Colleges Don’t Need to Pay Athletes Beyond Attendance Costs

The 9th U.S. Circuit Court of Appeals ruled against a proposal Wednesday that would have forced the NCAA to allow schools to pay their student-athletes up to $5,000 per year in deferred compensation for use of names and likeness.

If you’re looking for silver linings, it’s that the appeals court re-emphasized that the NCAA is not above anti-trust law and should continue to be scrutinized, and didn’t go so far as to say that college athletes have no right to be compensated beyond the cost of attendance.

The ruling can give the case hope, since an alternative would have been to find that rules restricting compensation are justified under antitrust law as the NCAA stated. Both we and the district court agree that the NCAA’s amateurism rule has procompetitive benefits.

Under last year’s ruling by federal Judge Claudia Wilken, college athletes would be able to earn money through trust funds created from licensing revenue, and the NCAA could cap that amount at no less than $5,000 for each year an athlete is eligible to play. Among the publications covering the decision are the New York Times (in stories here and here) and the Hollywood Reporter. Rather, it held that, because many NCAA rules (among them, the amateurism rules) are part of the ‘character and quality of the [NCAA’s] product … no NCAA rule should be invalidated without a Rule of Reason analysis.

But it also states that allowing colleges to pay players the cost of attendance in the form of scholarships is enough of a remedy. The NCAA has dug in its heels amid challenges by athletes, lawyers and labor unions. The court also shut down a plan for paying athletes. But it’s possible that either the O’Bannon case or a separate one seeking a full free-market payroll system in college sports could still make it onto the high-court docket in the coming years. A lawsuit brought by attorney Jeffrey Kessler against the NCAA and its major conferences has a class action hearing in front of Judge Wilken later this week.

A federal appeals panel awarded the NCAA a clear victory in the organization’s defense of amateurism Wednesday but left open a big window that keeps the college athletics’ embattled business model vulnerable to future courtroom challenges.

The athletes are backed by dozens of law professors, as well as groups such as the Screen Actors Guild, which warns that a ruling for the NCAA on the issue of pay for the use of players’ likenesses “can be ruinous to performers’ careers and financial interests”. Wednesday’s judgment overrules last year’s outcome, but supports the charge that the NCAA violated antitrust laws.

College athletes, many of whom come from poor backgrounds, have complained that schools exploit their talent by making tens of millions of dollars through television contacts, tickets sales and marketing deals while not paying them more than the cost of a scholarship and room and board. The court added that “in order to preserve the character and quality of [college sports], athletes must not be paid”. “The athletes as a whole have a right to participate in the broadcast licensing market”.