As a lifelong Boise State University fan, and gamer who pre-ordered the EA Sports NCAA Football 2008 game (with Jared Zabransky on the cover), I was probably more excited than your average legal beagle to read last week’s Ninth Circuit Court of Appeals decision in O’Bannon v. NCAA, et al. Case No 14-16601. However, the decision ultimately fell short of expectation, leaving me disappointed, just like most Broncos opponents.

Defending the Amateurism Status Quo

The case before the Ninth Circuit pits Ed O’Bannon, a former UCLA basketball player and defender of the collegiate athlete, against the NCAA, the staunch defender of amateurism in collegiate athletics, seeking to retain what it believes is a carte blanche exemption from the antitrust rules contained within the Sherman Antitrust Act of 1890.

At trial, the basic dispute was the one-hundred year old NCAA rule prohibiting student-athletes from being compensated for the use of their names, images and likenesses. For an athlete like Jared Zabransky, who graced the cover of that EA Sports game in 2008 following an unbeaten season and an MVP performance in the Fiesta Bowl, but with limited success in the NFL, those amateurism rules are harsh. In sum, it means that athletes who were primarily successful in college receive no compensation for sales of jersey with their number, appearances in video games, appearances in highlight reels and other marketing done by the NCAA and universities that involve the athletes’ likeness.

Ultimately, the trial judge in the O’Bannon matter concluded that the NCAA was indeed subject to antitrust rules and that the prohibition from any payment to student athletes in football and basketball was a violation of the Sherman Act. The trial court did not go so far as to fully unleash universities, but rather concluded that the so-called cost of attendance scholarship was appropriate and that schools could elect to pay athletes up to $5,000.00 per year in deferred compensation.

Ninth Circuit Plays Catch and Release

The Ninth Circuit, in what it describes as a “momentous case”, ultimately concluded that the NCAA amateurism rules are not exempt from antitrust scrutiny and must be analyzed pursuant to the “Rule of Reason.” However, by effectively rubber stamping the NCAA’s continued use of student-athlete likenesses without compensation, the Court greatly watered down the impact of its ruling.

To begin, the Ninth Circuit specifically concluded that the United States Supreme Court decision in NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984) did not bless the NCAA amateurism rules as a matter of law. Thus, the Ninth Circuit applied the Rule of Reason factors. The Rule of Reason, a fact often lost in commentary on this issue, requires a three step burden shifting analysis in which the Plaintiff bears the burden of showing that a restraint produces an anticompetitive effect. In response, the Defendant must show that the restraint has procompetitive effects. And then, the plaintiff must show that any legitimate objectives can be accomplished in a substantially less restrictive manner. See Tanaka v. University of Southern California, 252 F.3d 1059, 1063 (9th Cir. 2001). The Ninth Circuit held that the amateurism rules satisfy the first two prongs of the Rule of Reason and then went on to make its own determination of whether less restrictive alternatives had been established by O’Bannon and his class members. In sum, the Ninth Circuit was offered the opportunity to legislate what it believed were less restrictive restraints on student-athletes. The Ninth Circuit upheld cost of attendance scholarships but struck down the $5,000.00 per year deferred compensation describing such payments as vitiating the amateurism rules. The simple impact of the decision was to apply the Sherman Act to the amateurism rules in name, but provide only cost of attendance scholarships to student-athletes as a remedy. This author finds the dissent authored by Chief Judge Thomas the more reasoned approach. Judge Thomas argues that the $5,000.00 deferred compensation payment is exactly the correct mechanism to compensate student-athletes and respond to the concerns of the NCAA.

In Boise, Idaho, the number 99 is synonymous with a player that many believe to have begun the renaissance of Boise State Football. Alex Guerrero, a defensive lineman on the 2006 Liberty Bowl team (then the biggest game the upstart team had ever been to) graduated before the heroics of the Fiesta Bowl. But Guerrero, a member of several NFL scout teams and now the CEO of Elite Sports Society, a sports marketing and brand management company, was one of the first to grab the hearts of Boise State fans. His number 99 flew off the shelves. And, that number 99 will always be connected to Guerrero. Guerrero has never received compensation for this connection. In response to the O’Bannon decision, Guerrero said “perhaps the NCAA wants to retain the simplicity of amateurism, but the NCAA and its member schools made the decision to commercialize this issue long ago. They made the decision to let the sport be driven by ESPN timeslots, marketing arrangements, Nike uniform deals and licensing.” When pressed on this point, Guerrero said “this issue should be dealt with on the school administration level. If the jersey becomes popular enough to merchandise, and is connected to the player or the player’s image, and the image is on the stadium or billboard to advertise, the athlete should be paid a reasonable amount for that effort.” Guerrero also balked at the notion that this overly commercializes the NCAA or destroys amateurism by saying “the athlete still has to perform. Maybe some schools offer more exposure or more marketing potential, but that is already true and the schools are recruiting on that very notion. But, none of this matters if the athlete does not perform.” Guerrero agreed with the Judge Thomas dissent and suggested that the majority opinion let the NCAA off the hook.

Next Stop, US Supreme Court?

The O’Bannon decision leaves a number of issues up for debate and for legal challenge. Even halfway through the decision, issues clearly exist that set up an appeal to the United States Supreme Court. The Ninth Circuit has now limited the scope of a previous decision and has created a conflict in precedent with three other circuits. The simple reality is that one-hundred year old amateurism rules are difficult to apply in this information age. It is unlikely that the Courts will get the final word and more likely that the NCAA will have to change its amateurism approach that has the effect of profiting a few favored institutions and its business partners.