NCAA antitrust suit going courtside

OAKLAND, Calif. -- They did not know what to expect. Even while believing that the letter of the law was on their side, former college basketball star Ed O'Bannon and his team of attorneys understood that taking on a behemoth like the century-old National Collegiate Athletic Association could very well end up a fruitless and frustrating endeavor.

So for nearly five years, as their antitrust lawsuit against the NCAA gestated in U.S. District Court for the Northern District of California under the supervision of Judge Claudia Ann Wilken, they remained cautious. She could toss their case out at any moment, just like the previous attempts made by former athletes to question the organization's student eligibility rules in court. Plus, the NCAA with its vast resources could play the legal chess match into eternity, stretching Mr. O'Bannon and his growing list of fellow plaintiffs thin by outmaneuvering them with the long game.

But, time and time again, Judge Wilken kept their hopes alive. She questioned the NCAA's foundation -- the ideal of amateurism that first washed ashore in this country because rowing teams from Harvard and Yale decided to compete against one another in the 1850s -- and broadened the scope of the case by certifying current and former college football and basketball players as a class.

For the plaintiffs, just getting to today, when opening statements of O'Bannon v. NCAA will be heard on the fourth floor of the federal courthouse in downtown Oakland, feels like a monumental accomplishment.

Big-time college sports are on trial. Finally. The games and traditions that fans and alums have loved for decades with undying loyalty will now be boiled down to the essence of what they've morphed into -- a business, one with real issues that won't be ignored any longer.

Mr. O'Bannon and the plaintiffs will spend up to the next three weeks trying to prove that the NCAA and its partners have violated the Sherman Antitrust Act -- limiting competition and restraining trade across state lines -- by conspiring to fix the compensation to the certified class of players for the licensing, use or sale of their names, images and likenesses in video games, live broadcasts of games, rebroadcasts of games and video clips at zero dollars.

The NCAA and its member institutions, of course, have sold those names, images and likenesses for millions upon millions of dollars.

A ruling in favor of Mr. O'Bannon, who led the University of California, Los Angeles to the 1995 national championship, would result in an injunction by Judge Wilken that would likely force the NCAA to change its rules to encourage a free market for current and former college athletes to receive endorsement deals and sell their names, images and likenesses. The NCAA, the schools and conferences would have to give the players a financial cut, leading to a fundamental change in the current business model but not the full-blown Armageddon that some have predicted with an O'Bannon victory.

A ruling in favor of the NCAA would maintain the status quo and buoy the organization's chances to man the high ground in future litigation that is currently brewing against it.

No matter the result of the trial, the open discourse -- with NCAA executives, conference commissioners, college administrators and former athletes -- will be seen as a win by the organization's many critics.

A big case gains focus

To consider putting his name on a lawsuit of this magnitude, Ed O'Bannon needed to reconnect with an old friend.

Sonny Vaccaro, the Trafford native and longtime sneaker magnate at Nike and later Adidas and Reebok, had left the shoe industry in 2007 so that he could travel the country and speak out about the NCAA and what he perceived to be the organization's hypocrisy.

Sure, the shoe and apparel endorsement contracts Mr. Vaccaro had signed with college basketball coaches in the 1980s contributed greatly to college sports becoming big business to begin with, but he had soured on the organization because of its rule book that he believed limited player rights.

Mr. Vaccaro's most recent problem with the NCAA stemmed from its ability to sell old broadcasts to ESPN Classic and other networks without the former players receiving any royalties after their college careers were over.

He was on the hunt for a former star player who could be the face of a lawsuit, and he was having no luck until he called Mr. O'Bannon, whom he befriended when Mr. O'Bannon was a high school prospect at one of Mr. Vaccaro's summer basketball camps.

A few years prior, Mr. O'Bannon had the realization that the NCAA was still making money off of him when he was at a friend's house and his friend's son was playing an Electronic Arts Sports college basketball video game that featured a classic UCLA team with a left-handed forward who wore No. 31 -- essentially Mr. O'Bannon himself but without the name.

Mr. Vaccaro convinced Mr. O'Bannon that they had a case, and they hired one of the top class-action attorneys in the country, Washington, D.C.-based Michael Hausfeld, who had represented Native Alaskans whose lives were affected by the 1989 Exxon Valdez oil spill and a class of Holocaust victims whose assets were wrongfully retained by private Swiss banks during and after World War II.

Nearly five years later, so much has changed with the case, and it has become more important than they ever could have imagined. What began as a suit that included EA Sports and the Collegiate Licensing Company is now just against the NCAA -- EA and CLC recently settled with the O'Bannon plaintiffs for $40 million. The plaintiffs also have decided to not pursue individual damages, only an injunction, which means the case will be heard by a judge and not a jury. In other words, O'Bannon v. NCAA will now simply produce a ruling on the structure of college sports.

In her decision, Judge Wilken will have to weigh the anti-competitive effects of the NCAA's rules squashing player compensation against the pro-competitive effects that the organization will argue exist: brand differentiation from professional sports and creating a competitive balance among its member schools.

The NCAA's attorneys, led by Carolyn Hoecker Luedtke of the San Francisco-based firm Munger, Tolles & Olson, LLP, will aim to prove that the amateurism model is necessary to make college football and college basketball different from the National Football League and the National basketball Association, respectively, and form a distinct product market that is popular with consumers. They will also try to show that a free market for players would create too great of a gulf between the haves and have-nots contained within their membership (a point that the plaintiffs will counter by pointing out that schools with larger budgets already are consistently winning championships in football and basketball).

"The real question is, if the NCAA will be able to show that there isn't a less restrictive way of achieving this brand differentiation," said Matt Mitten, a Marquette University law professor and the director of the National Sports Law Institute.

If Mr. O'Bannon wins, the plaintiffs will be ready to take the next step and distribute compensation to the class. On May 29, a nonprofit called the Former College Athletes Association was established under the laws of the District of Columbia and announced that it will handle distribution of the money. That group has been working closely with the performing rights organization SESAC, a business designed to represent songwriters and publishers and their right to be compensated for having their music performed in public.

Mr. Vaccaro and Kenneth Feinberg, a nationally respected mediator and former administrator of both the Sept. 11 Victim Compensation and One Fund Boston arising out of the Boston Marathon bombings, are among the FCAA board members.

"The failure of former college athletes to be compensated by the NCAA after leaving college must be corrected," Mr. Feinberg said in a statement. "The NCAA certainly benefited financially while these athletes were in school; what about now?"

'The first crack'

Without a jury, O'Bannon v. NCAA is not likely to have quite the same level of theatrics in the courtroom. Judge Wilken will be unmoved by emotional pleas, but don't expect the long list of attorneys who have spent years preparing to examine and cross-examine these particular witnesses to pull any punches.

NCAA president Mark Emmert and Big Ten Conference commissioner Jim Delany are on the NCAA's witness list, along with numerous presidents of prestigious universities, athletic directors and NCAA executives from throughout the organization.

The plaintiffs' attorneys are expected to call Mr. O'Bannon, Hall of Fame basketball players Oscar Robertson and Bill Russell and lesser-known plaintiffs who will testify about their experiences as student-athletes.

Also on their witness list are Jordan Edelstein, the former vice president of marketing at Electronic Arts, Inc., and Mary Willingham, a former learning specialist in the Academic Support Program for Student-Athletes at the University of North Carolina-Chapel Hill.

Ms. Willingham was the whistle-blower in the North Carolina academic scandal, accusing the athletic department of steering college football and basketball players into fake classes that never met, and her testimony will be used to help the plaintiffs show how valuable the educational experience actually is for some college athletes.

Unlike with a jury trial, there will not be an immediate decision after closing arguments. Judge Wilken will likely take her time in reviewing the facts presented. When she rules, the loser is likely to appeal, beginning a process that could take years to complete.

Meanwhile, the NCAA will be having to fight off more suits, and some will be scarier for its future prospects than even the O'Bannon case.

In March, Jeffrey Kessler, a noted sports antitrust lawyer, filed a claim in a New Jersey federal court on behalf of a group of college football and basketball players that says the NCAA has unlawfully capped player compensation at the cost of an athletic scholarship. Mr. Kessler will be pursuing an end to the amateur model altogether.

Viewed within the context of what's to come, an O'Bannon victory would mostly serve to bolster the groundswell of momentum against the NCAA.

"It's the first crack," Mr. Mitten, the law professor, said. "It would potentially result in a fairly significant crack in the NCAA's regulatory authority."

J. Brady McCollough: and on Twitter @BradyMcCollough.

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