NCAA Rules: Establishing Student-Athlete Eligibility - Report Sample

Introduction

The National Collegiate Athletic Association (NCAA) has been formulating rules to establish athletes' eligibility from its members drawn from colleges and universities. The rules have been developed to prevent student-athletes' payment for the use of their likeness, names, and images. Understandably, in 2008, Ed O'Bannon, an All-American basketball player, featured by Electronic Arts (EA) in a basketball video game. Since O'Bannon never consented about the use of his likeness, he successfully sued the company, arguing that he had not been compensated. He sued NCAA together with Collegiate Licensing Company (CLC) in the federal court. O'Bannon observed that NCAA's amateurism rules illegally restrained trade under Section 1 of the Sherman Act, 15 U.S.C.During the same time, the University of Nebraska and the Arizona State University foot teams' Sam Keller made similar allegations against NCAA, CLC, and EA and brought his suit in the federal court. According to Sam Keller, NCAA and CLC were little concerned about the illegal use of student-athletes' NILs by EA in its video games. Following the trial, it was concluded by the District Court that the NCAA's compensation rules illegally restrained trade.

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Enforcement Capabilities

In 1948, the NCAA bolstered its enforcement capabilities through the adoption of the Sanity Code. Instructively, this was a set of rules that barred schools from compensating student-athletes. However, in 1956, the NCAA abandoned Sanity Code and allowed its member schools to offer student-athletes scholarship as a reward for their athletic ability. At the time, student-athletes were allowed to seek other financial aid that was not hinged on their athletic ability, but the amount could not surpass the cost of attendance. Recently, the NCAA has adopted other amateurism rules prohibiting its members from compensating student-athletes and allowing them to interact with professional leagues. Before hearing of the O'Bannon case against NCAA, the District Court sought to identify the markets that have been adversely affected by NCAA amateurism rules. The court determined that the college education and the group licensing markets were the most affected by the rules. In the college education market, it was established that Division I basketball and FBS football schools engaged in a competition to recruit talented high school student-athletes by dangling various sets of goods and services. In the group licensing market, college football and basketball student-athletes were allowed to trade group licenses to compensate for the use of their NILs.

Professional Athletes and Amateur Athletes

Notably, there has always been a difference between professional athletes and amateur athletes. Although professional athletes are paid for their participation, amateur athletes are hardly paid. The emergence of a highly commercialized society made the NCAA and its member schools unlawfully use students' names, images, and likeness (NILs). NCAA adopted compensation rules that denied payment to student-athletes. Worth noting is that in the case O'Bannon v. NCAA, the United States District Court for the Northern District of California, NCAA was dealt a huge blow. The case included Ed O'Bannon, a former UCLA basketball player and 19 other student-athletes, both current and former, who participate or participated in college football and basketball from 1956 to present. The O'Bannon plaintiffs, in their suit against NCAA, argued that some NCAA compensation rules went against the Sherman Antitrust Act by outlawing student-athletes to get revenues earned by NCAA and its member schools by using their NILs in the media.

Following O'Bannon and Keller's deconsolidation, the antitrust claims targeting NCAA on the case of O'Bannon proceeded to the District Court's bench trial. The District Court, in its ruling, observed that NCAA's imposition of restraint effectively resulted in an anticompetitive impact in the college education. After its determination that there was a restraint, the District Court accepted two of the four procompetitive benefits offered by NCAA, that is, supporting academics and athletics' integration and amateurism preservation. More imperatively, former student-athletes were given the burden to depict less restrictive alternatives. Despite offering three alternatives, the District Court adopted only two that included encouraging schools to deposit a certain portion of licensing revenue into a trust fund that would be consequently given to student-athletes after graduation. In the same vein, the court accepted the alternative that would raise the grant-in-aid limit. The District Court argued that the alternative would be instrumental since it will allow schools to cover the student-athletes total cost of attendance.

NCAA Restrictions

The Northern District of California ruled that the NCAA restrictions barred the trade that could have allowed college basketball and football players to receive revenue generated from their NILs. In a remedial ruling, the District Court adopted an injunction that dictated that student-athletes' total compensation shall either be equal to or surpass the cost of attendance. Further, the court-mandated that revenue emanating from NIL licensing will be deposited in a deferred trust that does not go beyond $5,000 annually for the period the student-athlete will be academically eligible. After the ruling, the NCAA, in August 2014, appealed to the United States Court of Appeals for the Ninth Circuit. The body outlined the relevance of its amateurism approach and compensation rules. Through the Rule of Reason, it was found that the NCAA's compensation rules depicted an anticompetitive effect that consequently upset the college education market. The court determined that the price-fixing was premised on illegality, and it observed that lessening compensation rules strictness will enhance student-athletes' chances of attending the school of their choice. More fundamentally, the Ninth Circuit refuted NCAA's argument that their compensation rules are vital just because they have been in use for decades.

The District Court failed to accept that consumer demand for college sports is driven by amateurism. The court pointed out that consumers' affinity for schools in their areas is one attraction to college sports. By providing the evidence about Dr. J. Michael Dennis's survey, Americans "generally oppose the idea of compensating college basketball and football players," the court established that the argument was unreliable. Notably, the unreliability of the evidence was based on the fact that the survey results were deliberately skewed to make participants believe that compensating student-athletes is illegal. In its counter-argument, NCAA maintained that its restrictive compensation rules are vital in creating a competitive balance between FBS and Division I schools. The District Court admitted that embracing competitive balance falls within the purview of procompetitive purpose entrenched in the antitrust laws. However, the court observed that the challenged NCAA rules have underlying elements that do not promote competitive balance. The court further argued that economists' various studies on NCAA compensation practices reveal that they do not support competitive balance. In its assessment, the District Court found that NCAA has been providing member schools with the freedom to spend on other programs such as facilities and coaching, which negated equalizing efforts.

Concerning the integration of academics and athletics, the NCAA built a strong case arguing that its restraints have been central to fostering the blend, which has greatly enhanced educational services. More significantly, the NCAA argued that student-athletes' participation in academics often allows them to achieve long-term benefits. Even though the court agreed that the evidence justified the procompetitive approach, it observed that the benefits accruing from the integration are a result of other NCAA's rules. Furthermore, NCAA alleged that its restraints help reinforce enhanced output in the college education market because of the increased opportunities to engage in Division I basketball or FBS football. Still, NCAA added that its compensation rules had facilitated the accomplishment of the increased output goal. In refute to this justification, the District Court demonstrated that some schools have been lobbying to overturn the NCAA's rules. Besides, the court highlighted that similar amateurism rules govern FCS, Division II, and Division III just like Division I. The court noted the inconsistency in the argument that Division I schools use funds they have saved to finance scholarship programs, arguing such schools do not share revenue.

Despite NCAA's argument that the plaintiffs did not suffer any injury since it had terminated its cooperation with EA, a video making company, the District Court explained that there was a high likelihood that it would resume the relationship sometime in the future. The court demonstrated that NCAA has immensely benefited from the relationship with EA in terms of improved profits. The court concluded that the NCAA was more likely to work with another video game company or resume working with EA. Equally important, the NCAA claimed that its instituted policies and rules would undoubtedly prohibit the use of student-athletes' NILs to make video games. Following EA's executive testament concerning their effort to change policies concerning NILs, the court observed that the NCAA has shown that it might alter its policy prohibiting the use of NILs in video games or depict reluctance to adequately ensure its enforcement. Additionally, the NCAA contended that some legal barriers, such as the Copyright Act, would frustrate the plaintiffs' compensation. Still, the NCAA maintained that the video games companies might use student-athletes' NILs for free even if it resumes cooperating with the companies.

Concluison

In conclusion, the court ruled that the NCAA amateurism rules are invalid and always result in anticompetitive effects in the college education market. It is worth noting that the NCAA presented numerous justifications for their compensation rules. Still, the court established that there were underlying gaps that failed to give credence to their evidence. Understandably, the NCAA's amateurism rules do not support competitive balance because it allows schools to spend in different programs that discourage the realization of equity. Further, applying the Rule of Reason helped analyze the NCAA's rules, which had to be subjected to antitrust laws scrutiny. Although the O'Bannon Plaintiffs never achieved the intended relief that necessitated them to file suit, the issue was thrust into the legal field. It will undoubtedly reshape how new generation student-athletes will address the problems that have been created by the NCAA's compensation rules.

Bibliography

Cameron Miller. “Explaining the O'Bannon v. NCAA Ruling.” The Stanford Daily: Stanford University. (September 22, 2014 Monday) Retrieved from
https://advance-lexis-com.ezproxy.neu.edu/api/document?collection=news&id=urn:contentItem:5V6N-JNN1-DY7P-T140-00000-00&context=1516831.

Edelman, Marc. "The District Court Decision in O'Bannon v. National Collegiate Athletic Association: A Small Step Forward for College-Athlete Rights, and a Gateway for Far Grander Change." Wash. & Lee L. Rev. 71 (2014): 2319.

Editorial Staff. O'Bannon v. NCAA—the Appeal and Beyond. The Legal Broadcast Network Blog. (October 16, 2014 Thursday) Retrieved from
https://advance-lexis-com.ezproxy.neu.edu/api/document?collection=news&id=urn:contentItem:5DCN-HW21-JCMN-Y47B-00000-00&context=1516831.

Lodge, Alexander. "Who's Afraid of the Big Bad NCAA: The Ed O'Bannon v. NCAA Decision's Impact on the NCAA's Amateurism Model.".