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The demise of NCAA amateurism is greatly overstated

Last year, top basketball recruit Jahlil Okafor chose Duke over several other schools. In return, he received a scholarship. Panelists at a recent SportsBusiness Journal symposium (SportsBusiness Journal, Oct. 20-26 issue, “College Panelists Sure That Change is Coming”) opined that in the “not-too-distant future,” top recruits will get not merely a scholarship, but a substantial salary. So instead of going to Duke, Okafor might be attending Oklahoma State, which could use T. Boone Pickens’ largesse to outbid everyone.

Those who think football and basketball players will soon command “market” salaries attribute this to (a) Ed O’Bannon’s antitrust victory; (b) the Northwestern unionization effort; and/or (c) the “autonomy” granted to the big five conferences. I think they’re wrong.

I do think all of these factors will make life better for college athletes. Scholarships will soon be more generous, and guaranteed; nutrition, health care and insurance will likely improve; and maybe Mom and Dad will get flown to the Final Four. But market-based, individually negotiated salaries are not very likely in the foreseeable future.

Antitrust: O’Bannon and Jenkins

The language of the O’Bannon opinion, while giving plaintiffs a nice victory, is not encouraging for the recent cases like Jenkins v. NCAA that seek market salaries; indeed, the court’s opinion suggests just the opposite.

O’Bannon and others sued the NCAA for prohibiting universities from paying him anything for the use of his name and image. He argued this was an illegal price fix. The NCAA presented many defenses, some challenging the notion that college athletes even have cognizable name and image rights, some presenting technical arguments about markets. U.S. District Judge Claudia Wilken rejected these arguments, and found that the prohibition on payments for name and image did restrain competition. Thus, under the antitrust “rule of reason,” she turned to whether there were pro-competitive justifications for these rules, and if so, whether those purposes could be achieved by less anti-competitive measures. The NCAA offered both business justifications (e.g., fan interest will wane if college sports become too professional), and cultural justifications (e.g., players are less likely to integrate into campus life if they earn more than their professors).

NCAA athletes are not likely to be commanding market-based salaries in the near future.
Photo by: GETTY IMAGES
Wilken ruled for O’Bannon, finding that these purposes could be served by less restrictive rules. But her opinion is narrow and cautious, grabbing the low-hanging fruit presented by the NCAA’s most restrictive and illogical interpretations of amateurism, while repeatedly suggesting that a rule prohibiting substantial “market” salaries would likely be legal.

The less restrictive regime she posited as a superior alternative was one in which (a) scholarships truly covered the full cost of attendance; and (b) football and basketball players could receive up to $5,000 per year of athletic competition, payable after they left the university. (The $5,000 ceiling was not suggested by O’Bannon, but created by Wilken.) And having found such a ceiling for athlete compensation to be sufficient for the NCAA’s purposes, she ordered it into effect (in one year, allowing time for appeal).

Because Wilken’s analysis compared the NCAA’s strict amateurism to her new construct (better scholarships plus $5,000), rather than comparing it to a regime of “free agency,” she found the NCAA’s key evidence wanting. For example:

1. When the NCAA offered polling data suggesting that fans did not want college athletes paid, she pointed out that the poll asked about “salaries” of $20,000-$50,000, not the $5,000 she was suggesting.

2. When faced with NCAA assertions that compensating athletes would keep them from integrating with campus life, she noted that the NCAA’s evidence addressed “paying student-athletes large sums of money,” not her modest alternative.

3. In discussing the $5,000 per year delayed payments, Wilken noted that they would not be harmful to college athletics because of their modest size, and also “particularly if the student-athletes were not paid more or less based on their athletic ability.” That is the opposite of free agency.

Rereading the opinion with an eye on whether free agency will be obtained through subsequent antitrust litigation, one can see that Wilken would be unlikely to go that far. The polling data would now be on point, the cultural concerns would be real, and free agency would call for payments varying based on perceived ability, which she frowned upon. While it is true that Wilken decided only what was before her, it is flatly wrong to suggest that her opinion leads us toward market salaries. The lawyers in the next case will have to get the judge to go substantially further than Wilken appeared comfortable in going, and hold that victory on appeal and through potential review by the Supreme Court, which was last heard saying, albeit in a different context, that “in order to preserve the character and quality of [college football], athletes must not be paid, [and] must be required to attend class.”

Finally, we must remember that O’Bannon is on appeal. The issues are novel and complex, and the NCAA could win. Moreover, the appeal cannot make things better for the plaintiffs, since they took no cross-appeal, but an NCAA win would make the free agency cases even more challenging.

Labor law and autonomy

If antitrust won’t deliver a killing blow to NCAA amateurism, labor law and big five autonomy are even less likely to do so. The Northwestern unionization effort is a nice wake-up call to the NCAA and its universities, and may help the push toward better scholarships, food, insurance, etc., but it is pressing your luck to expect that unionization will find favor with the National Labor Relations Board, the federal appellate courts, and the players at enough universities to provide free agency through collective bargaining. Also the state universities (most of the big guys) benefit from even more restrictive state labor laws than the federal law that governs Northwestern.

Likewise, the autonomy granted to the big five universities is not going to generate competitive salaries. As noted above, O’Bannon and other factors may convince the big five (or all of Division I) to sweeten the scholarship packages, but expecting the majority of these big athletic programs to voluntarily create free agency that will cost them millions of dollars is unrealistic.

At bottom, although it will be interesting to see how O’Bannon comes out on appeal, and what happens in Northwestern and Jenkins, I will be shocked if, by 2020, star football and basketball recruits generate bidding wars, causing universities to behave like the Yankees, Dodgers and Red Sox pursuing a top free agent. People may disagree on whether free agency would be good for college sports, or is required for reasons of fairness to the athletes, but I don’t think antitrust law, labor law or big school autonomy will force free agency any time soon.

Len Simon is a professor of sports law and has a solo practice in San Diego. He is also Of Counsel to Robbins Geller Rudman & Dowd, one of the many firms assisting in the representation of Ed O’Bannon. He had no involvement in the O’Bannon case, no financial interest in the outcome, and writes solely on his own behalf as a professor of sports law and a practitioner of antitrust law.

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