×

Court Strikes Down Possible Cash Payments to College Athletes

NCAA rules prohibiting compensation to college athletes are “more restrictive than necessary” and subject to antitrust laws, but the athletic conference can still limit payments to the full cost of attendance, a three-judge appellate panel ruled on Wednesday.

The decision from the 9th Circuit Court of Appeals comes as amateur athletes have been challenging NCAA rules, pointing to the bonanza of broadcast and cable contracts and licensing of their image and likeness for such things as videogames. Although the appellate decision was a mixed ruling, it found fault with the idea of providing athletes with cash payments for the use of their name, image and likeness.

The plaintiff in the case, Ed O’Bannon, a former basketball player for UCLA, filed suit after discovering his avatar was being used in an Electronic Arts videogame, but NCAA rules prevented him from being compensated. His claim was consolidated with that of another athlete, Samuel Keller, a former quarterback for Arizona State University and the University of Nebraska. Last year, a district court judge ruled that NCAA’s prohibition on compensation to athletes for the use of their name, image and likeness violated antitrust rules. A remedy was to pay NCAA members scholarships up to the full cost of attendance, and cash compensation of up to $5,000 per year.

“Applying the Rule of Reason, we conclude that the district court correctly identified one proper alternative to the current NCAA compensation rules — i.e. allowing NCAA members to give scholarships up to the full cost of attendance — but that the district court’s other remedy, allowing students to be paid cash compensation of up to $5,000 per year, was erroneous,” the appellate panel ruled.

The judges ruled that “a compensation cap set at student athletes’ full cost of attendance is a substantially less restrictive alternative means of accomplishing the NCAA’s legitimate pro-competitive purposes.”

Yet they saw a big difference between providing compensation for attendance costs and giving them cash payments for the use of their image and likeness.

“The difference between offering student-athletes education related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap,” the judges wrote. “Once that line is crossed, we see no basis for returning to a rule of amateurism and no defined stopping point; we have little doubt that plaintiffs will continue to challenge the arbitrary limit imposed by the district court until they have captured the full value of their” name, image and likeness. “At that point, the NCAA will have surrendered its amateurism principles entirely and transitioned from its ‘particular brand of football’ to minor league status.”

Judge Sidney Thomas concurred with the opinion but wrote that there was “sufficient evidence in the record” to also support the award of a $5,000 cash payment for the use of name, image and likeness.

Earlier this year, a federal judge in Tennessee threw out a class action lawsuit filed by 10 former athletes against ESPN and other broadcasters, ruling that telecasts were exempt from right of publicity claims.

More Biz

  • Bert Salke and Jennifer Salke

    Feds Looked Into Amazon Studios Chief Jennifer Salke in College Admissions Scandal

    Federal investigators looked into Amazon Studios chief Jennifer Salke and her husband, Fox 21 Television Studios president Bert Salke, as they conducted a sprawling probe of cheating in elite college admissions, a source close to the case told Variety. It does not appear, however, that prosecutors will charge the Salkes in the case. The Salkes [...]

  • Variety Cord Cutting Placeholder Cable

    Big Blackout Looms as CBS, AT&T Go Down to Wire on Renewal Talks

    A blackout affecting CBS stations in major markets throughout the country looms as CBS and AT&T executives go down to the wire on negotiations for a retransmission consent deal covering 28 O&O stations. The sides have sparred publicly during the past few days as 11 p.m. PT Friday expiration of the previous contract approached. AT&T [...]

  • Contract Placeholder Business WGA ATA Agent

    ICM Responds to WGA Packaging Lawsuit: Claims are 'Baseless' and 'Absurd'

    ICM Partners has asked a judge to dismiss the lawsuit filed against four major talent agencies by the Writers Guild of America as part of the larger war between agencies and the guild over packaging fees on TV series and movies. The guild sued ICM, CAA, WME and UTA in California state court in April, [...]

  • New York City NYC Placeholder

    CityFM Podcast Takes a Deep Look at New York’s Music Scene (Listen)

    First among the many projects listed at the beginning of New York Music Month in June was a WNYE radio show and podcast called CityFM that promised to “explore the city’s music culture, emerging artists and trends, and upcoming events told through the lens of what’s happening around the city in Summer 2019.” And while [...]

  • Live Nation Logo. (PRNewsFoto/Live Nation)

    Live Nation Confirms Placing Tickets Directly on Secondary Market at Artists’ Request

    Representatives for Live Nation, the world’s largest live-entertainment company and owner of Ticketmaster, confirmed that it bypassed conventional channels and directly placed thousands of concert tickets on the secondary market upon artists’ request, in an article published in Billboard. In a statement shared with Variety, the company acknowledged that it has facilitated the transfer of [...]

  • Costume designer Michele Clapton

    Costume Designers Fashion a Plan to Fight for Pay Parity in Upcoming Contract Talks

    The Costume Designers Guild Local 892 is gearing up to fight for pay equity in its 2021 contract negotiations with the Alliance of Motion Picture and Television Producers, establishing a pay-equity committee to raise awareness of the scale disparity between the mostly female CDG membership and the mostly male membership of the Art Directors Guild Local [...]

More From Our Brands

Access exclusive content