The Bubble Watch: O'Bannon, Keller, Hart and the Business of College Athletics

        Given the recent O'Bannon/Keller court decision and the fact that March Madness is upon us (the highest grossing collegiate sporting event and second highest grossing post-season sporting event overall (NFL playoffs rank #1)), I figured it would be fitting to share some thoughts:

          As NCAA revenues rise, so has a growing discomfort over the disparity between the business of college athletics and its "amateur" participants, particularly in men's football and basketball, the highest revenue-generating sports.  It seems disingenuous to categorize the NCAA as a non-profit organization especially when it funnels its licensing revenues through a for-profit entity, the Collegiate Licensing Company.  Ironically, while the NCAA and its members rake in roughly $3.5B a year from television, sponsorship and licensing deals, no less than 9 D-I football players have been arrested or charged with robbery or burglary in the past year.  Whether out of pure foolishness or a sense of necessity, any number, which includes starting players, is inexcusable. 

          Although some schools claim to lose money over college athletics, in reality, the so-called losses are more likely to arise from using the income generated by men's football and basketball to support entire athletic departments and programs.  Undoubtedly, there is a clear benefit to the profits earned by the programs -- it offers other students, both men and women, the opportunity to compete for their schools in their respective sports.  However, it does not suffice it to say that these amateur athletes should bear the burden of paying for, amongst other things, the immense salaries of their coaches, athletic directors and conference commissioners, not to mention the NCAA’s 500 employees and its $35M planned building expansion.

            Ed O'Bannon, former UCLA Bruin basketball star, Sam Keller, former Arizona State/Nebraska quarterback and Ryan Hart, former Rutgers University quarterback, have recently filed cases in California and New Jersey respectively against Electronic Arts as well as the NCAA and CLC for unauthorized use of their names and/or likenesses in merchandise.  In the O'Bannon and Keller matter, Judge Claudia Wilken, a District Court judge in California, recently denied EA's motion to dismiss, which could allow the case to go to trial.  A judge has yet to rule on the Hart matter but precedent supports the same result (In interest of full disclosure, I have been consulting with Hart's attorneys on the case).  With the O'Bannon/Keller and Hart cases hanging in the balance, the law may finally catch up. 

            The principle of amateurism has insulated NCAA rules and hampered the classification of college athletes as employees.  At the very least, upon termination of one's collegiate eligibility, the athlete is no longer restricted by the NCAA’s rules governing income and remuneration for use of his/her identity.  A number of parties, including the NCAA, either itself or via third-party agreements, regularly appropriate the names and identities of former college athletes without their consent in violation of federal and state laws designed to protect an individual’s property interests.  Thus, any party seeking to appropriate the identity of a former college athlete should obtain a license, including the NCAA, university and athletic conference and failure to do so without a valid defense is unlawful.

           In his 2006 state-of-the-association address, the late Myles Brand, then NCAA President, boldly advocated for the NCAA’s engagement in commercialism, asserting that “’[a]mateur’ defines the participants, not the enterprise.”[1]  Interestingly enough, just over a decade earlier, in Banks v. NCAA, the Seventh Circuit Court of Appeals expressed a now obviously misplaced concern that introducing professional athletes into collegiate sports would commercialize the industry, interfere with educational pursuits and destroy amateurism.  In fact, professional revenues, not professional athletes, have commercialized NCAA sports, and as articulated by Myles Brand, have served to professionalize every aspect of the business except the college athlete.  It'll be interesting to witness the development of the O'Bannon/Keller and Hart cases -- for once the NCAA is on the bubble watch.

Amber is a graduate of UCLA's Entertainment & Media Law and Policy Program.  She currently consults as an attorney on a variety of matters throughout the sports and entertainment industries.  Find Amber on Twitter @amber2jewel

[1] Robyn Norwood, NCAA Chief Thinks Revenue, Los Angeles Times, Jan. 9, 2006, at D4.

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