Once again, Ed O’Bannon is creating a stir amongst former and current collegiate athletes, universities, and the governing athletic institutions with the multi-billion dollar class action lawsuit against the NCAA. Lawyers anticipate that this suit, which was originally filed in 2009, will have a trial date scheduled for 2013. Currently in the discovery stage, O’Bannon asked U.S. Magistrate Judge Nathaniel Cousins to grant permission to expand the lawsuit to allow current Division I male football and basketball athletes to join as parties to the suit. While on its face this new development appears minimal, the potential impact of the case is even greater than what was originally projected when the suit was filed in 2009.

The main issue is one that has been around for years — whether collegiate players are entitled to receive compensation for the licensing and use of players’ names and images by the NCAA. In the past, the argument supporting player compensation was heavily criticized as contradicting the most fundamental premise of collegiate athletics — amateurism. In order to preserve a player’s status as an amateur, the NCAA prohibits players from receiving any payment other than reimbursement for tuition, room, and board. In the class action suit, O’Bannon suggests an alternative to physically paying collegiate athletes by setting up temporary trusts in the players’ names. The court’s acceptance of such a suggestion would drastically impact the future of collegiate athletics.

While O’Bannon concedes that the actual distribution and practical dimension of the trust system has yet to be established, he focuses on what this would mean theoretically if the courts accept this proposal. He urges that setting up a trust neither violates the NCAA provision nor interferes with a player’s amateur status because the money would accrue in the trusts during a player’s collegiate career and would only be accessible upon graduation. Moreover, the players receive what they are entitled — just compensation for the profits attributed to the  licensing and use of player names and images. O’Bannon furthers his argument by claiming that the player waiver, which the NCAA claims permits the licensing and use of player names and numbers, is a contract of adhesion completely eliminating a player’s bargaining rights because the player’s only alternative to not signing the waiver is ineligibility.

This argument seems worthy of a second or maybe even a third look before one considers discarding it. In theory, it may seem unfair for the NCAA to profit from the players and leave the players empty-handed. If the main issue is preservation of amateur status, then could one solution be that the NCAA designate one jersey number as the only number that may be used for jersey sales, thus avoiding the licensing issue since no player would wear that designated jersey number. But the problem is, the issue is not that simple. The issue goes beyond jersey and memorabilia sales, it deals with the scope of the NCAA’s authority to license and use player names and images. This case began as one about the use of player’s name, images and likeness in video games; but now, with the help of O’Bannon, the issue has transcended new territory and is gaining supporters along the way.

However, there are concerns with implementing a trust system for player compensation. O’Bannon suggests a formula for distributing the player-generated NCAA revenue: (i) players receive up to half of the NCAA’s broadcasting revenue and one-third of the NCAA video game revenue, and (ii) the remaining revenue after satisfying part (i) would be dispersed between the NCAA, conferences and universities. But, what is the authority behind this formula? How do you know how much each revenue each university will receive to be divided amongst the players? Will each university receive an equal amount or will it be associated with how much the NCAA uses a certain university’s players in its commercial endeavors? Also, would there be a potential Title IX issue since the NCAA broadcasts female athletic contests? It appears that there are many questions that must be properly addressed and answered before any trust system would be implemented.

The expansion of the class action suit against the NCAA has the potential to dramatically change college athletics by finally finding the loop-hole to allow player compensation while preserving a player’s amateur status. Perhaps, what this issue may be getting at is the need for the NCAA to redefine its role. Although that is not stated or suggested in the suit, it seems that it would be an interesting thought to refer back to as the case progresses.


– Caitlin Buckstaff

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4 Responses to Old Issue with a New Twist: Alternative to Compensating Collegiate Athletes Through Player Trusts

  1. Caitlin Buckstaff says:

    As an update to the O’Bannon v. NCAA lawsuit, a class certification hearing is set for June 20 of this year. However, the trial will not occur until July 2014. Many division commissioners and athletic directors starting to discuss contingency plans in the event that the plaintiffs in the antitrust lawsuit prevail as schools would experience dramatic reductions in their annual television revenues. In a recent interview Jim Delany, the Big Ten Commissioner, stated his belief that the lawsuit will go all the way, that there will be no settlement. Jim Delany has no problem voicing his opposition to paying student athletes as he strongly believes that no one player is bigger than the school itself. Jim Delany has threatened, in the past, to remove the Big Ten Conference from Division I play should the plaintiffs prevail. While I would like to call his bluff now, I am curious to see how the schools will react should the plaintiffs prevail.

  2. John Lomascolo says:

    I just can’t seem to wrap my head around why it would be a problem for these players to be compensated if the NCAA is making money off of them. I think if college players started getting paid, yes, maybe they would technically be “professional” within the word’s dictionary meaning, but most people would likely still consider the NFL, NBA, MLB, and what not, “professional sports” that are played by the real “pros.” Why does the need to define college sports as amateur outweigh the fact that these players are being used to make money?

    I also don’t really see how setting up the trusts changes anything since the players are still basically getting paid; they’re just not receiving the money while they are in college. But regardless, I think these guys (and gals) work hard, are incredibly talented, and shouldn’t have their names and hard work used to make money without some of it getting sent back to them.

  3. Katharine Skinner says:

    I wonder if there could be a potential difference between the current players in the suit (the ones O’Bannon seeks to add) and former players, like O’Bannon himself, who initiated it. While current players do not have the ability to receive licensing fees for the use of their image, the issue may be different for former players, who are no longer “amateurs.” O’Bannon objects to the fact that the NCAA still sells archival materials, using the likenesses of former players, without providing any compensation, even though the athletes are now out of college. However, the NCAA has said that they do not attempt to stop former players from licensing their “collegiate likeness.” Whether or not this is true, I do not know – perhaps former players have tried to regain licensing control from the NCAA and have failed. But it is a potential issue that could separate the current from former athletes.

  4. Michael Dearington says:

    Great post, Caitlin! I wonder if such a trust system would impact the cost-benefit analysis of Division I athletes who are deciding whether to play professionally. Players with huge earning potential may think twice before cashing in after freshman year if they can make money in college while earning a degree, albeit with a delayed payoff.