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The Rapidly Changing Landscape of College Athletics – Pay-for-Play on the Horizon?

Posted by Timothy Medcoff | Aug 12, 2014 | 0 Comments

Recent months have set the wheels in motion to usher in a seemingly new era in college sports.  Recent legal decisions and pending litigation likely will produce an across-the-board restructuring of college athletics as we know it.

First, in a potentially game-changing moment for college athletics, the Chicago district of the National Labor Relations Board ruled that Northwestern football players qualify as employees of the university and can unionize.  NLRB regional director Peter Sung Ohr cited the players' time commitment to their sport and the fact that their scholarships were tied directly to their performance on the field as reasons for granting them union rights.  The decision further denounced the NCAA's core ideology – that college athletes are amateurs, compensated by scholarships and education alone.  Ohr wrote in his ruling that the players "fall squarely within the [National Labor Relations] Act's broad definition of 'employee' when one considers the common law definition of 'employee.'"

Subsequently, in early August, a California Federal District Court issued a 99-page ruling in O'Bannon v. NCAA, that the NCAA must eliminate its rules against payments to college athletes for commercial use of their names, images and likenesses. The NCAA and its lawyers claimed that the NCAA was not a monopoly, that it restrictions on payments to college athletes were reasonable and that its rules were based on the organization's core principle of amateurism. On these three claims, the NCAA went 0-for-3.  Indeed, the Court found the NCAA's historical account of its commitment to amateurism "unpersuasive" and that the record "reveals that the NCAA has revised its rules governing student-athlete compensation numerous times over the years, sometimes in significant and contradictory ways."

The decision held short of turning college sports into a full-fledged free-market by capping compensation at $5,000.00 per year, paid only after the student-athlete leaves school.  The ruling also held – just one day after the NCAA voted to do the same – that colleges can offer student-athletes the “full cost of attendance” rather than a tuition-only scholarship.  SEC Commissioner Mike Slive described these developments as college athletics “going through a historic evolution.”

O'Bannon is a significant ruling that could haunt the NCAA in other litigation.  Attorneys for other players challenging other NCAA rules will argue that rulings in O'Bannon will apply to all situations. In what has become known as the "Kessler case," for example, attorney Jeffrey Kessler and his player-clients will assert now that the big antitrust issues have been decided in O'Bannon, that the court is compelled to “strike down permanently the restrictions that prevent athletes in Division I basketball and the top tier of college football from being fairly compensated for the billions of dollars in revenues that they help generate.”  Thus, the lawsuit Kessler filed is broader in scope than O'Bannon. It makes no claim on specific revenues, only that athletes should be treated like other students, who are not subject to educational or financial compensation caps by agreement among universities. High-value students in areas like physics receive whatever the market will bear, in some cases a full scholarship plus cash.  "We're looking to change the system. That's the main goal," Kessler said. "We want the market for players to emerge."

The all-out litigation blitz on the NCAA continued shortly after the O'Bannon decision was issued.  The NCAA and its major college conferences have been sued by a Minneapolis law firm which claims they have violated antitrust laws by pocketing billions of dollars that student-athletes helped generate. The suit contends that playing revenue-generating sports such as college football and basketball is a full-time job, but scholarships fall short of accounting for the full cost of school attendance.  The suit seeks to be certified as a class-action suit and says Derek Thompson, a member of the University of North Texas football team from 2009 to 2013, is the plaintiff.

Farhang & Medcoff, PLLC has extensive experience in labor and employment matters, including special expertise in union disputes and collective bargaining issues.  If you have any legal needs related to your business, give Farhang & Medcoff, PLLC a call – because we'll be there, protecting your interests.

About the Author

Timothy Medcoff

Tim Medcoff is an AV Rated attorney who defends clients in the areas of product liability...

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