O’Bannon v. NCAA Implications

If you grew up in the 2000’s it’s likely you played the NCAA football video game presented by EA Sports (ITS IN THE GAME). However, you are probably uncertain as to why the game was cancelled. Here’s an overview of the lawsuit that discontinued one of America’s favorite games and further intensified the idea that NCAA student-athletes deserve to profit off of their Name, Image and Likeness (“NIL”).

Former UCLA basketball star Ed O’Bannon believed he was depicted in the 2008 video game, NCAA March Madness 2008. Having not ever consented to the use of his likeness in the video game or having ever received any type of compensation, O’Bannon sued the NCAA and the Collegiate Licensing Company (CLC) in 2009 on the grounds that the NCAA’s rules preventing athletes from being able to profit off their NIL’s violated the Sherman Antitrust Act. Anyone take AP US History? Well for those who didn’t, the Antitrust Act was developed to prevent monopolies and to protect consumers from predatory business practices. Around the same time, former QB Sam Keller sued the NCAA, CLC, and EA alleging that EA had unlawfully used student-athletes’ NILs in their video games. The two cases were combined and the NCAA was now involved in a legal battle that had massive implications for the future of collegiate sports.

In a lawsuit you have the plaintiffs (those who are doing the suing) and the defendants (those are who are getting sued). In this case, O’Bannon and Keller were the plaintiffs and the NCAA, CLC, and EA were the defendants who were mainly hoping the Court would hold the status quo: that is, vehemently defend the stance that student-athletes should not be paid as to uphold the sanctity of amateurism. The US District Court for the Northern District of California initially heard the case and believed the NCAA regulations that the plaintiffs were complaining about ought to be reviewed under the Rule of Reason. The Rule of Reason basically says that if the regulations are put in place to encourage procompetitive purposes then they are lawful. In this case, if the NCAA’s rules prohibiting athletes from profiting off their NIL promoted a competitive marketplace then they would be deemed legal. In a Rule of Reason Antitrust case, there is a three-step framework. First, the plaintiff must show that the regulations produce anticompetitive effects. If the plaintiff meets this burden, the defendant must bring evidence that the regulations are in fact procompetitive.  Lastly, the plaintiff then must show that their goals in bringing about their lawsuit can be achieved through less restrictive laws.

After hearing arguments from both sides, Judge Claudia Wilken of the District Court found that the rules restricting student-athletes from receiving compensation for their NIL’s violated anti-trust law. According to the California Lawyers Association, Judge Wilken determined two alternatives the NCAA could use to achieve procompetitive effects: “(1) raising the ‘full grant-in-aid’ cap on athletics-based scholarships by allowing schools to award stipends, derived from NIL licensing revenue, to student-athletes up to the ‘cost of attendance’; and (2) allowing schools to deposit limited shares of NIL licensing revenue above the cost of attendance into a trust fund payable to student-athletes after they left school. However, no court case would be complete without an appeal from the loser. On appeal to the 9th Circuit Court, the 3-judge panel agreed with most of what Judge Wilken said. They agreed with her first point but disagreed that students should receive NIL cash compensation after they left school. It was a solid win for student-athletes but not a disastrous result for the NCAA. They had once again evaded the real issue at hand: true player compensation.

Amidst the legal controversy, EA decided to cancel the video game. While recent discussion of allowing student-athletes to profit off their NIL has ensued, student-athletes are still barred from forming their own unions. This is problematic. NBA players have a NBA player union as does the NFL and their players. These unions are able to cut deals with video game developers to discuss licensing and the use of players NIL’s in a video game. Without a union, it would challenging for collegiate football or basketball players to make a deal that would be equitable to all.

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