Appeals Court Rules that Colleges Don’t Need to Pay Athletes More than Cost of Attending College

The 9th Circuit Court of Appeals ruled in favor of the NCAA in an opinion handed down on Wednesday. Ruling on the appeal in O’Bannon v. NCAA, the appellate court reversed part of the district court’s ruling and held that the NCAA is not required to compensate college athletes beyond the cost of attending college. (LBN previously reported on the decision in the district court.)

The ruling was not a clear-cut win for the NCAA, however. The appellate court expressly held that the NCAA’s amateurism rules “are not exempt from antitrust scrutiny.” However, the court ruled that there should be no compensation beyond the cost of college attendance, ruling against a $5,000 annual deferred compensation plan that had been part of the ruling by the district court. In a statement on the NCAA’s website, its president Mark Emmert says that “Since Aug. 1, the NCAA has allowed member schools to provide up to full cost of attendance; however, we disagree that it should be mandated by the courts.”

The lawsuit was filed by Ed O’Bannon, a former basketball player for UCLA, who realized that his likeness was being used in a basketball video game produced by Electronic Arts under a licensing agreement with the NCAA. O’Bannon argued that it was unfair for the NCAA to sell the rights to his likeness but deny him access to any of the money it made on the sale. (The appellate court opinion discusses name, image, and likeness, or NIL, sales.) The district court’s decision permitted athletes to have access to those sales by way of trust funds set up for them. The appellate court ruled that getting paid for college attendance costs was a fair tradeoff for athletes to cede NIL proceeds to the NCAA.

In the final paragraph of its opinion, the appellate court said that “the NCAA is not above the antitrust laws, and courts cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules.” The ruling would seem to leave the door open for further litigation against the NCAA. Look for future LBN reports on this case.

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