Judge Claudia Wilken of the Northern District of California issued a 99-page opinion and injunction, stating that the NCAA can no longer stop schools from giving athletes money based on their names, images and likenesses (NIL), and it is not allowed to impose a salary cap below $5,000. That money can be put in a trust.
However, the NCAA scored a major win in that it can still stop athletes from marketing themselves, since Wilken claimed that is a legitimate pro-competitive rule.
The injunction, prompted by the Ed O'Bannon suit, is perhaps the most important ruling in the history of the NCAA, as it will put a stop to the organization's refusal to allow athletes to make any money.
So what's next, and what exactly does this mean? It certainly isn't over, but here's a look at what happened, how the two major parts of the case played out, and what the future of college sports might hold.
Compensation limits of athletes
The plaintiffs argued that the NCAA was illegally keeping prices low by forcing all of its schools to offer the same compensation packages. Compensation limits get to the heart of the collusion issue. Even schools that want to pay athletes more are not allowed to, in order to keep labor prices low throughout the industry. This limit, Wilken ruled, is a form of collusion and allows the NCAA to operate as a cartel.
The success of this argument became a little dicey at the end of the trial, because Wilken seemed unclear what the plaintiffs were fighting for, and specifically why they chose to focus on NIL rights (meaning the rights players have to a portion of the money that is earned from schools using their images on TV and in promotional materials).
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In many leagues — the Olympics were used as an example, too — athletes aren't specifically given a percentage of NIL rights, but the teams/leagues are allowed to compensate players, and NIL rights are typically included (and athletes can get more money if their images are promoted more). Wilken's question was, why not just ask for athletes to get paid more, rather than worry about TV rights?
However, the NIL rights ended up being the entire focus of the ruling. While schools will not be forced to pay athletes a certain amount of money above the full cost of attendance — that nuance could have a major impact on smaller schools with tighter budgets — the NCAA cannot stop them from doing so below $5,000.
Rather than allowing the individual conferences or schools to set the cap on wages, Wilken placed her own cap on the market. That's a strange decision, since it's still restrictive and doesn't allow for competition, but there's a chance that number could change and it could be negotiated on an NCAA-wide level by a potential players union. And that's also what makes this such an NCAA-friendly ruling.
Wilken didn't open up the market. She placed her own restrictive rules on the NCAA. That's a loss for people who wanted to see the market determine how much athletes are worth.
How will the rules change?
Here's a breakdown:
- If a school wants to offer its recruits $5,000 per year out of a trust fund, the NCAA can't stop them from doing that. However, the NCAA can require that the school has to pay all of its recruits the same amount, which is a big blow to middle-of-the-road schools, who could have potentially placed more value on players than the top schools, and thus saved up to offer those players more money.
- The NCAA can't stop schools from offer full cost of attendance scholarships.
- Athletes still can't market themselves. Wilken wrote that those rules are pro-competitive.
If there's a big winner here, it's the blueblood schools, who have the money to pay every recruit in their classes $5,000 per year. Middle of the road schools, who could have offered different amounts based on how much they value recruits — offers that could have stacked up against the bigger schools — are hurt, as are schools that may not be able to afford offering full cost of attendance scholarships, though that was bound to happen very soon due to autonomy.
The biggest winner? The NCAA. They were already likely to give students NIL money in the future, and now they don't have to open up the market. This is the best scenario it could have possibly hoped for. However, you could also classify video game players as the biggest winners. Since Judge Wilken ruled restrictions on athletes being paid for the use of their likenesses is illegal, that means athletes could theoretically be paid for their appearances in video games, and EA said that it would like to bring back the game if it can pay players.
We already knew that both sides would appeal this ruling as far as they possibly could, and the NCAA used the object-to-everything strategy throughout the trial to make sure it had a case for appeal. No new evidence can be introduced, but the NCAA can claim that the judge allowed or didn't allow some things she should have.
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The governing body is tweaking its rules to give more power to the five big conferences, but outside forces might still do more to change college sports.
Even though the NCAA really won here, it probably won't see it that way and will likely appeal. The organization would like to bring this to the Supreme Court, argue that it needs football to pay for Title IX sports, and say that it is really broke when you consider all sports to be within the relevant market. There's not a great chance that will happen, though, and that's why the NCAA is looking for other options.
Right now, one option could be Congress, where they could try to get an antitrust exemption to continue having the same amount of control that they currently do. Even though a few conservative representatives have shown support for the organization, this Congress seems unlikely to take such a drastic measure, especially if the NCAA's unwilling to even negotiate with players.
Now, the Kessler suit becomes even more important for players rights activists. That suit is focused squarely on opening up the market, and if it prevails, the NCAA will cease to exist in its current form. If not, then the organization will somehow have navigated through the biggest lawsuits it has ever faced relatively unscathed.
The NCAA released a statement on the ruling:
"We disagree with the Court's decision that NCAA rules violate antitrust laws. We note that the Court's decision sets limits on compensation, but are reviewing the full decision and will provide further comment later. As evidenced by yesterday's Board of Directors action, the NCAA is committed to fully supporting student-athletes."
This story will continually be updated as we make our way through the 99-page ruling.