Who's afraid of the big bad NCAA? The Ed O'Bannon v. NCAA decision's impact on the NCAA's amateurism model.

AuthorLodge, Alexander
PositionNational Collegiate Athletic Ass'n
  1. INTRODUCTION II. BACKGROUND A. History of NCAA Amateurism and Divisional Distinctions 1. History of the NCAA 2. Division I Football and Men's Basketball B. NCAA and Antitrust Litigation C. Defining a "Relevant Market" D. Breaking Down the O'Bannon Decisions 1. The O'Bannon District Court Decision 2. The O'Bannon Court of Appeals Decision E. Adidas America, Inc. v. NCAA and NCAA's Appeal of O'Bannon III. ANALYSIS A. Why Does Amateurism Usually Win? B. Distinguishing the College Education Market and Restraint of Trade C. Applying the Adidas Commercial/Noncommercial Analysis to O'Bannon IV. RECOMMENDATION V. CONCLUSION I. INTRODUCTION

    On August 8, 2014, the United States District Court for the Northern District of California issued its decision in the highly awaited O'Bannon v. National Collegiate Athletic Association (NCAA) case, where a group of current and former NCAA football and men's basketball players challenged an N CAA provision prohibiting compensation for use of their name, image, and likeness (NIL). (1) On September 30, 2015, the Court of Appeals for the Ninth Circuit affirmed the district court's ruling in part and reversing in part. (2) The case, filed in 2009 by the named plaintiff, Ed O'Bannon, along with 19 other student-athletes, challenged the NCAA's use of student-athletes' NIL in video games and live television broadcasts as a violation of antitrust law. (3) The O 'Bannon decisions come in the midst of national debate and a number of student-athlete challenges to NCAA provisions about paying student-athletes above the current grant-in-aid scholarships offered by NCAA Division I schools. (4)

    The debate regarding paying college football and men's basketball athletes engenders strong opinions on either side, but the near-billion dollar revenues generated by NCAA football and men's basketball raise the stakes and emotions surrounding this topic. Compensation for use of student-athletes' NIL creates a unique juxtaposition of a player's "right to publicity" and NCAA amateurism arguments. Student-athletes are unique participants in a commercial enterprise because they do not receive pay but contribute to the NCAA's success in commercializing college football and men's basketball. The O 'Bannon decision introduces a new layer of complexity to the student-athlete "pay-for-play" debate because it supports student-athlete NIL compensation and seems to reject the historically successful NCAA amateurism defense.

    This Note discusses the O 'Bannon v. NCAA decisions and the impact on the NCAA's amateurism model. Part II of this Note addresses the history of the NCAA, its commercial growth, and the application of antitrust laws challenging NCAA provisions. Part II also distinguishes the details of O 'Bannon v. NCAA and introduces the commercial/noncommercial test from Adidas America, Inc. v. NCAA. (5) Part III analyzes the O 'Bannon facts in the context of applying the Adidas commercial/noncommercial test. Part IV recommends the application of the Adidas commercial/noncommercial test by the NCAA to amend its provisions regarding player amateurism. Part V concludes by suggesting that courts hearing antitrust challenges against the NCAA incorporate the Adidas commercial/noncommercial test for provisions restricting player compensation.

  2. BACKGROUND

    1. History of NCAA Amateurism and Divisional Distinctions

      1. History of the NCAA

        Much of the debate that drives discussions about collegiate sports, particularly Division I football and men's basketball, is whether these widely popular endeavors are still truly amateur, wherein players receive no monetary remuneration. This debate centers around the NCAA, the non-profit governing body for the majority of intercollegiate athletic programs, whose basic purpose is "maintaining] intercollegiate athletics as an integral part of the educational program and the athlete as an integral part of the student body and, by so doing, retain[ing] a clear line of demarcation between intercollegiate athletics and professional sports." (6) The NCAA's history is one that formed from a national concern, both social and political, to prevent the exploitation of collegiate athletes at the turn of the century. (7)

        Since its inception, the NCAA upheld amateurism as its cardinal principle and purpose. (8) A primary concern in the early formation of the NCAA was to address the need "to ensure fairness and safety" and to counterbalance the growing commercialization and "extreme pressure to win" in intercollegiate sports. (9) During this time, intercollegiate sports faced major issues of cheating, unscrupulous recruiting practices, and severe--and even fatal--injuries to collegiate players. (10) However, in the decades following the NCAA's initial establishment, the growing popularity and commercialization of intercollegiate sports prompted stronger NCAA provisions seeking to maintain its amateurism model. (11) Public pushback to NCAA oversight and unscrupulous recruiting practices led to a relaxation of the strict no-compensation model of amateurism, which allowed collegiate institutions to offer prospective players educational scholarships known as grants-in-aid. (12)

        Fast-forward to the present, where college sports are undoubtedly a tremendous commercial endeavor with football and men's basketball programs at the helm. (13) Despite this tremendous growth in commercial success and popularity, the NCAA continues to champion the fight for the principles of amateurism in intercollegiate sports. (14) However, "[t]he commercial aspect of college athletics--television contracts and bowl game revenue, for example--counteracts the nonprofit, amateur motives of the [NCAA]." (15)

      2. Division I Football and Men's Basketball

        Since the first television broadcast of a college football game in the 1950s, the commercial success of the NCAA centers on controlling Division I college football and men's basketball programs. (16) Since the 1970s, the NCAA divisional classifications have separated 1100 member schools into three separate divisions, putting a particular emphasis on isolating football and men's basketball programs. (17) Division I NCAA distinguishes its athletic programs by the number of games scheduled within the division, attendance at sporting events, scholarships available, and number of sports offered. (18) The NCAA further classifies Division I NCAA football programs into two subdivisions, the Football Bowl Subdivision (FBS) and the Football Championship Subdivision (FCS). (19)

        Division I FBS and men's basketball programs showed significant revenue growth even during the recent economic downturn in the United States. (20) Five powerhouse conferences (Power 5) (21) dominate the NCAA's Division I FBS and men's basketball programs and contribute the vast majority of the multimillion dollar annual revenues earned by the NCAA through television and marketing fees. (22) Although Power 5 Division I FBS and men's basketball programs are big revenue earners, the same sports in conferences outside the Power 5 (including lower divisions) and other NCAA sports do not share this same commercial success. (23) It is important to note that Title IX requirements to provide equal funding to support women's sports bear little effect on Division I FBS and men's basketball earnings, but commentators pinpoint the NCAA's rules governing the allocation of scholarships available for other sports as a key reason for an economic gap. (24)

    2. NCAA and Antitrust Litigation

      Given the NCAA's increased regulation of intercollegiate sports, the rapid commercial success of Division I FBS and men's basketball programs, and the historical criticism of NCAA's regulatory position, the NCAA has often run into litigation of whether its regulations violate federal antitrust laws. (25) Section 1 of the Sherman Antitrust Act of 1890 prohibits the "restraint of trade or commerce among the several States." (26) Litigation claiming NCAA violations of the Sherman Act rely on section 1, calling the NCAA's regulations of student-athletes or its member institutions into question. (27)

      Those seeking to submit a claim against the NCAA for violating section 1 must show "(1) that there was a contract, combination, or conspiracy; (2) that the agreement unreasonably restrained trade under either a per se rule of illegality ... or a rule of reason analysis; and (3) that the restraint affected interstate commerce." (28) The NCAA's non-profit nature and purpose of protecting the educational benefits flowing from amateurism often make litigation challenging NCAA rules, regulations, and conduct nefariously difficult to overcome. (29) Two primary rules are applied in determining violations of section 1: either the per se rule or the rule of reason. (30) In NCAA antitrust litigation, courts apply the rule of reason analysis to determine if there is an unreasonable restraint on trade in a case-by-case analysis. (31)

      Application of the rule of reason in NCAA antitrust allegations provides ideal analysis because the approach seeks to balance the "procompetitive and anticompetitive effects of the restraints." (32) In cases where parties have a cooperative arrangement, which is most often the case in NCAA antitrust allegations, the Supreme Court held the rule of reason should apply. (33) The seminal case expressing this application of the rule of reason in NCAA antitrust challenges is NCAA v. Board of Regents, where the Board of Regents of Oklahoma and the University of Georgia Athletics Association brought an antitrust suit against the NCAA's control over televising contracts for college football games. (34) The dispute arose when NCAA member schools with major football programs, operating collectively as the College Football Association (CFA), sought to negotiate an alternative television broadcasting contract with the National Broadcasting Company. (35) For the previous 28 years, the NCAA implemented its own television plan for negotiating...

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