O'Bannon compensation case begins, with future of NCAA in the balance

The O'Bannon case charges that the NCAA violates antitrust laws by conspiring to deny athletes compensation for their name, image, or likeness. The aim is to dismantle amateurism.

After a half decade of legal maneuverings, a lawsuit that some suggest could change the face of college sports is finally underway in a federal courthouse in downtown Oakland, Calif.

Five years ago, former University of California at Los Angeles basketball star Ed O’Bannon launched an antitrust case against the National Collegiate Athletic Association. The aim was to allow college athletes to be compensated for the use of their image, name, or likeness by the NCAA

As the case has gathered momentum, additional plaintiffs have joined the class, including both football and basketball players.

Legal and industry analysts say the antitrust trial unfolding on the fourth floor courtroom before Judge Claudia Ann Wilken has the potential to unwind the century-old NCAA business model as it currently exists.

“If the courts say these guys are entitled to make money for the use of their image, likeness, or name, then what else are they entitled to?” asks David Hollander, professor at the New York University Tisch Center for Hospitality, Tourism, and Sports Management.

An important portion of the original suit has recently concluded. Video game giant Electronic Arts (EA) recently settled with the players for $40 million, an award that will be divided among former players as compensation for the use of their likenesses after they were no longer student-athletes.

But the original antitrust action will proceed. It is attempting to prove that the NCAA and its partners violate the Sherman Antitrust Act by limiting competition and restraining trade – in this case, depriving student athletes of compensation for use of their names, images, and likenesses in video games, live or rebroadcast television programs, and video clips.

The NCAA has fought all attempts to pay student athletes for their performance, claiming that amateurism is foundational to college sports. “The collegiate model of sports provides hundreds of thousands of student-athletes with unmatched opportunities for education, growth, mentoring, and future success,” NCAA Chief Legal Officer Donald Remy said.

But critics suggest that the notion amateurism no longer reflects the realities of a multibillion dollar business. It’s time for the NCAA to pay those who produce the product, they say. 

College athletes are forced to sign releases concerning the use of their name and likeness or they are not allowed to compete, says attorney Richard Lee.   

“This is absurd and smacks of forced indentured servitude,” he says via e-mail. “The NCAA has gotten away with it for decades, crying poverty and hiding under the guise of academia and the bogus promise of a free college education which often fails top athletes.”

If O'Bannon wins, “the after-effects could be enormous,” adds Mr. Lee, a partner at the law firm Salisian Lee in Los Angeles. “The same rules will then apply to college athletes as to everyone else when it comes to marketing, merchandising, and monetizing names and likenesses: Individuals will get to negotiate and see a return on what their image brings in, when it is put on the cover of a video game or jersey or advertisement.”

He adds: “that's the American way. Free enterprise."