College Guide


May 06, 2013 11:58 AM The Lawsuit That Could Bring Down the NCAA

By Jonathan Mahler

The storm that’s slowly rolling toward Indianapolis quietly gained strength this week with the filing of several devastating documents in a federal court in California. If it stays on course, it’s going to hit with biblical force, reducing the National Collegiate Athletic Association to a heap of rubble.

This storm is also known as O’Bannon v. NCAA. It’s an antitrust lawsuit filed in 2009 by former UCLA All-American basketball player Ed O’Bannon and a handful of other ex-college athletes, who don’t think the NCAA should be profiting from their names and images without sharing the royalty payments.

In their latest filing, O’Bannon’s lawyers argue that the case deserves class-action status. If their request is granted, the NCAA would be liable for claims brought not just by the plaintiffs but also by all former athletes. Anyone who has ever played a Division I college sport would instantly be suing for damages for every instance in which his or her image was used in a video game, highlight reel, broadcast or rebroadcast.

That could get pretty expensive for the NCAA. But if the case were just about a few billion dollars, the association would have settled by now. It hasn’t because O’Bannon and his lawyers are also asking for something else: They want all current and future college athletes to be able to make licensing deals of their own. It’s short yardage from there to the NCAA’s doomsday scenario: schools bidding for the services of student- athletes.

Idle Threats

The NCAA’s lawyers, of course, are trying everything they can think of to stop the case from earning class-action status. They’re so desperate that they’re resorted to idle threats, enlisting Big Ten commissioner Jim Delany to file a declaration stating that if the O’Bannon case were to result in student- athletes getting paid, his conference’s schools would probably opt out and move down to Division III. (Early line on the upcoming Amherst-Ohio State game: Buckeyes by 117 1/2.)

Delany’s statement says pretty much everything you need to know about the NCAA’s legal strategy. It’s called — and this is not a legal term — fear-mongering.

The world of college sports would be radically different, the NCAA says — in ways we can’t even begin to predict! — if those responsible for making it a multibillion-dollar business (that is, the athletes) were entitled to receive some monetary compensation for their efforts. This is the same sort of doomsaying that Major League Baseball engaged in during its battle against free agency in 1970, when it warned that without the reserve clause, “professional baseball would simply cease to exist.” For that matter, every time an amateur sports event “goes pro” — whether it’s the Olympics, or golf and tennis’s majors — it has been preceded by predictions of disaster.

O’Bannon’s response to the NCAA may be the most powerful case ever assembled against the association’s propaganda machine. Among other things, it systematically dismantles the NCAA’s argument that the vast majority of its members lose money on sports. In fact, most Division I schools are not caught in an expensive arms race for coaches and athletic facilities. They have simply obscured the profitability of their football and basketball programs with accounting tricks, such as shifting revenue from sports concessions to the food service budget.

The NCAA advances these false claims of poverty so it can argue that its member schools can’t possibly afford to spend more money on sports, much less pay their athletes. O’Bannon’s lawyers put the lie to this, too, invoking foundational truths of economics dating to Adam Smith and David Ricardo: “Redistributing rents does not change true economic costs. It simply takes money from one person or group and shifts it to another.” Translation: Paying athletes wouldn’t result in schools spending additional money on sports. They would just spend less of it on coaches and facilities and more on students.

Star Recruits

In truth, if the NCAA’s cartel were finally broken, the college-sports world of tomorrow would look … well, it would look a lot like the college-sports world of today. More student- athletes might decide to stay in school rather than gambling on the draft (a bad thing?). Maybe some second-tier schools would take a run at joining the first tier — not by shelling out $100 million for a new field house, but by spending a lot less on a few five-star recruits.

And that’s about the extent of it. The same schools that invest heavily in their sports teams now would continue to do so, much as the top recruits would continue to gravitate toward the biggest, richest programs. Most of all, fans would continue to watch the games.

The NCAA’s lawyers have one final chance to respond to O’Bannon’s request that the case be certified as a class action before the judge rules in June. Whatever happens from here, the O’Bannon case has already performed a valuable service: It has exposed a system whose sole purpose is to deny the value of talented athletes. That system and its overlord — the NCAA — both deserve to die.


  • hornblower on May 06, 2013 7:24 PM:

    Why colleges should be subsidizing athletes in non-revenue sports is beyond me. The cost of golf, baseball, volleyball etc. is being borne by fee paying students who have no interest in these sports and are already paying tuition that is too high. Football and basketball bring in money and the players should get their share. Other sports should pay their own way.

  • Walker on May 07, 2013 12:45 AM:

    I still cannot believe the NCAA thought it was a good idea to allow a collegiate-level game from EA sports. If all we were talking about were the TV revenue for games played by college teams, it is unlikely it would have gotten this far. The schools get part of the TV revenue, even if the players do not, and it is possible to make some reasonable-sounding (though perhaps not reasonable) arguments for why this is enough. Theoretically, money to the school helps the students.

    But using individual player likenesses in a video game, where you have completely disassociated the likeness from the actual player? That was a bridge too far, and it is amazing that any legal counsel thought this was remotely a good idea.

  • Matt on May 08, 2013 2:58 AM:

    Walker: I still cannot believe the NCAA thought it was a good idea to allow a collegiate-level game from EA sports... But using individual player likenesses in a video game, where you have completely disassociated the likeness from the actual player? That was a bridge too far, and it is amazing that any legal counsel thought this was remotely a good idea.

    That's an excellent point, and I'm not sure there's a clever explanation, but there might be a very simple and timeworn one: hubris. Who was going to stop them? Congress wouldn't dare regulate them. The schools are all willing partners. For every critical journalist like Joe Nocera, there are entire networks like ESPN who would defend them without even being asked to.

    And as for a student, well, the NCAA had already gotten away with doing incredibly malicious things to students who weren't even trying to challenge them. They must have figured that the only students with a remote chance of drawing even a little blood would be the ones most wholly co-opted by the scam--the marquee athletes passing through en route to first-round draft picks and million-dollar salaries.

    I mean, at any given big-sport university you'll find hundreds of smart, prickly, tenured faculty members who loathe the NCAA. None of them have ever so much as landed a punch. So where was the harm?

    Of course, it's only hubris if it actually leads to their downfall. So we'll see.

  • Ken on May 08, 2013 2:57 PM:

    The myth of football actually being a money maker rises its mythological head again.
    Study after study has shown that football on the college level is a financially a dead loser.

    There are about 3 or 4 schools that consitently make money because of history and drw ( i.e. Notre Dame) and then every year there are about 3 schools who win a lottery by getting into a big bowl payday. Otherwise the other 95+% rely on subsidies to field a team.

    Student "athletic" fees are a football tax imposed on all students basically to subsidize the life styles of the free loaders who get better food, better accomadations, special acedemic considerations and a certain immunity from standard regulations and laws then the students who are footing the bill for those luxuries.

    Michagan State, Ohio State are among the schools that regularly subsidize a program that consistently loses money.

    The proof of the economic failure of football is the lack of a semi pro farm league. If there was money to be made why hasn't some one tried to do so?

    The Pro's are benefiting on the suckers to subsidize their player development through welfare payments that are the athletic subsidies that students, and in the case of public universities, taxpayers pay.

  • Mark on May 08, 2013 10:10 PM:

    So if the Big 10 moves to Div III, they will have to play in a play-off every year. What about Delany's claim that a play-off would interrupt students-athletes study time?