The U.S. Ninth Circuit Court of Appeals ruled Wednesday that the National Collegiate Athletic Association (NCAA) may restrict colleges from compensating athletes beyond the cost of attendance.
The decision is a crushing defeat for the effort to unionize and pay college athletes as professionals.
With the NCAA. generating over $1 billion in revenue from TV broadcast deals and merchandise sales, plus a surplus of $708 million at the end of 2014, America’s most liberal federal appellate court ruled that limiting student compensation to the “cost of attendance” in exchange for the commercial use of the players’ names, images and likenesses was legally sufficient.
The case, referred to as O’Bannon v. NCAA, began in 2009 when former UCLA basketball star Ed O’Bannon sued the NCAA for uncompensated use of his name and image in TV and video games. The suit, which became a class action, argued that players must sign waivers to participate on NCAA teams give the schools and NCAA billions of dollars in value for the unlimited rights to use their “likenesses.”
Lawyers for both sides told analysts that in addition to tuition, books, room and board; the “cost of attendance” may also include travel to and from home and the paying of such expenses as monthly cell-phone bills.
Although the decision does uphold an August District Court ruling that the NCAA rules have been too restrictive in maintaining amateurism, the three judge panel dumped U.S. District Judge Claudia Wilken’s proposal that the NCAA allow colleges to pay athletes $5,000 per year in deferred compensation. The court declared: “Today, we reaffirm that N.C.A.A. regulations are subject to antitrust scrutiny and must be tested in the crucible of the Rule of Reason.”
The court added that “the N.C.A.A.’s rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market. The Rule of Reason requires that the N.C.A.A. permit its schools to provide up to the cost of attendance to their student-athletes. It does not require more.”
The decision was not expected and most observers though that the days of the “amateur model” of the student-athlete had come to an end.
NCAA President, Mark Emmert, on a conference call after the decision, reportedly said, “I was particularly pleased that the court recognized the fundamental difference between providing support for student-athletes that’s education-related and to use their words, ‘cash sums’ that were untethered to educational expenses,” according to The Recorder.
The victory for the NCAA and the schools follows last month’s victory when the National Labor Relations Board overturned a regional director’s finding that Northwestern football players are employees who may unionize under federal labor law.