Bloomberg News

NCAA Fights Ex-Athletes in TV Money Trial Over Amateurism

June 09, 2014

Ed O’Bannon, a former college basketball player suing the National Collegiate Athletic Association in a bid to let student-athletes share in $800 million in annual broadcast revenue, said even Little League players should be paid if their games are televised.

“Yea, absolutely, if they are generating revenue,” O’Bannon, who was the Most Outstanding Player of the 1995 Final Four while playing basketball at the University of California (85079MF:US) at Los Angeles, testified at an antitrust trial that started today in Oakland, California.

The outcome will determine whether the NCAA, which treats student-athletes as amateurs, has to stop barring them from negotiating their own deals in games that are broadcast.

Challenging the NCAA

O’Bannon said UCLA games he played in were televised locally, regionally and nationally, and playing basketball was his priority -- not academics. He first realized his image was being used in video games in 2008. While he wasn’t compensated, O’Bannon said, he’d be willing to sell his image for video games. He’s suing on behalf of current and former players seeking to negotiate licensing deals for use of their images.

The NCAA said today it settled a related lawsuit by players who sued over use of their likenesses and images in Electronic Arts Inc. (EA:US) video games. The $20 million accord resolves claims that depicting players in the products without permission or compensation violated their rights to control and license their identity. The NCAA also resolved a related lawsuit against EA, the organization said on its website.

‘First Time’

“This is the first time the NCAA has agreed to a settlement that pays student-athletes for acts related to their participation in athletics,” lawyers for the athletes said in a statement.

O’Bannon’s lawyers say they want to break up what they call a price-fixing conspiracy among the NCAA and member schools that reap the proceeds from televised college basketball and football games and cut athletes out of the profit. College athletics is as commercialized as professional sports, with billions of dollars going to the NCAA, universities, coaches and facilities -- everywhere but into players’ pockets -- they argue.

O’Bannon, who was on the stand today for more than two hours, testified that he doesn’t believe that he and current NCAA student athletes were or are amateur players.

Glenn Pomerantz, an attorney for the NCAA, showed him instances in pretrial statements in which he said he didn’t think student athletes should be be paid.

“I think they should be paid,” he said on the stand. “With the amount of money they are bringing in I think they should be compensated.”

Suit ‘Baseless’

The NCAA claims O’Bannon’s lawsuit is baseless because its amateur model is legal and serves players and schools. It also benefits fans, who attract advertisers that pay big money to NCAA broadcasting partners and who have said in surveys that they oppose compensating athletes. Paying players would pit schools against each other to attract top talent, and cause some to stop fielding teams and fans to leave in droves, the NCAA argues.

“It is known as the O’Bannon trial, but we could just as well call it the amateurism trial,” said Michael McCann, a University of New Hampshire law professor.

O’Bannon, 41, now sells cars in Las Vegas after playing two years with the National Basketball Association’s New Jersey Nets and also in Europe. He’s seeking a court order declaring that NCAA rules and practices violate federal antitrust laws because they block competition in the open market for schools to get the best athletes and among broadcasters for the right to use the players’ names and images.

NCAA Regulations

Under NCAA regulations, athletes can be stripped of their scholarships and barred from playing if they accept payment.

U.S. District Judge Claudia Wilken will decide the case without a jury in a trial expected to last three weeks.

Her order might stop short of saying how the NCAA should remedy the situation, opening the door for player organizations such as the Former College Athletes Association to work with teams to bargain for group licenses, McCann said. Star players could hire agents depending on how Wilken crafts her order.

“My guess is that it would be a very small percent of athletes who would get their own deals,” he said.

The NCAA had $912 million in total revenue last year, including $838 million from television, championships and marketing rights fees, according to its financial statement.

Medical Benefits

The trial comes at a time when the NCAA is facing attempts by current and former college athletes to secure better medical benefits and labor protections, as well as control over their images.

“The plaintiffs’ lawyers are attempting to twist legitimate concerns about the current system –- issues that the NCAA and its member institutions are actively addressing -– into a rationale for turning student-athletes into employees,” NCAA legal director Donald Remy said in an e-mail. “It is a short-sighted goal that would severely diminish academic and athletic opportunities for student-athletes -– 99 percent of whom will never turn pro.”

The trial outcome will reverberate across the broadcasting industry, according to lawyers for companies including Turner Broadcasting System Inc. and CBS Corp. (CBS:US), which signed a $10.8 billion contract with the NCAA in 2010 to present Division I men’s basketball championships through 2024.

Legal Chaos

If O’Bannnon wins, legal chaos will ensue, with halftime performers, marching-band members, cheerleaders and even Little League players who appear at televised games running to court, the broadcasters said in a court filing.

“Any athlete of any age whose image appeared on television might claim a right to similar compensation and even assert analogous antitrust violations by the governing sporting authority,” they said.

The NCAA failed to convince Wilken that free-speech rights bar athletes from seeking TV licensing revenue on the grounds that the games are public events that aren’t commercial in nature.

That ruling in April followed several others that have benefited the plaintiffs.

“Her rulings have generally favored O’Bannon,” McCann said. “I think O’Bannon appears to have an advantage.”

Appeal Expected

McCann, who writes about sports and law for SI.com, said he expects an appeal to be filed by whomever loses.

Lawyers for the NCAA may call its president, Mark Emmert, Big Ten Commissioner Jim Delany and university athletic directors to testify that alumni donations will dwindle as fans walk away from college sports, according to court filings.

“Fans support Michigan because they love that young students coming out of high school arrive at Michigan, work hard, and are largely successful getting college degrees,” University of Michigan President Mary Sue Coleman said in a court filing. “Paying these students-athletes would change the students-athletes in the eyes of the fans and, in my experience, would negatively impact fan interest in Michigan sports.”

O’Bannon’s case, filed in 2009, was combined with a related case brought by former Arizona State University quarterback Sam Keller, who sued the NCAA and Electronic Arts on behalf of athletes whose likeness were used in video games without permission or compensation.

Canceled Games

EA’s NCAA football games didn’t use the players’ names, though they depicted individual players by their height, weight and other identifying features. The company settled the lawsuit for $40 million and canceled the football video games.

EA was unsuccessful in its effort to have the case dismissed on the grounds that its representations of the student-athletes were protected under the First Amendment as artistic expression.

A separate jury trial was scheduled for March over athletes’ claims against the NCAA that they are owed damages because their privacy rights were violated by the use of their images in video games, broadcasts and other media. The $20 million settlement announced today ends that case, the NCAA said.

The payouts from the two EA accords are enough to provide more than $1,000 for student-athletes for each year they were depicted in one of the company’s video games, according to a statement by plaintiffs lawyers at Hagens Berman Sobol Shapiro LLP in Seattle.

Today’s NCAA settlement applies to current and former student-athletes who competed on an NCAA Division I college or university men’s basketball team or on an NCAA Football Bowl Subdivision men’s football team, and whose images, likenesses or names were included in game footage or in EA video games after 2005, according to the statement. The earlier settlement covers student-athletes back to 2003, even if they were not in the video games.

The accord needs final approval from Wilken.

The case is In Re NCAA Student-Athlete Name and Likeness Licensing Litigation, 09-01967, U.S. District Court, Northern District of California (Oakland).

To contact the reporter on this story: Karen Gullo in federal court in Oakland, California, at kgullo@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg, Charles Carter


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • EA
    (Electronic Arts Inc)
    • $48.33 USD
    • 0.27
    • 0.56%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus