NCAA Antitrust Ruling Is Inadequate to Fix Athlete Pay Problem

(Bloomberg Opinion) -- There isn’t a jurist in the U.S. who knows more about the National Collegiate Athletic Association than Claudia Wilken, the senior district judge for the Northern District of California. Let me rephrase that: There are precious few people in the U.S. who know more about the NCAA than Judge Wilken.

In 2009, Michael Hausfeld, a plaintiffs’ lawyer with a crusader’s bent, filed an antitrust lawsuit against the NCAA in her Oakland courtroom. Called the O’Bannon case — Ed O’Bannon, the former UCLA basketball star, was the lead plaintiff — the lawsuit argued that the NCAA should allow college athletes and former college athletes to retain the economic rights to their own name, image and likeness.

During the five years it took to get that case to trial, it evolved into something much broader: whether the NCAA’s rules forbidding athletes to be paid was a violation of the nation’s antitrust laws. Wilken asked penetrating questions of a number of the NCAA’s witnesses in the June 2014 trial, making clear that she wasn’t buying their assertion that “amateurism” was the secret sauce that gave college football and basketball its immense appeal.

When Wilken handed down her ruling that August, it seemed at first like a slam dunk for the players. Wilken said the NCAA’s rules were, in fact, evidence of cartel behavior that constituted an unlawful restraint of trade.

But her remedy was so tepid that the NCAA was the real victor. She said colleges could pay players the full cost of attending college — putting an extra $3,000 to $6,000 in their pockets — but many schools had already begun doing that. And she said schools could put aside $5,000 in a trust fund that players could recoup once they left school.

A year later, the U.S. Court of Appeals for the 9th Circuit, while agreeing that the NCAA was an antitrust violator, removed the trust fund remedy, and said that any money received by players had to be related to education. Although the plaintiffs claimed victory because of the antitrust ruling, little actually changed as a result of the O’Bannon case.

Late Friday afternoon — a full 10 years after the O’Bannon case was first filed — Judge Wilken handed down her second major NCAA-related ruling. This was a consolidation of two lawsuits, the Alston case, brought by Steve Berman, another well-known plaintiffs’ lawyer, and the Jenkins  case, brought by Jeffrey Kessler, who has spent his career suing on behalf of professional players’ unions. Unlike O’Bannon, Alston/Jenkins was always intended to be a full frontal assault on the NCAA’s amateurism rules — an effort to blow up the current system and replace it with a free market, allowing players to earn whatever a university was willing to pay. It was tried last September.

The 100-page ruling Wilken issued Friday was pitiless. It was clear that after listening to the NCAA’s lawyers for the decade, Wilken had had enough: She described their arguments as threadbare, lacking in rigor and evidence. Not to mention duplicitous. Not to mention hypocritical.

Here are some of her choicer morsels:

“Because elite student-athletes  lack any viable alternatives to Division I, they are forced to accept, to the extent they want to attend college and play sports at an elite level after high school, whatever compensation is offered to them by Division I schools, regardless of whether any such compensation is an accurate reflection of the competitive value of their services. Moreover, the compensation that class members receive under the challenged rules is not commensurate with the value that they create for Division I basketball and FBS  football; this value is reflected in the extraordinary revenues that Defendants derive from these sports.”

“Defendants nowhere define the nature of amateurism they claim consumers insist upon. … Mike Slive, the former commissioner of the SEC , one of the Power Five, from 2002 to 2015, testified that amateurism is ‘just a concept that I don’t even know what it means. I really don’t.’”

“The rules that permit, limit, or forbid student-athlete compensation and benefits do not follow any coherent definition of amateurism. … The only common thread underlying all forms and amounts of currently permissible compensation is that the NCAA has decided to allow it.”

And so on.

Did this scathing assessment of the NCAA’s amateurism rules cause Wilken to toss them out on antitrust grounds? Alas, it did not. Once again, she ruled that the NCAA was an antitrust violator, and once again she pulled her punches when it came to devising a remedy. Perhaps chastened by the 9th Circuit’s ruling in the O’Bannon case, she said that universities could give athletes unlimited rewards — but only if they were connected to education. I have no doubt that schools will game her ruling and find ways to put “educational funds” into the hands of athletes. But it still only changes things on the margins. The NCAA has now been twice found guilty of violating the antitrust laws — and has paid almost no price for it.

No doubt Wilken’s ruling will be appealed to the 9th Circuit, but one can hardly expect it to reverse its O’Bannon decision of just a few years ago. From where I’m sitting, the legal system has proved itself inadequate to force real change on a system that exploits the athletes while the adults all get rich. Which is not to say it’s game over.

For one thing, the realization that players are exploited, an idea that was rarely articulated a decade ago, has practically become conventional wisdom. Just look at the reaction to the knee injury suffered by Zion Williamson, the Duke University’s star player, a few weeks ago. It led to an outcry as people realized that if Williamson’s injury were serious enough, it could severely damage his financial prospects once he enters the professional ranks. The fact that he was playing for free at Duke was a notable part of the discussion. This kind of awareness of what’s wrong with the NCAA is only going to increase.

Second, the NCAA is about to face competition the likes of which it’s never faced before. Within a few years, the National Basketball Association is going to once again let high school players enter the draft, ending the one-and-done rule. It is also planning to rev up its so-called G League, so that high school players who aren’t yet ready to leap directly to the NBA can play in its minor league and make a decent salary.

Several entrepreneurs (including my friend Andy Schwarz, an economist who played a role in both the O’Bannon and Jenkins cases) have formed something they are calling the Historical Basketball League, which will start play in the summer of 2020. The HBL plans to recruit top high school prospects with offers that could go as high as $150,000. Players will still be able to attend a local university, but their basketball team won’t be affiliated with any school. The founders of the HBL believe that if they get enough high profile recruits, college basketball fans will flock to their games. We shall see.

Third, a number of states are working up legislation that would give college athletes the ability to make money from their name, likeness and image by, say, selling their autographs or endorsing products. No doubt the NCAA will fight any such bill, but if one were to become law — in North Carolina, for instance — it could be a game changer.

Finally, there is always the possibility that college athletes decide to boycott a marquee game like an important bowl showdown, or a championship basketball game. It’s unlikely because the risks are so high for athletes who are so young — all of whom want a shot at playing in the pros — but I’ve long believed that a strike by the players would change the system in about, oh, an hour.

I’ve been advocating for paying the players their economic value since 2011. A lot of progress has been made during the ensuing eight years. Players were once forbidden from eating whatever food they wanted whenever they wanted. That is no longer true. Parents are now given money to visit schools with their children and travel to big tournament games. That’s new. Athletes get cost of attendance checks and other money here and there. It’s rare now that an athlete is prevented from transferring to a different school by a mean-spirited coach.

Although the biggest change of all — paying the players — remains out of reach, I remain confident that won’t be the case forever. But now we know: It won’t happen through the courts.

The lead plaintiff in the Alston case is Shawne Alston, a former West Virginia running back. Jenkins is Martin Jenkins, who played football for Clemson University.

For the record, I loathe the phrase “student-athlete,” and avoid it at all costs. It is a propagandistic term created in the mid-1950s by the NCAA to avoid having to pay workers compensation to injured football players.

FBS stands for Football Bowl Subdivision; all the major college football programs are FBS members.

The SEC is the Southeastern Conference, one of the five powerful conference that essentially run college football.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. He is co-author of “Indentured: The Inside Story of the Rebellion Against the NCAA.”

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