Q&A: What the O'Bannon ruling means for NCAA, schools and athletes
It's going to take a while to sort out what the O'Bannon ruling means for all parties concerned and how changes will be implemented.
This much is certain about the impact of Friday's Ed O'Bannon ruling: Anyone who says today they know exactly how the decision will shape the future of college sports is guessing.
But there's enough in the decision of US District Court Judge Claudia Wilken to gain a sense of what it may mean for college sports. So with qualifiers attached, here are some questions and (attempted) answers about the ruling that the NCAA violates antitrust law by preventing football and men's basketball players from being paid for use of their names, images and likenesses (NIL).
What are the big takeaways from the decision?
A federal judge has confirmed what many people have stated for decades: College football and men's basketball are not amateur endeavors, they're big business. Wilken had no use for the amateurism defense to justify the restraints on paying players.
Also, Wilken told the conferences and schools they must compete against each other for recruits instead of colluding to fix a price for everyone. NCAA autonomy for the Power 5 conferences, which was largely a reaction to the litigation threats facing college sports, is in the process of being set up and can address the cost-of-attendance part of Wilken's injunction.
What exactly did the judge rule?
Wilken's injunction has two components: A) The NCAA can't cap the amount of a scholarship below the actual cost of attendance; and B) The NCAA can't ban schools from creating a trust fund to pay players equal shares for use of their NILs.
For the trust fund, the NCAA and schools are allowed to cap the amount, but it can't be lower than $5,000 for every year an athlete remains academically eligible. The schools can't conspire to fix these amounts at a set price, thus creating competition.
Wilken's injunction, although a win for the O'Bannon plaintiffs, could have been worse for the NCAA. The $5,000 number could have been higher. The injunction doesn't allow athletes to receive money for endorsements, citing efforts by the NCAA and its schools to protect against "commercial exploitation." And the injunction doesn't prevent the NCAA from creating rules that prohibit athletes from selling their NIL rights individually.
Where did the $5,000 number come from?
From the NCAA's own witnesses and current rules. Wilken pointed out that witnesses at trial -- namely former CBS Sports president Neal Pilson and Stanford AD Bernard Muir -- testified they would have fewer concerns about paying players if the compensation was capped at a few thousand dollars per year. Wilken noted this range is also comparable to how much money the NCAA currently permits athletes to receive if they qualify for a Pell Grant and the amount that tennis players may receive prior to enrolling.
Wilken's ruling reflected caution and, perhaps, an incremental step for what the future may bring. (More on that later with the Jeffrey Kessler lawsuit.) Wilken responded to concerns about college players getting hundreds of thousands of dollars. So instead of sending a signal either way on how she feels, she's letting the market do it for now.
No one has debated the legality of the cap. Wilken seemed hesitant to do too much too soon. Interestingly, Wilken is not saying the cap would be legal under antitrust law. Instead, Wilken made clear her injunction would prohibit any cap if it's below $5,000 or below the cost of attendance (a figure that will vary by school). For now, it's basically up to the schools and the NCAA to create a cap at their own peril. That antitrust question got delayed for another day.
Do schools have to provide this new compensation?
Legally, no. Wilken said she doesn't believe that any school's athletic program would be "driven to financial ruin or would leave Division I" if other schools paid their players.
"The high coaches' salaries and rapidly increasing spending on training facilities at many schools suggest that these schools would, in fact, be able to afford to offer their student-athletes a limited share of the licensing revenue generated from their use of the student-athletes' own names, images and likenesses," Wilken wrote.
Practically, the market -- and whatever cap is set -- will bear out which schools provide more money to football and men's basketball players and at what amounts. Wilken's decision won't go into effect until the next recruiting cycle, meaning it would start to impact recruits who enroll in college after July 1, 2016.
The potential of this new money could become recruiting issues for coaches and affect where players attend school. Parents may examine the differences between conferences or schools on what they pay post-graduation. That could raise another issue on the recruiting trail: Parents wanting to know how schools will educate their child on properly handling potentially $20,000 or more once he leaves college.
What about other sports? Won't there be Title IX implications?
Title IX will absolutely come into play, as I wrote about in June. But that wasn't Wilken's charge in this case. She threw out the NCAA's Title IX/non-revenue sport defense several months ago. Wilken's decision does not apply to non-revenue athletes, leaving that in the hands of the NCAA, conferences and schools to figure out, perhaps with some future assistance from Congress and other lawsuits.
If schools don't provide new money to female athletes, someone will undoubtedly bring a Title IX claim about this issue. The topic, at least for the purpose of cost-of-attendance stipends, figures to come up in an antitrust scholarship lawsuit against the NCAA and conferences that Wilken oversees. A handful of those plaintiffs are female athletes.
How does O'Bannon affect the scholarship lawsuits?
The looming lawsuit facing college sports is the one brought by Kessler, a prominent sports attorney who brought free agency to the NFL and seeks a free market for college recruits. Pending a possible NCAA appeal, the O'Bannon ruling cleared a wide path for Kessler, eliminating the NCAA's antitrust defenses used in court.
Wilken's language about amateurism, competitive balance, the integration of academics and athletics, and output reduction could have created obstacles for Kessler. It likely did the complete opposite while offering Kessler's case a playbook on how to defeat the NCAA.
Also, the NCAA would have to appeal O'Bannon in the 9th Circuit Court of Appeals, which tends to be slow in providing rulings. It's possible Kessler could get his trial -- it would be in New Jersey, not in California, where his case is currently consolidated with others before Wilken -- before the 9th Circuit reviews O'Bannon. If that delay happens, Wilken's ruling in O'Bannon would be the case precedent for Kessler.
The Shawne Alston scholarship plaintiffs, also before Wilken, allege the NCAA and many conferences have fixed the value of scholarships below the actual cost of attendance. They will still need to get a damages class certified -- Kessler is only seeking an injunction -- but Wilken's ruling in O'Bannon should help their case in terms of liability. The NCAA could argue a damages class can't be certified because every school has a different cost of attendance figure. That appears to be the fight ahead in Alston.
So when will the future of college sports get sorted out?
It's still going to take a while. Wilken's ruling is undoubtedly a victory for the O'Bannon plaintiffs. It sets in motion the next wave of questions college sports leaders will have to answer -- or risk again having the questions answered for them by the courts.
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