The National Collegiate Athletics Association’s longstanding policy of banning student-athletes from receiving compensation for their role in generating billions of dollars in annual revenue for the NCAA and its members is illegal, a three-judge Ninth Circuit U.S. Court of Appeals panel ruled Wednesday.
The decision partially vindicates a lawsuit brought by former college athlete Ed O’Bannon, but also strikes down the more dramatic challenge to the NCAA’s business model represented by a lower court decision in the case earlier this year. The earlier ruling had ordered the association to start socking away revenue from its lucrative merchandising and licensing deals into a fund that would pay athletes deferred cash compensation upon exiting the NCAA system.
Instead of the $5,000 maximum cash payouts to individual players mandated in that ruling, the appeals panel ordered the NCAA to start allowing schools to offer larger scholarships to athletes than it had in the past. Many schools had already begun allowing supplemental cost-of-living payments to scholarship athletes to cover the full expense of attending the schools where they play.
Such a system could prevent a repeat of stories like Shabazz Napier’s, who told reporters he often went to bed “starving” because he couldn’t afford food while leading the UConn Huskies to a national title in 2014. But it’s a far cry from the full compensation that O’Bannon and other suing athletes are seeking.
By voiding the cash compensation order of the lower court, the judges are preserving the NCAA’s ability to keep spending rafts of cash on coach salaries and campus facilities. Everyone who cashes a paycheck derived from college sports revenues is profiting off the sweat, injuries, and heroics of young people who have no alternative route into the professional leagues where those skills and sacrifices can make them rich.
The panel’s split decision to uphold the idea that scholarships constitute sufficient compensation for athletes gives the NCAA a significant win. Critics of the amateur sports model argue that a scholarship athlete’s education is always going to be secondary to her on-field commitments, devaluing the degrees that the NCAA points to as evidence that players needn’t be paid real money. (At the same time they make that argument in court, both the NCAA and EA Sports have recently agreed to pay tens of millions of dollars to settle class-action suits brought by O’Bannon and another former NCAA athlete named Sam Keller over the unpaid use of player likenesses in videogames.)
It’s not all wine and roses for the adults who get rich off college sports, though. The panel rejected the NCAA’s argument that its rules are exempt from anti-trust law based on a 1984 Supreme Court case. While the decision limits how far the association will be required to go to get right with anti-trust rules, it still voids the longstanding prohibition on any augmented compensation beyond basic scholarships.
The NCAA has not yet decided if it will appeal the ruling to the Supreme Court, President Mark Emmert said in a statement Wednesday. But it’s possible that either the O’Bannon case or a separate one seeking a full free-market payroll system in college sports could still make it onto the high-court docket in the coming years.