United States District Court Judge Claudia Wilken has ruled that the NCAA is in violation of federal antitrust laws by prohibiting major college football and men’s basketball student-athletes from receiving compensation for the use of their names, images and likenesses in broadcasts and video games.
Following a three week non-jury trial in June, Judge Wilken ruled in favor of a group of plaintiffs led by former UCLA basketball player Ed O’Bannon. O’Bannon sued the NCAA and alleged that the organization had violated antitrust laws by working with schools and conferences to make sure the student-athletes never received a share of the revenues generated from the use of their images in broadcasts and video games. The plaintiffs gave up their right to seek potential monetary damages in a pretrial decision to avoid having the case heard by a jury.
In a 99-page decision, the judge issued an injunction prohibiting the NCAA from enforcing its rules on money given to athletes for the use of their names, images and likenesses. Specifically, Judge Wilken found, “The challenged NCAA rules unreasonably restrain trade in a market for certain educational and athletic opportunities offered by NCAA Division I schools.”
Rejecting the numerous arguments offered by the NCAA during the trial to support its operational model, Judge Wilken considered the NCAA’s rationale but stated, “the justifications offered by the NCAA do not justify this restraint and could be achieved through less restrictive means” while still protecting the competition.
However, the judge’s decision did provide a small victory for the NCAA. While finding the current NCAA policies in violation of federal law, Judge Wilken did acknowledge that the NCAA could set a cap on the money paid to athletes as compensation for the use of their names and likenesses as long as the NCAA permitted at least $5.000 per athlete per year of competition for players at major football and basketball schools. Her injunction allows the money to be set aside in a trust for every year an athlete remains academically eligible to compete. The money would be paid to the athlete upon the expiration of his eligibility or graduation, whichever comes first. Specifically, Judge Wilken stated, “the NCAA’s witnesses stated their concerns about student-athlete compensation would be minimized or negated if compensation was capped at a few thousand dollars per year.”
While authorizing the creation of this compensation trust, Wilken stopped short of allowing athletes to receive money for endorsing commercial products.
“Allowing student-athletes to endorse commercial products would undermine the efforts of both the NCAA and its member schools to protect against the ‘commercial exploitation’ of student-athletes,” Wilken ruled.
NCAA Chief Legal Officer Donald Remy disagreed with the Judge’s decision that the NCAA violated antitrust laws. He stated, “We note that the Court’s decision sets limits on compensation, but we are reviewing the full decision…the NCAA is committed to fully supporting student-athletes.
The ruling will not affect college athletes immediately. It states the new rules on pay will not take effect until the start of the next football and basketball recruiting period and will not have any effect on prospective recruits before July 1, 2016.