Tristan Griffin 2012-11-29 12:26:12
The past few years have seen a marked rise in the number of lawsuits between former athletes and their respective leagues and associations. Not surprisingly, the NCAA has found itself playing defense in some of these suits. One lawsuit in particular could change the NCAA as we know it. This suit calls into question the NCAA’s bylaws and procedures regarding the payment of student-athletes during and after their collegiate athletic careers for the use of their name, image, or likeness.1 This lawsuit has the potential to reform collegiate athletics and the relationship between the NCAA and student-athletes for better or worse. In 2009, former UCLA basketball star Ed O’Bannon filed a lawsuit against the NCAA and the Collegiate Licensing Company for their failure to compensate him during and after his collegiate athletics career for the use of his name, image, and likeness on video games, trading cards, DVDs and other materials.2 The O’Bannon lawsuit was later consolidated with a suit brought by former University of Nebraska quarterback Sam Keller to form what is now known as In Re: NCAA Student-Athlete Name and Likeness Licensing Litigation (“O’Bannon” ).3 In O’Bannon, the plaintiffs allege the NCAA and its business partners made agreements that unreasonably restrained trade in violation of the Sherman Act, and the NCAA deprived former student-athletes of their right of publicity.4 The NCAA has responded to these allegations by claiming that it has never prevented former student-athletes from selling or licensing their likenesses.5 The association claims that former student-athletes have always been able to enter this market, though few, if any, have made the choice to do so.6 Keller and O’Bannon argue that commercial agreements made by the NCAA, which depressed the price paid to student-athletes for the use of their image to zero, constitute an unreasonable restraint on trade in violation of the Sherman Antitrust Act.7 They contend that the NCAA, through these agreements, has effectively gained control over the collegiate licensing market and prevented student-athletes from entering the market and negotiating a price in exchange for their “right of publicity.”8 The plaintiffs further contend that the NCAA’s profits from these agreements constitute unjust enrichment.9 In relation to their unjust enrichment claim, plaintiffs also dispute that the NCAA gains a right of publicity, or a right to control the commercial use of one’s identity, from each studentathlete upon his or her signing a 08-3a form.10 Athletes must fill out this agreement at the beginning of each year and return it to the athletic director before they can compete.11 It authorizes “the NCAA [or a third party acting on behalf of the NCAA] to use [athlete’s] name or picture to generally promote NCAA championships or other NCAA events, activities, or programs.”12 The plaintiffs contend that student athletes sign this form under duress and have never given informed consent to the commercial use of their images; therefore, this form does not give the NCAA a right of publicity.13 In support of the plaintiffs’ duress claim, it is worth noting that an athlete cannot participate in intercollegiate athletics until he or she has signed this form.14 This gives the NCAA the clear upper-hand in terms of bargaining power. For an aspiring student-athlete, the decision is simple: sign the form and play, or refuse to sign the form and say goodbye to your collegiate athletics career. In addition, Keller and O’Bannon claim that this agreement not only restricts student-athletes’ ability to use his or her name, image, or likeness for commercial purposes, but it also restricts the NCAA from doing the same.15 This restriction, plaintiffs argue, places a duty upon the NCAA not to use a student-athlete’s name, image, or likeness for commercial gain.16 If the plaintiffs prevail in this suit, they have asked that the NCAA be forced to give up profits from its use and sale of former student-athletes’ name, image, or likeness plus interest.17 Also, any right of publicity agreements between the NCAA and current student-athletes would be considered null and void.18 This dollar figure could reach the hundreds of millions.19 As of August 2012, class certification is pending, and the case is set for trial in early 2014.20 To prevail on their Section 1 Antitrust claim, Keller and O’Bannon must show that (1) there was an agreement; (2) the agreement unreasonably restrained trade under a rule of reason analysis; and (3) the restraint affected interstate commerce. 21 The second element in this test proposes an interesting evaluation. Under a rule of reason analysis, to prove that a restraint is unreasonable, plaintiffs must prove that there are significant anticompetitive effects to a relevant market.22 This proof must withstand evidence presented to the contrary that any anti-competitive effects are outweighed by pro-competitive effects upon the market. 23 In defeating a motion to dismiss, Keller and O’Bannon successfully argued that the relevant market is the “collegiate licensing market,” and that the exclusion of former student-athletes from this market has significant anti-competitive effects.24 Without NCAA restrictions, former student-athletes could place themselves into this collegiate licensing market after graduation, and allow various companies to bargain for the right to display these images. Currently, video game manufacturers such as Electronic Arts bargain with the NCAA for the rights to these images.25 EA is currently in contract, the financial terms of which were not disclosed, with the NCAA for the exclusive rights to produce all NCAA football games through 2014.26 This year, EA sold 683,625 copies at $60 per copy of NCAA Football 2013 in its first three weeks after release.27 It is not hard to see that a profit is made in this collegiate licensing market. The court, in O’Bannon, found that this market is sufficient to support a Sherman Act claim.28 In the O’Bannon case, the court’s evaluation has been restricted to a specific collegiate licensing market.29 However, a recently dismissed case, Agnew v. NCAA, brought forth a question that could impact the NCAA on a larger scale by allowing former student-athletes to sue the NCAA on antitrust grounds for restricting the supplementation of student-athletes’ income.30 In 2011, former student-athletes Joseph Agnew and Patrick Courtney brought suit against the NCAA for an alleged violation of the Sherman Act.31 After being given athletic scholarships to play football at Division I football universities, Agnew and Courtney both suffered career-ending injuries during the first few seasons of their college football careers.32 Subsequently, each athlete’s scholarship, which is only good for one year at a time due to NCAA restrictions, was not renewed for another year.33 They claimed that the NCAA restrictions prohibiting universities from offering multi-year scholarships had an anticompetitive effect on the market for student-athletes; therefore, these restrictions were in violation of the Sherman Act.34 On June 18, 2012, the U.S. Court of Appeals for the 7th Circuit affirmed a decision by a district court to dismiss the claim for failure to identify a relevant market in which the NCAA allegedly committed violations of the Sherman Act.35 Although a relevant market was not identified in the Agnew case, the court left open a question for the NCAA: Does a market for the services of student-athletes exist? For years, courts have denied student-athletes’ attempts to answer this question in the affirmative.36 Some cases, such as White v. NCAA, have been settled prior to this question being answered.37 If the answer is yes, then the NCAA could be open to antitrust liability for any significant anti-competitive restrictions on this market so long as the NCAA cannot prove that the pro-competitive effects of the restriction outweigh the anti-competitive effects. A pro-competitive effect that the NCAA has clung to in the past to shield itself from antitrust claims is that of “preserving amateurism.”38 This idea of preserving amateurism refers to the notion that the difference between a professional athlete and an amateur athlete is the presence of compensation. In recent years, the NCAA’s goal of preserving amateurism has come under fire.39 On one hand, the NCAA claims to preserve amateurism through the disallowance of any supplementation of a studentathlete’s income beyond what they are given through grants-inaid. 40 In other words, student-athletes cannot receive any more money than what is provided by their scholarships.41 The NCAA clings to the notion that this restriction is justified through an attempt to preserve amateurism and a collegiate athletics atmosphere in which athletes play for the love of the game as opposed to playing for cash. The NCAA is operating a multi-million dollar enterprise in which it makes a profit while those responsible for the income are paid nothing.42 For example, the licensing market referred to in the O’Bannon case allows the NCAA to make money from jersey sales, video games and DVDs during and after a studentathlete’s career.43 In addition, the student-athlete responsible for generating this revenue is precluded from sharing profits from sales during and after his collegiate career under the guise of preserving amateurism.44 Some surmise that the NCAA’s goal of “preserving amateurism” will be reformed in the wake of the O’Bannon case and others like it.45 Although the NCAA is designated non-profit, its executives and member institutions are profiting from studentathletes. 46 Football programs at major universities are bringing in revenue of $60 to $90 million a year.47 Turner Broadcasting and CBS recently paid the NCAA $10.8 billion for exclusive television rights to March Madness.48 College sports have become a highly-commercialized, billion-dollar industry. If “reserving amateurism” is not longer a valuable argument, the question that is raised is, should the NCAA and its member institutions pay student-athletes for their services? There are those who are vehemently opposed to paying student-athletes during or after their collegiate careers, and others who support a free-market system in which universities compete for the services of student-athletes and pay them during their collegiate career. Plaintiffs in the O’Bannon case are attempting to draw a line down the middle of these two extremes.49 They are asking that trusts be set up for current student-athletes that are accessible after their collegiate careers to compensate them for the use of their images.50 This solution attempts to fall in line with the NCAA’s goal of preserving amateurism while also compensating student-athletes for their services. Regardless of the position one takes, it is easy to see that the NCAA has many hurdles ahead. Over the past few years, the NCAA’s rules and regulations against benefits for recruits and current student-athletes have been called into question. Given the current interest, it is no surprise that the O’Bannon case has caught the attention of many collegiate sports enthusiasts. In an industry that is becoming more commercialized every day, there is no doubt that there will be changes to many aspects of the NCAA landscape. The old days of competition “for the love of the game” have been called into question at the collegiate level. A battle has begun between big business and purists. If the NCAA loses the battle, this chaste style of play will be relegated to the high school and Pop Warner levels, and a new style of collegiate athletics will emerge. NOTES 1. Michael McCann, O’Bannon Expands NCAA Lawsuit, Sports Illustrated (Sept. 1, 2012, 10:04 a.m.), http://sportsillustrated.cnn.com/2012/writers/michael_mccann/09/01/obannon-ncaa-lawsuit/index.html. 2. O’Bannon v. Nat’l Collegiate Athletics Ass’n, No. C 09–3329 CW, 2009 WL 4899217, at *1 (N.D. Cal. Dec. 11, 2009). 3. In Re Student-Athlete Name & Likeness Licensing Litig., No. C 09–1967 CW, 2010 WL 5644656, at *1 (N.D. Cal. Dec. 17, 2010). 4. Id. 5. Tom Farrey, Change in Compensation Sought, ESPN, (Sept. 2, 2012, 8:36 a.m.), http://espn.go.com/college-sports/story/_/id/8324732/new-motion-lawsuit-ncaa-change-how-athletes-compensated. 6. Id. 7. In Re Student-Athlete Name & Likeness Licensing Litig., No. C 09–1967 CW, 2010 WL 5644656, at *1 (N.D. Cal. Dec. 17, 2010). 8. See Farrey, supra note 5. 9. In Re Student-Athlete Name & Likeness Licensing Litig., No. C 09–1967 CW, 2010 WL 5644656, at *2 (N.D. Cal. Dec. 17, 2010). 10. O’Bannon v. Nat’l Collegiate Athletics Ass’n, Nos. C 09–1967 CW, C 09–3329 CW, C 09–4882 CW, 2010 WL 445190, at *8 (N.D. Cal. Feb. 8, 2010). 11. Form 08-3a Academic Year 2008-2009, ukathletics.com, http://www.ukathletics.com/doc_lib/compliance0809_sa_statement.pdf. 12. Id. 13. O’Bannon, supra note 10, at *8. 14. See Form 08-3a, supra note 11. 15. In Re Student-Athlete Name & Likeness Licensing Litigation, No. 09–cv–01967 CW, at *52 (N.D. Cal. Mar. 10, 2010), available at http://studentathletesrights.com/content_ images/file/Filed_NCAA_CAC%5B1%5D.pdf. 16. Id. at *54 17. Id. at *148 18. The NCAA Lawsuit, pbs.org, http://www.pbs.org/wgbh/pages/frontline/money-and-march-madness/ncaa-lawsuit/. 19. In Re Student-Athlete Name & Likeness Licensing Litigation, No. 09–cv–01967 CW, at *148 (N.D. Cal. Mar. 10, 2010), available at http://studentathletesrights.com/content_ images/file/Filed_NCAA_CAC%5B1%5D.pdf. 20. In Re Student-Athlete Name & Likeness Licensing Litigation, No. 09–cv–01967 CW (NC), 2012 WL 4111728, at *2 (N.D. Cal. Sept. 17, 2012). 21. See O’Bannon, supra note 10, at *3. 22. See Id. at *4. 23. See Id. 24. Id. at *5. 25. See Brendan Sinclair, EA Agrees to Give up NCAA Football Exclusivity, gamespot.com, (July 22, 2012, 12:18 a.m.), http://www.gamespot.com/news/ea-agrees-to-give-upncaa-football-exclusivity-6388207. 26. Id. 27. NCAA Football 13 — Early Sales Number Down, thegamingtailgate.com, (Aug. 9, 2012, 6 p.m.), http://www.thegamingtailgate.com/forums/content.php?618-NCAAFootball-13-Early-Sales-Numbers-Down. 28. See O’Bannon, supra note 10, at *5. 29. See Id. 30. See Agnew v. Nat’l Collegiate Athletics Ass’n, 683 F.3d 328, 334 (7th Cir. 2012). 31. Id. at 332. 32. Id. 33. Id. 34. Id. 35. Id. 36. See Daniel E. Lazaroff, The NCAA in Its Second Century: Defender of Amateurism or Antitrust Recidivist?, 86 Or. L. Rev. 329 (2007). 37. Thomas A. Baker III, Joel G. Maxcy, Cyntrice Thomas, White v. NCAA: A Chink in the Antitrust Armor, 21 J. Legal Aspects Sport 75 (2011). 38. Justice v. Nat’l Collegiate Athletic Ass’n, 577 F. Supp. 356, 383 (D. Ariz. 1983). 39. See Lazaroff, supra note 36. 40. See 2012-13 NCAA Division I Manual (2012), art. 2.9, available at http://www.ncaa publications.com/p-4284-2012-2013-ncaa-division-i-manual-available-for-order-now-for-delivery-after-aug-1.aspx. 41. See Id. 42. See Wolverton, infra note 49. 43. O’Bannon v. Nat’l Collegiate Athletics Ass’n, No. C 09–3329 CW, 2009 WL 4899217, at *1 (N.D. Cal. Dec. 11, 2009). 44. Id. 45. See McCann, supra note 1. 46. See NCAA Revenue Breakdown, ncaa.org, (Jan. 17, 2012), http://www.ncaa.org/wps/wcm/connect/public/NCAA/Finances/Revenue. 47. Jane Donahoe, Combined Revenue of 15 Richest College Football Programs Tops $1 Billion, bizjournals.com, (Aug. 29, 2012, 1:57 p.m.), http://www.bizjournals.com/memphis/news/2012/08/29/combined-revenue-of-15-richest-college.html?s=image_gallery. 48. Brad Wolverton, NCAA Agrees to $10.8-Billion Deal to Broadcast Its Men’s Basketball Tournament, chronicle.com, (April 22, 2010), http://chronicle.com/article/NCAA-Signs-108-Billion-De/65219/. 49. See McCann, supra note 1. 50. Id. TRISTAN GRIFFIN is in his second year at The University of Texas School of Law and serves as symposium editor for Texas Review of Entertainment and Sports Law. He earned his bachelor’s degree from Texas Tech University in 2011.
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