Federal judge's ruling puts billions at stake for NCAA
A federal judge on Friday night granted class-action status in the damages portion of a lawsuit against the NCAA and major-college athletics conferences that could result in a multi-billion-dollar award to former and current college athletes.
The suit challenges the association’s remaining rules regarding athletes’ ability to make money from their names, images and likenesses and seeks damages based on the share of television-rights money and the social media earnings it claims athletes would have received if the NCAA’s previous limits on name-image-and-likeness (NIL) compensation had not existed.
Attorneys for the NCAA and the conferences had written in legal filings that the athletes are seeking more than $1.4 billion. The filings did not specify whether that figure takes into account the tripling of damages awards that occurs in successful antitrust cases. If it does not, then more than $4.2 billion could be at stake in the case.
Specifically, the suit claims that football, men’s basketball and women’s basketball players at schools in the Power Five conferences are entitled to damages related to the use of their NIL’s during telecasts of games and that athletes in any sport at a Power Five school are entitled to damages related to social media earnings. If the plaintiffs prevail, most of the money would be spread among athletes in those three sports who have received full athletic scholarships and play — or have played — for a school in one of the Power Five conferences since June 15, 2016. That date is four years prior to when the suit was initially filed, the reach-back period allowed under antitrust law.
Citing an economic expert for the plaintiffs, Friday night's ruling said nearly 6,300 football and men's basketball players would be entitled to damages money, as would more than 850 women's basketball players. Nearly 7,400 athletes in other sports also would be covered, although not for money related to TV broadcast-rights revenue.
Had U.S. District Judge Claudia Wilken refused to grant class-action status in the damages portion of the case, any monetary award would have been limited to the claims of the three named plaintiffs: Arizona State men’s swimmer Grant House; former Oregon and current TCU women’s basketball player Sedona Prince; and former Illinois football player Tymir Oliver.
Now, the NCAA and the conferences face the type of consequences that have been driving their increasingly intense effort to get a form of antitrust protection from Congress as part of a broader measure that they want to use to bring a national standard to athletes' NIL activities. At present, there is a patchwork of state laws surrounding those activities.
However, the NIL issue pales in comparison to the potential impact of Friday night’s ruling — if the athletes prevail at a jury trial currently set to begin in January 2025.
Steve Berman, one of the plaintiffs’ lead attorneys, told USA TODAY Sports by email: It “potentially means that student athletes will share (in) broadcast revenues, ticket sales and endorsement deals. It’s a huge potential change in the NCAA and student-athletes relationship.”
NCAA spokesperson Saquandra Heath said in a statement: "The NCAA disagrees with this ruling as NIL is highly specific" in terms of its value to individual athletes, rather than being common or typical across a wide group of plaintiffs, as antitrust law requires for class-action status to be granted in a case. The statement also said that the association takes issue with the prospect that damages money would go overwhelmingly to male athletes. "The NCAA fully supports all student-athletes profiting from their NIL rights and the Association is increasing benefits for student-athletes — including new health and well-being requirements and guaranteed academic supports for all of Division I," the statement said.
Wilken is the same judge who oversaw the district-court portions of the Ed O'Bannon and Shawne Alston antitrust cases. The NCAA ultimately lost the Alston case in a unanimous ruling by the Supreme Court.
About six weeks ago, Wilken granted class-action status in the portion of this case that seeks an injunction against the NCAA's remaining rules regarding athletes’ ability to make money from their NIL and could create the possibility of athletes being able to get NIL money from their schools for any reason.
Her new decision represents just one of several major legal challenges the college sports world is facing. On Tuesday, proceedings are set to begin regarding a complaint by the National Labor Relations Board's Los Angeles office that alleges the NCAA, the Pac-12 Conference and the University of Southern California have unlawfully misclassified college athletes as “student-athletes” rather than employees.
Meanwhile, the 3rd U.S. Circuit Court of Appeals continues to consider a case that seeks to have athletes treated as school employees entitled to at least the minimum wage under the Fair Labor Standards Act. In addition, men's basketball players at Dartmouth College are in the middle of an effort to unionize.
The issue of whether — in the absence of NCAA-rules restrictions — athletes would have ended up with a share of conference television revenue is a major part of the money at stake in this case. But it's also an underlying issue in the question of whether conferences and schools should engage in revenue sharing with their athletes, as has been contemplated by a nationally watched bill that passed the California state Assembly this summer but then stalled in the state Senate, which could take up the measure again in 2024.
In this case, the plaintiffs' economic expert, University of San Francisco sports management professor Daniel Rascher, contended that, absent NCAA-rules restrictions, the Power Five conferences would have competed with each other for football and basketball players by offering them payments for the use of their NIL in broadcasts "because that would have enabled the conferences to maximize their broadcast revenues." He also said that the conferences would have entered into group licensing deals with the athletes under which they would have offered equal payments to those athletes for the use of their NIL in broadcasts.
The NCAA had argued, in part, that there is no reason to assume that athletes' NIL in broadcasts have any value because no payments have been been made to college or pro athletes to specifically compensate them for the use of their NIL in those broadcasts.
"However," Wilken wrote, she found "ample support for (the) plaintiffs’ assumption that student-athletes NIL in broadcasts have value, and that their value is at least ten percent of the revenues of Defendants’ broadcasting contracts."
According to data compiled by USA TODAY Sports from the Power Five conferences' federal tax filings for their 2022 fiscal years, they totaled more than $2.2 billion in broadcasting rights fees that year.
Wilken also wrote that Rascher's opinions and methodology and those of the plaintiffs' expert on sports media and broadcasting rights, former NBA executive and current independent media consultant Edwin Desser, "are sufficiently reliable and capable of supporting a reasonable jury finding that" college football and basketball players "would have received ... compensation" for the use of their NIL in broadcasts "in the absence of the challenged rules."