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NCAA Punts On Its Opening Drive

Football teams often open a game with a series of plays scripted by their coaches. The objective is not only to score, but also to establish strategic advantages such as field position, possession time and a look at the other side’s strengths and weaknesses.

Sometimes it works. Sometimes it doesn’t. A team that gains little ground on its first three plays usually gives up the ball by punting it to the other side. In football, a punt is a sort of strategic retreat. You surrender possession sooner than the rules require (you could instead make a fourth try to gain the necessary 10 yards to keep the ball), but you try to drive the opposition back in the hope that you will have better luck the next time you go on offense.

Though pigskins won’t fly in games that count until late summer, the NCAA is playing what might be the Super Bowl of college athletics in a California courtroom right now. U.S. District Judge Claudia Wilken is presiding over a class-action antitrust lawsuit in which former UCLA basketball star Ed O’Bannon contends that the NCAA and its member schools illegally collude to deprive athletes of the economic fruits of their labors.

Just as the trial was getting underway Monday, the NCAA announced a $20 million settlement in a separate case involving the use of player likenesses in video games produced by Electronic Arts, which licenses the rights from the NCAA. Until Monday, the NCAA had contended that cash payments - even by third parties - to college athletes would upend the solar system and risk a collision between matter and antimatter. Suddenly, however, the association is willing to cut checks from its own bank account to former Division I men’s basketball players and Bowl Championship Series football players.

Two weeks earlier, EA and another company had agreed to pay $40 million to the same groups of athletes. The Wall Street Journal reported that this settlement will pay 100,000 players amounts ranging from $48 to $951 for the previously uncompensated use of their likenesses. Last fall, the NCAA sued Electronic Arts to stop that settlement from going forward. Having failed in that effort, the association instead pulled out its own checkbook.

This legal back-and-forth is all about field position in the O’Bannon contest. To win their antitrust case, the former college players must prove that schools colluded to deprive them of an economic market without fair compensation. The schools, which reap billions from big-ticket sports but prohibit players from receiving anything more than scholarships and fee waivers, argue that no such market exists.

Electronic Arts video games, however, are a big business. EA executives were expected to testify before Wilken that they would have been happy to pay players for the rights to their names and images, but that the NCAA rules prohibited them from doing so.

So the NCAA’s $20 million punt is best understood as a strategy to take EA out of O’Bannon’s game. Since players will have been compensated by EA and the NCAA via the settlements, the association will argue to Wilken that there is nothing further for her to consider regarding the players and the video game market. The play is dead, according to the NCAA.

I doubt Wilken will see it that way, and since she is the referee, she will decide when to blow the whistle. Players who could have individually or collectively negotiated fair compensation for their likenesses back when they were on TV and in the sports pages were forced to go to court and negotiate settlements against well-capitalized adversaries years after their college careers ended. That’s not what we might call competitive balance.

The more the NCAA engages in its smash-mouth tactics to deny players a share of the revenue they generate on and off the field, the more it looks like the anti-competitive, collusive monopoly that it is.

A well-placed punt can turn a game around, but victories are seldom achieved through strategic retreat. The reality is that given the facts and under the law, the players have a stronger case than does the NCAA. Having failed to stop the contest from happening at all, the NCAA’s behavior increasingly smacks of the desperation of a losing team that is trying to escape its fate, as time runs out.

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 most recent book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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