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Ed O'Bannon Antitrust Lawsuit

By Matthew Sledzinski

Under current National Collegiate Athletic Association (NCAA) rules and regulations, college student-athletes are not entitled to financial compensation for the NCAA's commercial use of their names, images or likeness via jersey sales, live television, video games and other merchandise. Ed O'Bannon, former UCLA basketball star, is leading an ongoing antitrust class action lawsuit in California challenging the NCAA's use of the images of its current and former athletes for commercial purposes. http://www.si.com/college-football/2013/06/19/ed-obannon-ncaa-hearing. The NCAA argues that its restraints on student-athletes' names and likeness are imperative to maintaining a competitive balance in college sports, and that if these restraints were overturned, it would financially destroy college sports for the majority of student-athletes. http://www.lawinsport.com/articles/regulation-a-governance/item/expansion-of-o-bannon-a-threat-to-the-ncaa

The original defendants in this suit, alongside the NCAA, included popular video game company Electronic Arts (EA) Sports and the Collegiate Licensing Company (CLC). Ed O'Bannon first filed suit in 2009, alleging violations of the Sherman Antitrust Act and the deprivation of his right of publicity by the NCAA and CLC. He noticed that an EA sports college basketball videogame, under contract with the NCAA, allowed its users to play with his classic 1995 UCLA championship team. The team featured a power forward that matched O'Bannon's height, weight, bald head, skin tone, jersey number and left-handed shot. http://espn.go.com/espn/otl/story/_/id/11255945/washington-attorney-michael-hausfeld-most-powerful-man-sports. EA sports and CLC settled their case for nearly $40 million. This money will be disbursed to nearly 100,000 current and former athletes whose likenesses had appeared in football and basketball video games since 2003. EA Sports has since ceased its annual release of both NCAA football and basketball games.

The O'Bannon class action plaintiffs continued their antitrust suit against the NCAA and gained momentum with the addition of basketball icons Oscar Robertson and Bill Russell. The class was certified by Judge Claudia Wilken to include current men's Division 1 football and basketball players. The inclusion of current student-athletes opened the door for the trust to claim a stake of the revenue derived from live event broadcasts and their billion-dollar television contracts in addition to jersey, merchandise and other commercial components containing the image or likeness of student-athletes. http://espn.go.com/espn/otl/story/_/id/8895337/judge-rules-ncaa-athletes-legally-pursue-television-money. Another major component of the suit revolves around NCAA Form 08-3a. Each year every athlete must sign this form, which authorizes the NCAA to enter into licensing agreements with companies that use student images perpetually. O'Bannonespn.go.com/espn/otl/story/_/id/11045682/ed-obannon-lawsuit-ncaa-paying-players-set-begin.

Unlike the Northwestern suit against the NCAA regarding athletes who wish to form a union and receive salaries, this suit is not about seeking labor payment for athletes as employees of the NCAA. Rather, the O'Bannon proposal is the establishment of a temporary trust for the licensing revenue earned by student-athletes. Players would be entitled to a portion of television rights deals, videogame sales, jersey and merchandise sales that the NCAA and universities currently receive. The trust would allow student-athletes to receive their money upon completion of their collegiate careers. http://www.si.com/college-football/2014/06/30/obannon-ncaa-antitrust-case-next-steps. The argument is that student-athletes would bypass NCAA regulations restricting compensation as amateurs, but be entitled to the profits they directly earned through their likenesses upon graduation. The inclusion of current players opens the door to tap the billion dollar television contract market that comprises various companies across the NCAA. The NCAA argues that an imbalance among conferences and universities would be created as power conference schools receive the vast majority of national television coverage and media attention. It fears that top tier talent would not be as diluted among universities, as athletes would flock to a small handful of schools to receive more exposure to receive compensation off their names and likenesses. Currently the Big Ten, ACC and SEC all have created their own conference television network. The plaintiffs argue that a competitive imbalance would not be created, because schools with more resources and a winning tradition already dominate the recruiting of top talent athletes. http://espn.go.com/espn/otl/story/_/id/11131166/all-need-know-ed-obannon-v-ncaa-trial.

Additionally, the NCAA argues the element of "student" in student-athlete. As this compensation would apply only to Division 1 male basketball and football players, other student-athletes would be adversely affected. The NCAA fears that if basketball and football players were allowed to be compensated, they would be unfairly distinguished from their peers and isolated from the values and benefits of their academic programs. http://espn.go.com/espn/otl/story/_/id/11131166/all-need-know-ed-obannon-v-ncaa-trial.

The O'Bannon camp argues that this NCAA landscape is not the same one that existed at the creation of these regulations. At stake is millions, if not billions of dollars. The NCAA and present day universities bring in millions upon millions of dollars in revenue every year via ticket sales, merchandise and major deals with networks, such as ESPN and CBS. The universities benefit from the names, images and likenesses of the players by paying out million dollar salaries to head coaches and building lavish stadium/training facilities while the student-athletes receive no compensation.

In August 2014, Judge Wilken ruled against the NCAA and in favor of the ED O'Bannon class. A prolonged appeals process of the ruling is currently being filed and litigation over this matter is likely to drag out for months, as this contentious issue is far from settled.

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This page contains a single entry from the blog posted on February 10, 2015 6:23 PM.

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