focused on O’Bannon, but cost of attendance and the value of the scholarship are the issues that will really stress the system,” Ohio State AD Gene Smith said. “People are already spending seven figures on [unlimited] meals. Health insurance is going to be a critical issue. There are simply a lot of pieces to it that the public doesn’t understand.”

If the antitrust cases succeed and a free market is created, that could lead to other byproducts of a new model, like a more enhanced role for agents. Theoretically, high school recruits would need agents to negotiate their deals with the colleges.

“If the courts say these kids are employees or are entitled to negotiate, as any American citizen can, and ask for their fair-market value, correspondingly they should be able to have agents to help them get their fair market value and advice on their careers,” veteran NFL player agent Peter Schaffer said.

“If it comes to that — that a court gives a high school senior that type of ability — then I believe the high school senior should be able to hire someone experienced to negotiate their fair-market value,” Schaffer said. “Otherwise there would be tremendous inequity in the negotiating system. You would have college and university officials negotiating against an 18-year-old kid, who doesn’t have any negotiating experience.”

Kessler’s case, originally filed in federal court in New Jersey, has been moved to federal court in Oakland where a number of other antitrust suits, including Alston v. NCAA, challenge the NCAA’s rules and restrictions on scholarships. Kessler and Jon King, counsel in the Alston case, do not agree exactly on how the cases will be tried.

The Jenkins lawsuit seeks only an injunction to find that the NCAA’s rules governing how much a college athlete
Photo by: Rubenstein Associates
can be paid are illegal. The Alston case seeks the same, as well as past damages for athletes’ full cost of scholarship.
In the next few months, U.S. District Judge Claudia Wilken in the Northern District of California will determine if the cases will be combined and if they will proceed on the same or separate tracks.

But King said, “No matter what, the NCAA version of amateurism is at stake in all of these cases.”

The cases are not unlike litigation that has challenged the way employers set wages for workers in other industries.

“They are challenging the very fundamental philosophical foundations upon which the NCAA rests,” Roberts said.

Roberts said if that litigation succeeds, it could have far more impact than the effort to unionize college players for a number of reasons, including the unconfirmed news reports that the Northwestern players voted down unionization.
The Northwestern football team voted on whether to become a union in April, but the votes will be unsealed and counted only if the National Labor Relations Board upholds the Chicago NLRB’s decision that the players are employees.

Matt Mitten, law professor at Marquette University and director of the National Sports Law Institute, noted that the NLRB is looking only at whether students at private universities can unionize, and there are far more public universities with big football and basketball programs.

Of all the lawsuits and legal challenges facing the NCAA, the antitrust litigation “has the broadest potential effect,” Mitten said. “The Jenkins lawsuit is the one that has the greatest potential to change the system under which college sports can be operated under the Division I model.”

Steve Ross, professor of sports law at Penn State, said the Northwestern unionization case is “important symbolically for this rhetorical myth that student athletes are amateurs rather than employees.”

But he does not think the Northwestern case will fundamentally change college sports at big, public school programs.

“If Kessler wins, a court would be saying that the fundamental distinction that the NCAA has drawn between college sports and professional sports is illegal,” Ross said.

He and other legal experts say that could open the floodgates to universities bidding to pay the elite high school football and basketball players to play at their programs.

“That would radically change everything,” Ross said.

And that is what has prompted some college administrators to suggest, crazy as it might sound, that their schools might contemplate a non-scholarship model of athletics, as opposed to openly bidding for the services of high school athletes.

“The debate draws the analogy between the student athlete and the professional athlete, not the student athlete and other students,” said Notre Dame’s Swarbrick. “But on our own campuses, that’s what we face every day. In the discussion about additional benefits for athletes, I’ve got deans coming up to me saying, ‘Are you crazy?’ Finding that balance is the challenge.”

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