There is an old saying in business: “Pigs get fat, hogs get slaughtered.” U.S. District Judge Claudia Wilken’s courtroom may be remembered as the NCAA’s abattoir.
Judge Wilken ruled Friday in favor of the plaintiffs in Ed O’Bannon v. NCAA. In a 99-page opinion, she struck down nearly all of the NCAA’s arguments supporting its stance that its ban on compensating student athletes for use of their names or likenesses did not violate antitrust rules. Nor did she find merit in the organization’s arguments about the importance of preserving amateurism; Wilken observed that the concept was one the NCAA had been historically quick to modify or backpedal from when it proved inconvenient.
The decision does not mean players will soon be paid for taking to the college football field or basketball court, but that is mainly because that sort of compensation was not the issue in the case. For now, the judge’s ruling simply means schools cannot exploit their student athletes’ names and likenesses without sharing the money with those student athletes.
Only a business model as outlandish as that of the NCAA could have generated a five-year court case over such a fundamental matter of fairness, not to mention intellectual property rights and antitrust law.
This outcome cannot come as a surprise to many, despite the NCAA’s attempts to improve its legal position. Steve Spurrier, South Carolina’s football coach, said when asked about the ruling, “I think we all thought they would win, didn’t we?” He added, “They had a good case.”
Nor do I think the decision is likely to be thrown out now that it has been issued. Though Wilken’s ruling is subject to appeal, and potentially to Congressional action to overturn or amend it, I don’t see much likelihood of either happening. This is a story with clear-cut good guys and bad guys, and the university pooh-bahs are not the good guys.
The colleges, too, are resigned to the inevitable. They know change is coming; they just want to try to steer it. That is the major reason for the rules change that now creates an official category of NCAA super-conferences, whose members are allowed to offer benefits to student athletes that are forbidden in the rest of the world of college sports. The mere act of writing these words drives home the realization that this new system is just as absurd as the NCAA’s soon-to-be-extinct business model. It also proves just how right Judge Wilken was when she scoffed at the NCAA’s argument that compensating athletes for their likenesses would undermine competitive balance. There is no balance to undermine.
It may very well be true that many schools have neither money nor interest to pay for top athletic talent. Those schools are not going to be competitive with the powerhouse campuses where big-time college sports is a multi-billion-dollar industry, but they are not competitive now. And they will simply proceed on the premise that on their campuses, academics must dominate and sports will be nothing more than a pleasant diversion, rather than a form of religion.
It is not clear that college athletes will, on average, be better off under a new system in which they will ultimately have a chance to be paid. Most of them probably won’t be paid, or at least won’t be paid very much. A few stars will do much better, of course, but if some schools drop out of the college big leagues because they can’t compete in them, the overall amount and value of scholarships and other remuneration may not go up much, if at all. Schools might even decide to cut back on nonrevenue sports that currently provide scholarships funded, indirectly, by football and basketball.
Making college athletes better off as a group isn’t the point, though. Individual college athletes, like all of us, own their image and their labor, and have the right to sell those assets in a free marketplace. It has never been fair to force star athletes to subsidize their teammates, their schoolmates and their schools by working for nothing but a scholarship (of questionable economic value, in many cases). Now, Judge Wilken has ruled that it has never been legal, either.
Despite all the time it took to litigate, this case was a layup, and the NCAA is going to lose this contest in a blowout.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book
The High Achiever’s Guide To Wealth.
Posted by Larry M. Elkin, CPA, CFP®
photo by Tom Woodward
There is an old saying in business: “Pigs get fat, hogs get slaughtered.” U.S. District Judge Claudia Wilken’s courtroom may be remembered as the NCAA’s abattoir.
Judge Wilken ruled Friday in favor of the plaintiffs in Ed O’Bannon v. NCAA. In a 99-page opinion, she struck down nearly all of the NCAA’s arguments supporting its stance that its ban on compensating student athletes for use of their names or likenesses did not violate antitrust rules. Nor did she find merit in the organization’s arguments about the importance of preserving amateurism; Wilken observed that the concept was one the NCAA had been historically quick to modify or backpedal from when it proved inconvenient.
The decision does not mean players will soon be paid for taking to the college football field or basketball court, but that is mainly because that sort of compensation was not the issue in the case. For now, the judge’s ruling simply means schools cannot exploit their student athletes’ names and likenesses without sharing the money with those student athletes.
Only a business model as outlandish as that of the NCAA could have generated a five-year court case over such a fundamental matter of fairness, not to mention intellectual property rights and antitrust law.
This outcome cannot come as a surprise to many, despite the NCAA’s attempts to improve its legal position. Steve Spurrier, South Carolina’s football coach, said when asked about the ruling, “I think we all thought they would win, didn’t we?” He added, “They had a good case.”
Nor do I think the decision is likely to be thrown out now that it has been issued. Though Wilken’s ruling is subject to appeal, and potentially to Congressional action to overturn or amend it, I don’t see much likelihood of either happening. This is a story with clear-cut good guys and bad guys, and the university pooh-bahs are not the good guys.
The colleges, too, are resigned to the inevitable. They know change is coming; they just want to try to steer it. That is the major reason for the rules change that now creates an official category of NCAA super-conferences, whose members are allowed to offer benefits to student athletes that are forbidden in the rest of the world of college sports. The mere act of writing these words drives home the realization that this new system is just as absurd as the NCAA’s soon-to-be-extinct business model. It also proves just how right Judge Wilken was when she scoffed at the NCAA’s argument that compensating athletes for their likenesses would undermine competitive balance. There is no balance to undermine.
It may very well be true that many schools have neither money nor interest to pay for top athletic talent. Those schools are not going to be competitive with the powerhouse campuses where big-time college sports is a multi-billion-dollar industry, but they are not competitive now. And they will simply proceed on the premise that on their campuses, academics must dominate and sports will be nothing more than a pleasant diversion, rather than a form of religion.
It is not clear that college athletes will, on average, be better off under a new system in which they will ultimately have a chance to be paid. Most of them probably won’t be paid, or at least won’t be paid very much. A few stars will do much better, of course, but if some schools drop out of the college big leagues because they can’t compete in them, the overall amount and value of scholarships and other remuneration may not go up much, if at all. Schools might even decide to cut back on nonrevenue sports that currently provide scholarships funded, indirectly, by football and basketball.
Making college athletes better off as a group isn’t the point, though. Individual college athletes, like all of us, own their image and their labor, and have the right to sell those assets in a free marketplace. It has never been fair to force star athletes to subsidize their teammates, their schoolmates and their schools by working for nothing but a scholarship (of questionable economic value, in many cases). Now, Judge Wilken has ruled that it has never been legal, either.
Despite all the time it took to litigate, this case was a layup, and the NCAA is going to lose this contest in a blowout.
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