Ed O’Bannon, who led UCLA to a national basketball championship in 1995, was visiting a friend in 2008 when his friend’s son shouted, “Ed, you’re in my video game!” The boy showed him a game, NCAA Basketball 09, that included an avatar that looked and played just like O’Bannon—African American, shaved head, six-eight, wore number 31 for UCLA, and programmed to score and rebound as O’Bannon had. His teammates were also depicted, and the game allowed the boy to match the 1995 Bruins against other teams of yore.
O’Bannon was astounded and angry. No one had asked his permission to depict him, and he was paid nothing for the use of his image. O’Bannon lawyered up and sued the NCAA, alleging that it had violated antitrust law by preventing college athletes from earning money from licensing opportunities like this one. Since its inception in the early 1900s, the NCAA had been enforcing a strict amateurism regime that prohibited athletes from earning any money on account of their athletic endeavors—salaries, cash inducements to attend a particular school, bonuses for winning championships, or income from endorsements or advertising. This last category depends on athletes’ licensing their name, image, or likeness to businesses, a practice known as “NIL.” The NCAA had long argued that its insistence on strict amateurism was intended to prevent unsavory business arrangements and ensure that college athletes played “for the love of the game.”
The all-too-predictable result, however, was that, as college football and basketball revenues skyrocketed, players, including many low-income and minority students, were locked out of the billions of dollars they made for their schools. Before the 2014 NCAA basketball Final Four, the University of Connecticut star Shabazz Napier complained that he and his teammates “have hungry nights [where] we don’t have enough money to get food.” Napier, who grew up in the projects in Boston, was about to play in a game watched by 80,000 people who paid an average of $500 per seat, along with a massive TV audience. But beyond his athletic scholarship, he didn’t have the proverbial two nickels to rub together. The social justice dimension of this regime has not been lost on commentators. In a 2011 article in The Atlantic titled “The Shame of College Sports,” the Pulitzer Prize–winning historian Taylor Branch opined that the lack of compensation had an “unmistakable whiff of the plantation.” Harry Edwards, a sociologist whose activism inspired two Black athletes’ iconic fist-raising podium protest at the 1968 Olympics, has called this issue “the civil rights movement of our time.”
The historian Taylor Branch once opined that college athletes’ lack of compensation had an “unmistakable whiff of the plantation.” Harry Edwards, who inspired two Black athletes’ iconic protest at the 1968 Olympics, has called this “the civil rights movement of our time.”
Ed O’Bannon’s lawsuit, which generated enormous publicity and discussion on this issue, delivered the first major blow to the NCAA’s amateurism regime in 2014, and influenced another antitrust case before the same judge, Alston v. NCAA, which culminated in a landmark Supreme Court decision in 2021. My law firm played a supporting role in O’Bannon’s case, and I worked directly on a predecessor case that involved compensation for assistant coaches. I also advised legislators who enacted a groundbreaking California law that allowed college athletes in that state to monetize their NIL. The California statute finished the revolution that O’Bannon had started, inspiring other states to adopt similar laws. In response, the NCAA withdrew its prohibition on athlete licensing deals, effectively ending amateurism as we know it in college sports.
Today, some college athletes whose recent predecessors played for a scholarship or simply the love of the game are making six or seven figures annually. The Athletic recently confirmed that it had seen an $8 million NIL contract, payable over three years, between a high school football star who preferred to remain nameless and boosters from a school that desired his services. (Boosters are groups of alumni or friends of the school who make substantial contributions to the athletic department.) Similarly, John Ruiz, a University of Miami alumnus, has committed $10 million to financing Miami athletes through purported NIL deals. And big money deals aren’t limited to football and basketball players, or to men. The LSU gymnast Olivia Dunne is reportedly making $2 million from apparel endorsements and social media, and the twin basketball stars Haley and Hanna Cavinder, most recently of Miami, have more than 40 endorsement deals, worth a total of $2 million.
Meanwhile, however, the NCAA has declined to implement any kind of sensible regulation on this burgeoning market, which college officials, journalists, and other observers have dubbed the “Wild West.” The endorsements and apparel deals signed by Dunne and the Cavinder sisters are more or less what O’Bannon sued for, but the shadowy world of boosters is not. Over the past year or so, groups of boosters calling themselves “collectives” have begun recruiting high school athletes (and college athletes willing to transfer schools) with promises of up-front NIL money without specifying what licensing deals they’ll be expected to accept in return. Many college coaches and officials who were just getting comfortable with NIL are quite uncomfortable with this combination of NIL and recruitment, which looks more like salaries or bribes to attend a school.
Last season, the now-retired Syracuse basketball coach Jim Boeheim accused three Atlantic Coast Conference rival schools of “buying players” with booster-generated NIL deals, only to have the allegation boomerang with a press report that a Syracuse booster was planning to spend $1 million on its recruits. The NCAA continues to insist that recruiting through NIL is improper, but it has taken no steps to regulate this market or punish offending boosters or schools. The turmoil led the legendary Duke basketball coach Mike Krzyzewski, known as “Coach K,” to say after his recent retirement, “This is the most tumultuous time in the history of inter-collegiate athletics, and there’s no leadership, no structure, no direction … It’s really good and it’s really bad.”
To college athletes and those who advocate for their compensation and empowerment, the good outweighs the bad. But there is admittedly a bad look from some shady-looking booster-generated deals, and many parties in this space are seeking to eliminate or limit the chaos. A congressional subcommittee recently held a hearing on this, and promises more, and the new NCAA chief (and former governor of Massachusetts), Charlie Baker, seems ready to try to address the issue. One thing missing from the debate, however, is solid data about how NIL is actually operating, so that the NCAA, Congress, and others might intelligently improve the situation. Regulators might take a cue from Supreme Court Justice Louis Brandeis, who said in 1913, “Sunlight is said to be the best of disinfectants.”
One powerful government tool, antitrust law, worked in concert with state legislation to break the back of the “plantation” system that exploited college athletes. Now, to preserve the gains of the past few years, advocates must embrace other tools that historically have established a level playing field for businesses, workers, and consumers. The available tools fall into three categories: further NCAA regulation under its new leadership; federal legislation; and, in the long term, unionization for at least some college athletes, allowing them to take their seat at the table through collective bargaining. Athletes have taken an enormous step toward fair compensation, but it will be a few more years before we see if the civil rights battle championed by Harry Edwards, Ed O’Bannon, and so many others can finally be won.
College sports is a uniquely American experiment. It has both wonderful and terrible elements. On the positive side, it allows young people to enjoy and hone their athletic skills, preparing a few of them for professional careers and providing others with scholarships or at least memories of great wins and cherished teammates. For the public, college sports creates very popular entertainment, live and on TV, and, for some, emotional bonds to universities they attended or have simply embraced. For universities, sports creates enormous athletic revenues (more than $3 billion for the 70 or so schools in the largest conferences), alumni and student pride, more undergraduate applications, and greater contributions to athletic departments.
But on the negative side, many athletes are admitted because of their athleticism, not academics, and don’t have sufficient time to focus on their studies. The former Oklahoma State and NFL star Dexter Manley testified to Congress that he couldn’t read or write when he finished college. Many athletes leave school without a degree, and are, as O’Bannon testified, “athletes who masquerade as students.” The University of North Carolina infamously was found to have propped up athletes’ eligibility with classes that never met, but the school somehow avoided NCAA sanctions. Even academically minded athletes are pushed into easy majors so they won’t be distracted from their sport. And we have “college” basketball players who barely visit college, spending only August to March of their freshman year on a campus, practicing basketball, playing as many as 40 games, and then leaving to prepare for the NBA draft. Passing one semester of exams does not a college student make.
Further, the NCAA’s decades-long effort to block athletes from earning a penny for their efforts created an unfortunate under-the-table economy for star players, in which recruits were secretly paid tens of thousands of dollars in cash for choosing a particular school. A federal prosecution put some people in jail for these activities, and evidence in that case included audio of the LSU basketball coach Will Wade complaining that he made a “strong-ass offer” to a recruit (and still didn’t get him), and that he could pay his players better than the NBA minor-league minimum. Despite this, Wade was allowed to continue coaching at LSU for several years, and, when he was finally fired, was hired at another NCAA school. The NCAA claims to believe in amateurism, but violations by coaches are treated with kid gloves. Athletes do not get the same forgiving treatment, as we will see.
The recent upheaval in college sports stems from a collision between the NCAA’s strict amateurism model and the rapid commercialization of college sports, in which everyone but the players got rich. The ever-increasing money in college sports has made the NCAA’s penurious attitude on athlete compensation look unfair and outdated, and the problems were exacerbated by the NCAA’s vindictive discipline and incoherent regulatory and litigation instincts. It has often been its own worst enemy, which is why many have little confidence in its ability to address current issues about NIL, even though it might be the most obvious candidate to do so.
In addressing these issues, one might think it would be useful to see how other countries handle college sports, but there is no such other country. (Well, Canada has a little.) Ask a Brit if Oxford has a strong soccer team this year, and you will get a long, silent stare. It’s the same in France, Australia, or Brazil. Around the world, potentially elite athletes do not go to college, and colleges do not field strong teams or televise their matches. The top athletes go pro or begin training for the Olympics at sixteen or seventeen. Only we Americans think we can mix education and big-time sports, and we are having a bumpy ride.
Intercollegiate college sports began in 1852 with a Harvard-Yale regatta. Harvard won, but its success was marred by questions about whether its coxswain was a current student. Eligibility questions and charges of cheating are as old as college sports itself.
Other sports followed, with Williams versus Amherst in baseball in 1859, and the first track meet in 1873. Football arguably began with Princeton against Rutgers in 1869, but that game was a hybrid of soccer and football, and is also considered the first college soccer game in America. Three games were planned between the two New Jersey schools, but the deciding game was canceled over faculty concerns about distraction from academics. Around this time MIT President Francis Amasa Walker said, “If the movement shall continue at the same rate, it will soon be fairly a question whether the letters BA stand more for Bachelor of Arts or Bachelor of Athletics.”
Early rulemaking and enforcement came from “conferences,” also known as “leagues.” Predecessors of the Southeastern Conference, the ACC, and the Big Ten were created between the 1890s and 1920s. But 18 college football deaths in 1905 caught the attention of President Theodore Roosevelt, who called for national regulation. As a result, the Intercollegiate Athletic Association of the United States (IAAUS) was formed in 1905, and in 1920 changed its name to the National Collegiate Athletic Association. Today the group includes the vast majority of four-year colleges with athletic programs, broken into Divisions I, II, and III, denoting large, moderate, and small commitments to athletics respectively.
The original NCAA constitution limited college athletics to “amateurs,” but without a definition of this crucial term. Whatever it initially meant to the NCAA, the concept was borrowed from overseas. In England, playing sports was considered a leisure-class activity that should be limited to gentlemen who ought not be paid for playing. But when the blue bloods were challenged by teams in factory towns in the 1880s, where players weren’t literally paid to play but were recruited to towns with factory job offers, the upper-crust teams complained that their opponents weren’t sufficiently amateur. The factory town teams ultimately prevailed in this debate, and amateurism in English soccer gradually faded away.
Amateurism also had roots in the Olympics, which restricted participation in the inaugural modern Olympics of 1890 to amateurs. Jim Thorpe famously (also infamously) had his 1912 track and field medals taken from him when it was learned that he had played a bit of minor-league baseball. But as decades passed, the Olympics came under pressure to abandon amateurism, amid allegations of secret payments to top athletes in Europe and the U.S., and government financial assistance to Soviet bloc athletes. Olympic amateurism was watered down in the 1970s, and abandoned in time for the USA “Dream Team” to win basketball gold in 1992.
Before the 2014 NCAA basketball Final Four, the University of Connecticut star Shabazz Napier, who grew up in the projects in Boston, complained that he and his teammates “have hungry nights [where] we don’t have enough money to get food.”
There is a clear pattern here—insistence on amateurism in these sports generated circumvention through under-the-table payments as the sports got more popular and profitable, and amateurism was abandoned as unrealistic in all these sports except American college athletics, by the late 1980s. The only surviving amateur regimes are the NCAA, and sports like golf and tennis, which are quite different since they allow athletes to choose whether to be pros or amateurs. There is no such choice in the major American sports, and colleges enroll hundreds of talented young athletes each year with substantial earning power who can’t go pro because of their age, which varies from sport to sport. Thus, the NCAA is the only game in town, but it told athletes for over a century that they couldn’t earn a penny from their athletic fame or talent. Zion Williamson, for instance, played in his first year of nationally televised basketball at Duke without any compensation. The next year he entered the NBA with a $9.75 million salary and signed a deal to endorse Nike products that was worth $75 million over five years. Nike would have paid him something substantial in his first year at Duke if NCAA rules had allowed it. It is this forced amateurism, contrasted with the vast and growing sums of money flowing to the schools from football and basketball, that generated growing opposition to the NCAA amateurism model from athletes and the public, and, with the help of antitrust law, ultimately toppled it.
If one chooses to enforce an amateurism regime, one must define “amateurism,” which is no mean feat. In broad concept, it is supposed to keep professional athletes out. But does an athletic scholarship make you a pro? How about free academic tutors? Can parents be transported to games for free? And, most important here, what about NIL money? Payments from an apparel company do not resemble professional salaries in source or terms. This was Ed O’Bannon’s grievance—his depiction in a video game should have earned him a few hundred or thousand dollars, but he couldn’t get anything. It was also described well by the NBA star Andre Iguodala: “After a while it starts to wear on you. Kids on campus were wearing my number and the school was getting $40–50 for each jersey sold, but I still was playing in exchange for tuition, room and board.”
Looking at NIL from a different angle, college students who are good singers or dancers can make money performing off campus, endorsing a line of instruments, or monetizing their social media accounts. But their classmates who play sports couldn’t earn a nickel from any of those things.
In 1948, the NCAA made its first effort to define athletic amateurism with what it smugly called its “Sanity Code,” which allowed for tuition scholarships only, no room and board or other financial inducements, and called for expulsion of any member school that violated the rules. Apparently the NCAA believed it insane to allow anything more.
Only three years later, however, “sanity” was redefined, after the NCAA proved unwilling to expel seven schools that self-reported violations of the code. By 1956, full scholarships were allowed—tuition, room, board, books, and a few dollars for incidentals—but nothing more.
While NCAA schools debated whether full scholarships were consistent with amateurism, they were in agreement that growing college football could be a highly profitable endeavor. The University of Chicago was an early pioneer, garnering attention around 1900 with a new coach, a big new football stadium, and entry into the Big Ten, winning two national championships. Its games were big social events. Applications for admission and enrollment at the university rose dramatically.
Despite all this success, newly appointed President Robert Maynard Hutchins concluded in the 1930s that football and strong academics were incompatible. The university left both the Big Ten and Division I, never to return. But dozens of other schools mimicked Chicago’s success and never looked back. Michigan State, for instance, was a small agricultural college until it decided to develop a strong football team, grew enrollment to 40,000, and, with perfect timing, slid into the Big Ten slot vacated by Chicago.
The growth of college sports accelerated after World War II, as the GI Bill provided funds for far more Americans to attend college, growing an alumni and fan base. Even more important, in the decade of the 1950s, the percentage of U.S. households with televisions jumped almost tenfold, from 9 percent to 86 percent. There are only so many people you can fit into a stadium, but with TV, the sky is the limit.
The NCAA obtained its first national football TV contract in 1952. It was $1.1 million annually, and the price accelerated through the 1960s and ’70s, reaching $31 million annually by 1980 (the equivalent of $150 million in 2023 dollars). Televised college basketball likewise began small but experienced exponential growth in the 1970s and ’80s, with TV rights to March Madness growing from $500,000 annually in 1972 to $16 million per year in 1981. And again, having a strong team with a national audience paid great non-sports dividends to schools; little-known Butler University, for example, saw admissions applications increase 50 percent between 2009 and 2012, during which time it made two Final Fours.
However, as college sports became more profitable, college officials and others pointed out the unfairness (and danger) of schools profiting massively off the accomplishments of athletes who were not allowed to earn a penny from their skills. When an ugly basketball point-shaving scandal in the 1950s led to criminal convictions of 32 players who had conspired with gamblers to affect the final score of games, Justin Morrill, the president of the University of Minnesota, commented that these uncompensated athletes were “easy prey to the easy-money approaches of unscrupulous gamblers.”
The availability of substantial TV money also led to disputes among schools over who got that money, and ultimately introduced the NCAA to a pesky thing called antitrust law, which has plagued it ever since. In the late 1970s, the major football schools objected to the NCAA’s egalitarian approach to television, which limited how often individual teams could appear and required that appearances under the NCAA’s national TV contract be shared among at least 82 teams.
More than 50 prominent football schools formed the College Football Association in 1977, and pressed for less NCAA regulation and more TV games overall, including many more for the most popular teams. When they got outvoted at the NCAA, they went shopping for their own deal, and NBC offered the CFA $180 million for four years of football. The NCAA threatened to expel the CFA schools, and the CFA schools, having to decide between this rich TV offer and their NCAA membership (which implicated basketball and all other sports), opted for something entirely different—an antitrust lawsuit against the NCAA.
Antitrust law might be the lead character in this story. The Sherman Antitrust Act was passed more than 125 years ago, in 1890, and its short and simple text remains substantially unchanged. It prohibits contracts, combinations, and conspiracies that restrain trade, and monopolization, and was dubbed “the Magna Carta of free enterprise” by Justice Thurgood Marshall. It creates challenges to many big businesses, but particularly difficult problems for sports leagues, which almost by definition restrain trade—controlling how many games and teams there are, how much money can be paid and to whom (salary caps, rookie scales), and a variety of lesser restraints. Ford, GM, and Toyota do not meet and discuss how they could cooperate to make more money (they would be indicted if they did), but the Yankees, the Red Sox, and the Dodgers do. They call it a “league meeting.” They even put their agreements to restrain trade in writing and call them “rules.” Leagues can be easily put on the defensive by antitrust charges aimed at such rules.
The legendary Duke basketball coach Mike Krzyzewski has said of the nascent licensing market, “This is the most tumultuous time in the history of intercollegiate athletics, and there’s no leadership, no structure, no direction … It’s really good and it’s really bad.”
In 1981, the 63 CFA schools, led by the Oklahoma State Regents on behalf of the Sooners, filed the first major antitrust suit against the NCAA. This began a 40-year period in which the NCAA lost four crucial antitrust cases, leading directly—with crucial help from the California legislature in 2019—to massive changes in college sports. At the time, the NCAA limited the total number of televised games and how many of those slots could be taken by the strongest teams. Thus Notre Dame, which might have wanted to be on TV every Saturday, might be relegated to one or two, while far weaker football programs might get a game every year or every other year. Antitrust law frowns on such artificial limits on competition, and prefers to let the market decide which games will be televised. Consumers get more choices, and more attractive games with top teams, and antitrust law typically favors consumer choice.
Ask a Brit if Oxford has a strong soccer team this year, and you will get a long, silent stare. Only we Americans think we can mix education and big-time sports, and we are having a bumpy ride.
The NCAA’s primary defense in the case, NCAA v. Regents of Oklahoma, was that it didn’t resemble a pro sports league or a big business, the real targets of antitrust law, and that its TV rules were part of the amateur tradition of college sports, which was principally about education and fair competition, not money. But the argument didn’t sell in the trial court, or on appeal, or, most importantly, in the Supreme Court, which ruled for the big football schools by a vote of 7–2. The high court found that the NCAA’s TV rules unreasonably restrained trade, and that competition would be better served by letting each school or conference negotiate whatever TV deals it wished. The NCAA lost control of college football, and the big money earned thereby, and has never gotten it back. (By contrast, it does control college basketball, and runs its entire operations off the profits from March Madness.)
Although the NCAA lost the Regents case, its arguments about the collegiate model obtained a few friendly comments from the Court. The opinion said “college football” was a particular brand in which the players “must not be paid,” and added,
The NCAA plays a critical role in the maintenance of a revered tradition of amateurism in college sports. There can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act.
So the NCAA lost the TV case, but it had reason to believe that it would do better if amateurism itself were at stake. Or so it appeared 40 years ago.
Not surprisingly, after Regents, fans got to see the top teams more often, more total games were broadcast, and total TV money increased spectacularly. For example, the Southeastern Conference was paid $17 million per year for football rights in 1996, and is now receiving roughly $722 million from all sports, most of which comes from football. Schools began to jump from conference to conference for increasingly lucrative TV deals, and the Big Ten, which once covered the Midwest, now stretches from sea to shining sea, from Rutgers to UCLA. These huge and spread-out conferences defy logic, convenience, and educational goals, but the TV money is very good.
The big TV deals caused everything in college sports to get bigger. Football and basketball coaches have become multi-millionaires, with many earning over $5 million annually—Coach K earned $12.5 million. To add insult to injury, these coaches are commanding long-term guaranteed contracts but being fired quickly if they don’t win, so in the past decade, public universities spent $530 million on coaches they had already fired.
As the TV money grew, voices were raised in favor of athlete compensation and empowerment. Dick DeVenzio, a starting guard and Academic All-American at Duke, wrote a whole book about the subject in 1986. Ernest Chambers, a legislator in Nebraska, annually proposed legislation to put Cornhusker footballers on the state payroll, an idea that seemed extreme at the time but is discussed more seriously today. NIL rights for athletes were still decades away, but players in the 1980s got some group perquisites, such as separate dormitories for athletes and lavish amenities, like Clemson’s miniature golf course for football players. Teams began to fly to games via charter planes, a perk that WNBA players have only recently begun to enjoy. But cash compensation remained verboten, both from the schools and from the likes of Nike or a local business wanting the player to sign some autographs for a few bucks.
Indeed, the NCAA not only stuck to amateurism, but also enforced it with a vengeance. The golfer Dylan Dethier of Williams College was ruled ineligible for the Division III championships because he wrote a book about golf while on a gap year. It was not a best seller. Brittany Collens and several tennis teammates at UMass were found ineligible, and their accomplishments deleted from the record books, because the university had accidentally overpaid them a few dollars on their scholarships, which they promptly repaid. The Colorado wide receiver Jeremy Bloom was ruled ineligible because he had apparel contracts from his prior success as an international skier.
This trend of unfortunate decision-making brings us to another antitrust loss—and one that was totally unnecessary. Despite ever-increasing TV money, in 1991 the NCAA decided to cap the annual pay of the lowest rank of assistant coaches at $12,000. The aptly named “Restricted Earning Coaches” rule was challenged in 1994 in a class action by Norman Law, a coach at Pittsburgh, and the NCAA got clobbered, and was forced to pay the coaches $55 million in damages. (I was involved in this case on behalf of the coaches, although the case was run day-to-day by others in my and another law firm.)
Importantly for athletes, antitrust law had crept closer to the mother lode of NCAA amateurism, because although Law’s case wasn’t about athletes’ rights, it involved an illegal “price fix” by the NCAA for people who toiled in college athletics, and bore much more resemblance to players’ financial grievances than the Regents TV-based case. If assistant coaches had antitrust rights, why not players?
Here we have several self-inflicted wounds. First, the NCAA should never have enacted the plainly illegal rule. Second, having been sued, it should have withdrawn the rule and settled. And finally, having lost the case, it shouldn’t have appealed, which created a published appellate decision finding the NCAA to be guilty of price-fixing.
The plot truly thickened in 2009 when O’Bannon saw his image in the video game and filed suit in federal court in Oakland. His case was combined with other athletes’ suits to challenge two things: their inability to earn NIL money, and the NCAA’s arbitrary caps on athletic scholarships. The latter set a maximum scholarship limit at an amount below what federal law defined as a “full cost of attendance” scholarship, a difference of several thousand dollars. But if federal law defines a certain level of scholarship help as the “full cost of attendance,” why would the NCAA set a ceiling on scholarships thousands below that? Does a truly full scholarship make an athlete a pro?
The NIL issues were hard-fought, but the arbitrariness of the scholarship rule likely hurt the NCAA’s credibility in front of the federal district judge, Claudia Wilken, who presided over both aspects of O’Bannon and later would preside over another crucial athlete compensation case, NCAA v. Alston. In August 2014, Wilken ruled in favor of O’Bannon on both points. She first brushed off the Supreme Court’s friendly remarks about amateurism in Regents as what lawyers call “dicta”—background commentary rather than a binding holding of the Court. Next, she concluded that the scholarship limits were an illegal price-fix. And finally, she turned to the big-ticket item—NIL. The money did not come from the schools, so it was different from a professional salary. And it had a commonsense attractiveness—if O’Bannon’s image and name were popular enough to help sell video games, why did everyone profit but O’Bannon?
Wilken found this issue difficult, and reached a compromise solution—she held that antitrust law was violated by the NIL prohibition. The proper remedy did not need to permit athletes to personally market their NIL, but it did require the NCAA to at least allow schools to pay their athletes up to $5,000 per year in lieu of their NIL rights, to be held in trust until they finished school.
O’Bannon’s wins were enormous in precedential significance. First, he got a federal court to use antitrust law to overturn, for the first time, the NCAA’s conception of amateurism; second, he won athletes the opportunity for full cost of attendance scholarships; and third, he got athletes an opportunity for compensation for their NIL rights, albeit with a low ceiling. He also secured direct compensation for athletes who appeared in the video game, whose publisher, Electronic Arts, paid $40 million in a pretrial settlement.
The NCAA appealed. In October 2015, the Ninth Circuit Court of Appeals affirmed Wilken’s ruling on scholarship size, but in a 2–1 vote overturned her NIL compromise. The appeals court held that the NIL trust funds could not be imposed on the NCAA because the association could reasonably limit athletes’ benefits to those “tethered to education,” and NIL rights were not so tethered.
Although the limited NIL rights were lost for the moment, the appeals court’s language about benefits being “tethered to education” opened the door to all kinds of new athlete compensation. Why couldn’t schools award post-graduate scholarships to athletes, or offer cash academic awards limited to athletes, or provide athletes paid internships in their fields of interest? Weren’t these benefits all “tethered to education”?
Ford, GM, and Toyota don’t discuss how to cooperate to make more money, but the Yankees, the Red Sox, and the Dodgers do. They call it a “league meeting.” They even put their agreements to restrain trade in writing and call them “rules.”
When the appeals court ruled in 2015, its “tethering” language was quickly adopted in another antitrust suit against the NCAA filed in 2014 by Shawne Alston, a running back for the West Virginia Mountaineers, and other athletes. Alston’s case challenged various aspects of the NCAA’s athletic compensation limitations. Alston’s lawyers spun their case to fit the appeals court’s new test from O’Bannon, and Alston ultimately produced a $200 million settlement in 2017 and an order from Wilken in 2019 that the NCAA must permit schools to offer academic-related benefits such as postgrad scholarships. The NCAA appealed again, seeing this as just another way for schools to recruit athletes with promises of cash, or what it called “improper inducements.”
But before the appeal of Alston could be decided, the action shifted 80 miles northeast, from federal court in Oakland to the state capitol in Sacramento, where state Senator Nancy Skinner was ready to take center stage.
Skinner, who had taken classes with Harry Edwards at Berkeley and was aware of the plight of college athletes, learned about the ongoing legal battles over athlete compensation from Andy Schwarz, an economist who worked on O’Bannon. After considerable study, Skinner introduced California Senate Bill 206 in 2019. The bill, which permitted California college athletes to monetize their NIL without penalty from their schools, threatened to force a showdown with the NCAA, which would otherwise suspend the athletes for amateurism violations. (I became an unpaid consultant to Skinner early in the pendency of the bill, assisted in the amendment process, and testified in favor of the bill at a Senate committee hearing.)
The NCAA vigorously opposed Skinner’s bill, threatening to bar California schools from its championships. Most of the college sports establishment reacted like the retired Purdue basketball coach Gene Keady: “Oh, I hate that. It’s entitlement. Everybody thinks they’re entitled to certain stuff. You’re not entitled to anything. Go to class, get your degree, and earn your own way in life with a good education.”
The California legislature felt differently. Skinner had crafted the bill narrowly to permit only NIL, and not salaries or other university-paid benefits. Furthermore, the commonsense notion that athletes should be afforded the same economic freedom as artistically or musically gifted students caught on with both the legislature’s Democratic majority and, ultimately, the Republican minority. Former college athletes testified in favor of the bill, and the opposition witnesses were somewhat off point, claiming that NIL would be expensive and rob minor sports of their support from the schools. NCAA CEO Mark Emmert irritated California leaders with his threats against state schools, and the outmanned opposition simply faded away. The bill passed both houses unanimously in September 2019, and Governor Gavin Newsom signed it at a televised event with Ed O’Bannon, LeBron James, and the former UConn basketball star Diana Taurasi. In contrast to the yearslong battles in court, which had not yet delivered NIL, Skinner’s legislation had proceeded from mere concept to groundbreaking law in only a few months.
Whether the NCAA would have blocked California schools from NCAA championships was never really tested, as Florida and more than a dozen other states followed up by passing similar NIL laws. The NCAA then began to think about allowing NIL nationwide but regulating it so it wouldn’t morph into salaries or improper recruitment inducements. Many suggestions were floated, such as mandating full disclosure of deals, requiring them to reflect the fair market value of the rights in question, and keeping the schools out of NIL agreements and leaving it to private businesses. Indeed, each of these limitations was included in one or more of the state laws.
But as the NCAA pondered how to regulate NIL, a bolt of lightning struck from the Supreme Court. Nine men and women in black robes were about to tilt the battle toward student empowerment and compensation.
Simultaneous with action in Sacramento, the NCAA had appealed Wilken’s decision in Alston all the way to the Supreme Court, hoping to stop the onslaught on amateurism. The Court had a solid conservative majority, and conservatives are often not friendly to antitrust plaintiffs, which made the NCAA hopeful and the athletes’ lawyers fearful when the Court agreed to hear the case.
But to both sides’ surprise, in June 2021 the Supreme Court unanimously affirmed the Alston decision, concluding that antitrust law required the NCAA to allow the schools to offer postgraduate scholarships, cash academic awards, and other education-related benefits if they wished. The Court’s opinion began by rejecting the 40-year-old amateurism-friendly comments from Regents as nonbinding, just as Wilken had, and added that when “market realities change, so may the legal analysis.” The justices were talking about television money, and they found that, particularly in this highly profitable market, antitrust law required the NCAA to permit schools to offer their athletes valuable education-related benefits. Indeed, the unanimous Court made its ruling sound relatively obvious. Antitrust law protects competition, and if Stanford wants to offer its athletes academic awards to try to compete more effectively for recruits, what’s the problem?
But if the Court’s calm and straightforward main opinion frustrated the NCAA, Justice Brett Kavanaugh’s concurring opinion was its worst nightmare. He not only sided with the students, but also vigorously disagreed with pretty much everything the NCAA had argued. His opinion dripped with sarcasm, mocking the NCAA’s arguments that its rules were lawful because its fans preferred amateur athletics: “All of the restaurants in a region cannot come together to cut cooks’ wages on the theory that ‘customers prefer’ to eat food from low-paid cooks. Law firms cannot conspire to cabin lawyers’ salaries in the name of providing legal services out of a ‘love of the law.’ ” He concluded: “The bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year.” Here he was equating the athletes to workers, anathema to the NCAA’s view of the world, and dangerous to their legal arguments that the athletes weren’t employees and couldn’t unionize.
In closing, Kavanaugh suggested that although the NCAA’s concerns could not be solved by bending antitrust laws to its purposes, they might be addressed by Congress, which could amend the antitrust laws, or by allowing the athletes to form unions, which under the labor exemption to the antitrust laws (described above regarding pro leagues) could legitimize limits on athlete benefits so long as they were collectively bargained with a player union.
This bombshell—both the loss in Alston and the threats of more drastic action from Kavanaugh—stopped the NCAA’s consideration of regulating NIL in its tracks. The Court’s language was so athlete friendly that the NCAA could foresee losing a challenge to any NIL regulations as a restraint of trade, and such a case, House v. NCAA, was already pending. If Alston cost the NCAA $200 million, House could cost it billions.
Nine days after the Alston decision, the NCAA announced that athletes in all 50 states could monetize their NIL. Regulations were expected to follow, but there were none for more than a year, and in reality, there have still been none with any teeth.
Many colleges took full advantage of the void. Some awarded the newly allowed cash “academic awards” to any athlete with a 2.0 average, which essentially meant anyone who had athletic eligibility. A Brigham Young University booster provided NIL money so all of its “walk-on” football players had the cash equivalent of full scholarships (undermining the NCAA’s scholarship limits). A University of Nevada, Las Vegas, booster provided free use of a car to all Running Rebel basketball players, surely something unrelated to the fair market value of the NIL of the least prominent benchwarmers. Each of these actions likely angered the NCAA, but there were no known inquiries to the schools, no penalties, no warnings, and no signs of life at NCAA headquarters in Indianapolis.
The world of NIL quickly became chaotic, and the chaos was multiplied by liberalized NCAA player transfer rules that also went into effect in 2021. Transfers previously had to sit out a year before playing for a new school, a serious deterrent, but that rule was withdrawn, and the number of players considering transfer boomed. You could not only buy a good batch of high school seniors, but you could also steal players from competing schools with high NIL offers. If NIL money became a recruitment tool, it might be used not only with high school seniors, but also with talented college freshmen, sophomores, and juniors who might wish to transfer. So many athletes wanted to test the transfer market that an online “transfer portal” was created where coaches could scroll through a compilation of available players on their cell phones. Wry observers dubbed it “Tinder for Coaches.”
Licensing deals no doubt generated several positive effects, as players were earning money commensurate with their market value. Some were staying in school longer because NIL money provided them a good living, and thus fans saw more continuity in their teams’ rosters. But the boosters, which had begun combining into larger groups called “collectives,” quickly introduced chaos. The original concept of licensing deals had been known as “third-party NIL,” where athletes made agreements directly with businesses in a free and open market. Now, boosters and collectives became middlemen to those third-party deals, saying, “Come to our school and get $300,000 per year.” If the offer was accepted, the boosters would try to find NIL deals to fund it, but failing that, would pay the athletes themselves. On rare occasions, the boosters have even failed to provide the promised funds. This bastardization of NIL is what Jim Boeheim was complaining about when he said three ACC rival schools had “bought” their teams (and also the basis for the countercharge against his Syracuse program).
Boosters and collectives brought us John Ruiz of Miami, with his $10 million NIL fund; a Clemson collective with $5.5 million to spend on players at its inception in 2022; and the $8 million deal with a high school star reported by The Athletic. No wonder observers dubbed the NIL market the Wild West. And the lack of any required disclosure of NIL deals meant that the known deals might be just the tip of the iceberg. It was possible that some other school or its boosters had bought its whole basketball team at inflated prices and just kept quiet about it. But in this maelstrom the NCAA remained cautious, issuing non-enforced “guidance” that frowned on university involvement in licensing agreements.
“All of the restaurants in a region cannot come together to cut cooks’ wages on the theory that ‘customers prefer’ to eat food from low-paid cooks,” Justice Brett Kavanaugh wrote in a concurring opinion overturning the NCAA’s amateurism rules.
As this article was nearing completion, the NCAA finally issued a slap on the wrist as its first sanction for NIL-related activity. The league found that the booster Ruiz and a Miami coach violated recruitment rules when the coach facilitated a meeting, and Ruiz bought the Cavinder sisters dinner in hopes of persuading them to transfer to his school. But the NCAA expressed no concerns about Ruiz’s $10 million “NIL” fund, and whether any was used for this or other recruitment.
Finally, there is one more NIL challenge worth noting—Title IX. That law requires that athletic opportunities and benefits provided to male and female athletes by schools be proportional to the male-female ratio at the school. Schools make an effort to balance their athletic spending on men and women, and a rich apparel deal with Nike by a football star won’t create a violation of Title IX because Nike money doesn’t count in the balance, only school money. But Gator Collective money might, or John Ruiz money. Schools are often held responsible for the conduct of boosters in traditional recruiting, so the same rule might apply here, putting a school out of compliance if men get more NIL money than women, which is likely. The Drake Group, a well-respected nonprofit that supports equity in college sports, has already raised this issue with the U.S. Department of Education, which administers Title IX. As Charlie Baker, the new NCAA president, takes office, many are pondering how to preserve athletes’ rights but end the chaos. What levers are available to the interested parties to do that? We might usefully divide the options into short-, medium-, and long-term fixes.
First, the NCAA can finally begin to regulate NIL without overly stifling it. As Baker recently acknowledged, “Someone has to set what I would describe as the sort of the rules of the game, [and] I think the NCAA has a pretty important role to play.” As poorly as the NCAA has performed, it is the most likely source of short-term action. It can demand transparency in NIL deals; it can tell schools to stay out of this market, or how to act in it; and it can penalize boosters and schools that misbehave, as it has done for decades on recruitment issues. Transparency would be a great first step. If we don’t know what the athletes, schools, and boosters are doing, it is impossible to know what corrective action is required, if any. But the next steps are harder. The NCAA could try to restore the concept of “third-party NIL,” where the deals are generated by businesses rather than boosters. To go further, and require that NIL deals provide no more than fair market value to the athletes, seems like a challenging and possibly dangerous task. Who is going to decide what fair market value is, and on what basis, and how quickly? This is also a step that surely invites antitrust attack.
A second method of change is federal legislation. The NCAA and its supporters have suggested that Congress could immunize the association’s licensing rules from antitrust attack, preempt past or future state legislation on this subject to avoid inconsistency, or write its own version of NIL regulations into law. Each of these steps has major problems or will miss the mark. Giving the NCAA antitrust immunity regarding NIL makes no sense given its track record of squelching athletes’ rights. The alleged differences among state NIL laws are rather minor and are not the central problem. And finally, having Congress write NIL rules would take months or years, might never occur, and, worse yet, might result in a political compromise that is counterproductive. Thus, Congress is at best a medium-term solution.
The third possible fix relates to athlete unionization, a double-edged sword that would give players the power to bargain collectively with schools, but could also provide antitrust protection for schools and the NCAA. (Market-restraining agreements made between unions and leagues—like the NBA salary cap—are exempt from antitrust enforcement.) Indeed, athletes at USC are trying to form unions right now. But it will be a long and slow process.
Even if college athletes are found to be employees, and thus eligible for union status, the challenges to creating a nationwide or even conference-wide union are enormous. If Alabama’s football players are found to be employees, they are employees of the state of Alabama and must be organized under Alabama law, while athletes at USC are private employees and must be organized under federal law. Combining state employees of multiple states and private employees into one nationwide union would be unprecedented in the annals of labor law.
Thus, the broad unionization needed for the creation of common work rules (including compensation) will be quite difficult so long as the universities continue to oppose unionization vigorously, as they have. But the Penn State football coach James Franklin recently surprised many by saying, “I also think that ultimately, whether it’s in the next three years or next five years or next two years, there’s going to be some form of revenue sharing or collective bargaining agreement [with the players]. That’s going to happen. I think that’s inevitable.”
If other coaches and athletic directors agree with Franklin, there are creative and collaborative unionization ideas floating around, such as making Division I football and basketball players employees of a conference or the NCAA who are then “assigned” to the school of their choice. Neither the conferences nor the NCAA are state entities, so all the athletes could be in one union. But these are bold and complex ideas that would take years to work out.
With both legislation and unionization slow and uncertain, the immediate focus should be on the NCAA. It can (and should) take an iterative approach, starting with disclosure and treading lightly, respecting the new rights athletes have won while trying to enforce fair and open competition among schools. Keep it simple, and if more regulation is needed, do it in year two or three.
Ed O’Bannon, Nancy Skinner, and many others who supported their efforts were looking for fair compensation for college athletes through NIL rights. They have gotten that, and NCAA amateurism is essentially dead, but the forces they unleashed have, for unforeseen reasons, created chaos in the nascent licensing market. Rational people from all parts of the college sports scene should work together to create more certainty as to what is permitted, and enforce the resulting rules. Otherwise, we will have a race to the bottom, where the boldest (and richest) boosters and collectives strike backroom deals to dominate college sports. If that happens, it will erode not only fair compensation for athletes but also the public’s respect for college sports.
We are far better off than we were five years ago, when many star athletes “majored” in their sport, created millions of dollars for others, and earned nothing for their athletic efforts, talent, and fame. But as in so many areas of economic life, the market-warping forces of concentration, collusion, and worker disempowerment need to be turned around.
