Tag Archives: O’Bannon

College Athletes Can Form A Union: What’s Next?

The regional National Labor Relations Board in Chicago issued a stunning decision Wednesday, granting employee status and unionization rights to college football players at Northwestern University (PDF of decision here).  The decision will almost certainly be appealed to the national NLRB in Washington, D.C., and from there can move over into the federal appellate courts and ultimately the Supreme Court.  While we won’t have a final resolution to this issue anytime soon, the decision issued today was significant and will have immediate impact.

Remember, we’re less than three months away from a trial in the O’Bannon v. NCAA case which has been in the courts since 2009.  A judgment against the NCAA there would no longer allow it to profit off of student-athlete (or should I now call them employee-athlete-students?) images and likeness without compensation.

We also had a new case filed just this month directly targeting the cap on scholarship amounts, demanding that the free market determine what a school may offer a prospective student-athlete.

In January, the NCAA hosted sessions at its convention on the future of Division I athletics.  But the feedback was skeptical and the detail missing.  The presentation reeked of bureaucratic speak such as new committees and task forces.

Now with this NLRB decision, you get the feeling the entire student-athlete / amateurism model is going off the rails.  But what did the decision actually say and how does it apply?

It says the scholarship (walk-ons are excluded) college football players at Northwestern University are employees, and have the right to unionize and collectively bargain for compensation and benefits.  The decision focused mostly on the level of control the school, via its athletic department and coaching staff, has over its athletes.  It covered in depth the athletes’ daily routine, the hours spent on football, and the rules that must be adhered to in order to remain on the team and keep the scholarship.  Special emphasis was placed on the fact the scholarship is contingent on a number of different factors which all ultimately are controlled by Northwestern, the employer.

Northwestern tried to argue that a 2000 NLRB decision involving graduate-students at Brown University should control, and lead to a determination the athletes are not employees.  (I went through a detailed analysis of this last month).  The NLRB said the Brown case did not apply here, and even if it did, the result would be the same.

Presumably, today’s decision would allow other private university athletes to follow a similar path.  The NLRB does not govern public institutions, so athletes at state schools will have to navigate the unionization process in their own state under state law.

To this point, the College Athlete Players Association (CAPA) has not said it will pursue increased financial compensation and/or salaries for performance.  It’s focus has been on better health care as well as some type of structure to receive funds from likeness and image use, as well as sponsorship revenue (i.e. along the lines of O’Bannon case issues).  However, the authority granted by the NLRB today would certainly permit increased compensation to be included in any collective bargaining.

It’s also difficult to read today’s decision and not think it could very easily be applied to many other sports at many different levels down the road.  As I mentioned, the focus was much more on the time commitment of the athletes and the control the coaches and school have over them, rather than the large amount of revenue the athletes in major college football generate.  Many student-athletes in non-revenue sports and at smaller schools are on scholarship, put in the same hours, and are under the same university control.  It will be interesting to see which group of college athletes follows in Northwestern football players’ footsteps.

There are two key dates coming up soon as this process moves forward.  Northwestern must file a list of eligible employees with the NLRB (Chicago) by April 2nd so that an election can take place regarding forming the union.  Then, Northwestern has until April 9th to file an appeal with the national NLRB in Washington, D.C.  It most certainly will do that, and where it goes from there is likely a long, windy road through the federal courts.

Northwestern football players won a victory today.  What remains to be seen is whether, upon further review, the decision is confirmed or reversed.

 

Follow Daniel at collegesportsbriefs.com and @Daniel Hare.

 

 

College Football Super-Division, Penn State and O’Bannon

I wanted to provide some brief thoughts on several hot topics in college sports today, so here we go:

College Football Super-Division

Back in February, I provided some analysis and predictions about the future of the NCAA.  Specifically I discussed the idea of four BCS super- conferences, the possible separation of those schools from the NCAA, and the possible creation of a new football division for the BCS schools.  The jury is still out on super-conferences (though things have stabilized for now with all but the SEC schools granting their television rights to their conferences), and defecting from the NCAA still doesn’t seem to have much momentum.  However the idea of a new football division is picking up steam.

The BCS schools, through the voice of their conference commissioners, are saying enough.  Their aggravated tone and sense of urgency leaps off the page.  No longer will they allow the simple majority of the “have-nots” to out vote them at every turn, on every initiative, and on anything they can’t or don’t want to pay for (stipends anyone?).  A fourth division is coming to an NCAA school near you, and it could be sooner rather than later.  Even the college athletics watchdog Knight Commission came out over the summer with a recommendation that the division be considered.

What does a fourth division mean?  Well, it depends.  Most importantly in my view, it restores some sanity to all Division I football programs and athletic departments.  The idea that schools in the Sun Belt or MAC are on playing the same game as those in the SEC or Pac-12 is ridiculous.  What’s worse, pressuring those schools, administrators, donors/alumni, coaches and athletes to compete with BCS level schools both on the field and in the financial arms race is unrealistic and harmful.

Penn State

The NCAA did something right this week by granting back some of Penn State’s scholarships taken away in the wake of the Sandusky debacle.  It simply had no business wading into criminal matters that it does not legislate; and while this certainly doesn’t make what it did to Penn State right, it provides hope there is at least some clear thinking going on today in Indianapolis.

O’Bannon

As I’m writing this post, news is breaking that the O’Bannon plaintiffs have settled their dispute with two of the three defendants in the case, EA Sports and the Collegiate Licensing Company (CLC).  It appears EA Sports will no longer produce its college football game, though the terms of the settlement were not yet disclosed.  This of course still leaves the NCAA as the lone defendant, and the case against it will presumably continue.

Those of you who have been following the Ed O’Bannon case probably know we’ve been waiting for the big ruling regarding whether or not the plaintiffs will be certified as a class (dramatically upping the stakes).  The hearing on this issue occurred in June, and since then we’ve seen several procedural tactics but nothing too critical to the ultimate outcome of the case.

This week we’ve also seen the NCAA beef up its legal team, as well comment they are prepared to go all the way to the Supreme Court.  This isn’t too surprising at this point in the proceedings; and it will be interesting to see if the tough talk continues if/when the plaintiffs are certified as a class.

Follow Daniel on Twitter @DanielHare and at collegesportsbriefs.com.

Preparing for a post-O’Bannon world

Stewart Mandel has a piece out today on SI.com describing the range of urgency athletics administrators are feeling regarding the O’Bannon v. NCAA case currently making its way through the courts.  For those of you who haven’t kept up with the case, I wrote about it in more detail here.  Essentially, former UCLA men’s basketball star Ed O’Bannon and his co-plaintiffs are suing the NCAA, and other defendants, for not sharing the revenue generated in part by student-athletes both while they are in school (e.g. TV) and afterwards (e.g. video games, archive footage).  If the O’Bannon plaintiffs were to win, or even settle the case in their favor, the current structure of college athletics will be forever altered.

Mr. Mandel profiled University of Southern California athletic director Pat Haden’s concern that the case is by no means a slam dunk for the NCAA, and how he and his colleagues should be preparing for the aftermath if it were to lose the case.  I appreciated Mr. Haden’s comments.  Up until now the little we’ve heard from administrators are the doomsday scenarios spouted off by the likes of Big Ten Commissioner Jim Delaney, who claimed his schools would rather de-emphasize sports and join Division III than go along with any type of pay for play scenario.

Mr. Haden is a lawyer.  He’s been reading the articles from legal analysts and scholars.  He knows the NCAA is vulnerable and the case is soft.  More importantly, he knows the stakes have never been higher.  It reminds me of this Family Guy/Star Wars clip, with Mr. Haden as Darth Vader and NCAA president Mark Emmert as the Empire’s henchman talking about the “invulnerable” Death Star (current NCAA structure).  Mr. Haden is right to be concerned.  He is right to be asking questions.  He is also right to be taking proactive steps to address the possible outcomes, or perhaps look at acceptable settlement options.

The contrast to Mr. Haden is University of Texas athletic director DeLoss Dodds.  He was also quoted in Mr. Mandel’s piece, but with much less concern or urgency than Mr. Haden.  Mr. Dodds seemed to think he and other athletics administrators have “more immediate things to worry about,” and “have no control over (the case).”  In my view, nothing could be further from the truth.  The case exists only because of how the NCAA and its members (of which the University of Texas and Mr. Dodds is one) have constructed the current college athletics model.  If those in power change the model, the case goes away.  And while Mr. Dodds might simply be one person in a massive bureaucracy, he leads arguably the most powerful athletic department in the country, and SI.com recently named him the 8th most powerful person in college athletics (notice Ed O’Bannon ranks #4).  My guess is others will listen when he speaks.

Last week much of the country’s attention was fixed on the Supreme Court’s hearing of two significant same-sex marriage cases.  Reading through much of the post-argument commentary from both sides, it seemed apparent that at some point in the future, though perhaps not as a direct result of these two cases, same-sex marriage will be legal across the country.  I get that same feel about the O’Bannon case and paying student-athletes.  It may not be this case or right now, but at some point in the future college athletes will be paid.  The only question is when the new era is ushered in, and how.  Pat Haden recognizes this and wants to take action; good for him.

Follow Daniel on Twitter at @DanielHare.

Future of the NCAA (Part III)

(In Part I we looked at Enforcement, and in Part II the BCS schools separating from the NCAA and conference realignment.  In this final post in the series we look at the various legal challenges the NCAA currently faces, and their potential long-term impact.)

In 1984, the United States Supreme Court in NCAA v. Board of Regents ruled that the NCAA violated federal antitrust law by controlling and restraining the television rights of its member institutions, and that those universities and colleges were free to negotiate their own television rights agreements.  Needless to say that case has been transformative.  What was a “game of the week” each fall Saturday has since become a smorgasbord of televised games to be enjoyed virtually any day of the week.  This has spurred unprecedented financial windfalls to participating schools and conferences, and shaped the college athletics landscape we have today.

O’Bannon v. NCAA could be this generation’s Board of Regents.  In O’Bannon, former UCLA basketball player Ed O’Bannon and other former NCAA student-athletes filed suit claiming the NCAA and its licensing partners violated antitrust law by not compensating them for the use of their “likeness” in video games, video archive programming  (i.e. old games shown on ESPN Classic) and other similar endeavors.  If you’ve ever played college football or basketball video games you know many of the players strongly resemble actual players, both in terms of physical characteristics as well as the number on the back of the jersey.  This is an example of what the plaintiffs refer to when they use the term “likeness,” and this is what they are complaining about and seeking compensation for.  The case began only with former student-athletes seeking damages beginning from the time they finished school and thereafter; however, current student-athletes were (somewhat controversially) recently added to the group of plaintiffs in order to claim damages for the time they are in school as well.  There have been several preliminary hearings, and things have not gone well for the NCAA thus far.  The case is on track to go before the judge for class certification this summer, with the trial to take place sometime in early 2014.

If the NCAA were to lose, the ramifications would be immense.  First there is the financial component, which could be tens of millions in damages or some say hundreds of millions.  There is also the complete reversal of decades of policy in which compensating student-athletes for anything related to their athletic ability outside of a scholarship has been forbidden.  Changes to both rules and structure would certainly need to be put in place moving forward in what would be a new era of NCAA athletics.  On the PR front, the hits have already begun, and will continue to come throughout the pretrial process.  We’re starting to see documents released which are, at best, embarrassing to the NCAA.  You can be sure more documents will become public as the case continues on, and each new day increases the odds of a crippling revelation.

If O’Bannon wasn’t enough, the NCAA is facing several other legal challenges as well.  You thought the USC / Reggie Bush affair was all over?  Think again.  Former assistant football coach Todd McNair is in the middle of a defamation suit against the NCAA for the way it conducted its investigation into he and the USC football program.  Mr. McNair claims the NCAA maliciously disregarded the truth and used false information to come to its conclusions and penalties, and as a result his career and future earnings as a coach were unjustly diminished.  In November, a judge ruled against the NCAA’s motion to dismiss the case, and in his opinion blasted the NCAA for an investigation he called “malicious,” and NCAA staff members who were “over the top.”

A similar case involves former State University of New York at Buffalo men’s basketball coach Tom Cohane.  Though less publicized, Cohane has the potential to markedly change how NCAA investigations are conducted going forward.  Mr. Cohane sued the NCAA claiming defamation and a violation of his due process rights under the Fourteenth Amendment, alleging the NCAA knowingly used information provided by the university that was false and coerced, in order to tie him to the violations.  Student-athletes have since given sworn statements that they were threatened and pressured to point the finger at Mr. Cohane, even though they never saw him do anything wrong.  The litigation then went on a complicated but potentially significant procedural journey to determine whether the NCAA could be considered a “state-actor,” a necessary step for Mr. Cohane to claim Fourteenth Amendment due process protections.  The 2nd Circuit Court of Appeals said since (if the facts were proved) the NCAA essentially acted along side the (undeniably state actor) public university to investigate and discipline Mr. Cohane, it could be considered a state-actor in this circumstance.

What does all this mean?  Until now, this issue had clearly been settled by the United States Supreme Court in Tarkanian v. NCAA, when it said the NCAA is not a state-actor and therefore does not have to afford due process rights to those it investigates and punishes.  This flexibility has allowed the NCAA to be more aggressive with its investigations and have a lower burden of proof in order to impose penalties.  But now with Cohane, an example may exist whereby due process rights would have to be provided, and higher burdens of proof would have to be met.  The distinction between the two cases boils down to the level of cooperation between the university and the NCAA during the investigation.  In Tarkanian, the university and its coach Jerry Tarkanian were denying all the allegations, and fighting together with the NCAA as their common adversary.  Therefore the Court said the NCAA was not a state-actor in that instance.  In Cohane, however, the university was acknowledging the violations against Mr. Cohane and allegedly working with the NCAA in “joint activity” to make sure the allegations stuck to him so he could be fired for cause.  So in that case the 2nd Circuit says the NCAA could be a state-actor. (The NCAA appealed the 2nd Circuit’s decision, but the Supreme Court declined to hear the case).  This is a case to watch through its completion, as it could dramatically change how both the NCAA and universities conduct investigations in the future, and the level of due process afforded individuals who find themselves in the middle of them.

All that and we haven’t even touched Miami or Penn State.  Looking back on this series of posts, it’s overwhelming to think about what the the NCAA faces in the coming months and years.  My view is the NCAA’s back is against the wall, and it must reinvent itself or it will become obsolete, if it isn’t already.

Follow Daniel on Twitter at @DanielHare.

A Deeper Look Into The Potential Damages In The O’Bannon Case

The O’Bannon case has recently been in the news again. This time the focus has been on the release of the plaintiffs’ class certification expert report. In the report, Stanford economics professor Roger Noll attempts to show that the plaintiffs will be able to prove their case against the NCAA using evidence that is common to the putative class members (i.e., current and former Division I basketball players and FBS football players). If plaintiffs cannot make this showing, their case will not be certified as a class action and the case will likely fade away. So the report is one of the most important documents that will be filed in the case.

Most of the media’s coverage of the report has focused on Noll’s live broadcast revenue damages calculations. Specifically, it has been reported by a number of media outlets that under Noll’s formula SEC football players on team rosters during the 2009-10 school year would share $61.5 million of live broadcast revenue, SEC basketball players $42.5 million, Pac-10 football players $26.3 million, and Pac-10 basketball players $30.4 million. The media reports don’t explain how Noll reached these numbers. But, because you have the good sense to read BusinessofCollegeSports.com, you will now learn.  I must give one warning though.  If you don’t like math you might want to skip the next few paragraphs.

The first step in Noll’s formula is determining the amount of live television revenue a conference’s football and basketball teams generated in a given year. According to Noll’s figures, in 2009-10 the SEC’s football teams generated $123,096,376 in live television revenue and its basketball teams generated $85,043,590.  The Pac-10’s football teams generated $52,506,327 and its basketball teams generated $60,480,049.  (On a side note, the huge gap in the amount of TV revenue earned by the SEC and the Pac-10 points out just how far the Pac-10 was falling behind the other BCS conferences in revenue generation.  Luckily, the Pac-10 members hired Larry Scott as their commissioner and have now closed the gap).

Noll’s formula assumes that this revenue is shared equally among conference members.  That leaves us with the following per-team revenue numbers:

• Each 2009-10 SEC football team earned $10,296,733 in live broadcast revenue.

• 2009-10 SEC basketball teams earned between $6,991,974 and $7,205,685 in live broadcast revenue (the basketball calculations also include a small amount of school specific live television revenue).

• Each 2009-10 Pac-10 football team earned $5,250,633 in live broadcast revenue.

• 2009-10 Pac-10 basketball teams earned between $5,519,602 and $7,142,893 in live broadcast revenue.

Noll’s formula also assumes that yearly live broadcast revenue is split evenly between a school’s athletic department and the members of the men’s basketball and football teams. So, each of the per-team numbers above is divided in half to calculate the players’ share of the live broadcast revenue. Here are those numbers:

• 2009-10 SEC football players’ share per school: $5,129,016

• 2009-10 Pac-10 football players’ share per school: $2,625,316

• 2009-10 SEC basketball players’ share per school: between $3,490,636 and $3,597,328

• 2009-10 Pac-10 basketball players’ share per school: between $2,744,750 and $3,551,969

Lastly, to calculate the per-athlete damages, Noll divides the players’ share of the live broadcast revenue by the number of players on a team’s roster.  Because the roster size is different at each school, the amount of per-athlete damages varies by school. Here are the per-athlete damage numbers:

• Per-athlete damages for an SEC football player on a 2009-10 roster vary from $46,627 to $66,610.

• Per-athlete damages for a Pac-10 football player on a 2009-10 roster vary from $26,253 to $44,497.

• Per-athlete damages for an SEC basketball player on a 2009-10 roster vary from $177,860 to $295,475.

• Per-athlete damages for a Pac-10 basketball player on a 2009-10 roster vary from $171,547 to $253,171.

A couple of interesting observations can be made by examining the per-athlete numbers and Noll’s model in general.

First, although football generates more total broadcast revenue, basketball players will be entitled to more money under Noll’s damages calculation than football players. There is one reason for this: because of the large difference in roster sizes there are fewer players on a basketball team to split the revenue with.

The per-athlete basketball and football numbers are so skewed by roster sizes that a basketball player at a mid-major like Bucknell would be entitled to more live broadcast revenue than a football player at USC. Using Noll’s formula, a basketball player on Bucknell’s 2009-10 team would be entitled to $34,903. (This revenue comes solely from the broadcast rights to the NCAA men’s basketball tournament).  A member of the 2009-10 USC football team is only entitled to $28,229.

Second, in many instances, a BCS football player’s live broadcast damages would not even be equal to the value of his athletic scholarship. For example, the per-athlete number for Stanford’s 2009-10 football team is $36,463. The value of a full athletic scholarship at Stanford in 2009-10 was over $50,000.

Lastly, while the O’Bannon case is still a long way from resolution, if it results in a system like Noll’s being implemented if will be a shock to the collegiate athletics model. Division I members will lose a large chunk of their athletics budgets. As a result, colleges are paying close attention to the case. For example, the Big 12 has recently convened a task force to study what the college sports landscape will look like if the O’Bannon plaintiffs are successful.

The NCAA will also lose the vast majority of its revenue if the plaintiffs prevail. Nearly 88% of the NCAA’s revenue comes from the sale of the broadcast rights for the NCAA men’s basketball tournament. But, in a post O’Bannon world, all of that money will be distributed to Division I men’s basketball players and the schools, not the NCAA. Despite this, the NCAA will not be as affected as the schools. The NCAA already distributes 96% of its annual revenue to NCAA member schools. The loss of NCAA revenue will most hurt the schools that are reliant on the NCAA distributions.

In the end, the O’Bannon case has the potential to be as important as the U.S. Supreme Court’s NCAA v. University of Oklahoma Board of Regents decision. That decision granted schools the ability to sell the broadcast rights to their athletic events. Prior to tha decision, the NCAA controlled and sold the television rights. With schools allowed to sell their television rights, money began to flow directly into the school’s athletics coffers. If the O’Bannon plaintiffs are successful, some of that money will begin to flow directly into the hands of the student-athletes.