The O'Bannon Appeal Decision Buys The NCAA Time, A Little Money, And Nothing Else

The 9th Circuit Court of Appeals partially affirmed and partially reversed the previous judgement in the Ed O'Bannon vs. National Collegiate Athletic Association federal antitrust case that would have allowed schools to give athletes scholarships up to the full cost of attendance as well as up to $5,000 per year of deferred trust fund compensation. A three-judge panel found that the NCAA's amateurism rules do violate antitrust laws, but the appellate court also struck down the trust fund portion of the case.

While the NCAA technically "lost," this is a short-term win for the association. It will not be required to allow schools to give up to $5,000 per year to athletes. The cost-of-attendance allowance was upheld, but most big-time football and basketball schools already have started providing stipends. Nothing in this ruling will preclude the NCAA and its member schools from continuing to collude to forbid athletes from signing autographs for money, accepting cash envelopes from boosters or pocketing signing bonuses from athletic departments.

However, the fact that the appeals court upheld Judge Claudia Wilken's O'Bannon finding that college sports amateurism isn't legal on its face is a major problem for the NCAA going forward. In particular, this line has to be disconcerting:

"We conclude that the district court's [Wilken's] decision was largely correct."

The lone incorrect part? Wilken's ruling about $5,000 trust fund payments. That aspect always struck legal scholars and casual observers alike as odd, given that a federal judge was essentially imposing a college sports payment cap as seemingly anticompetitive as NCAA amateurism. Moreover, the arbitrary $5,000 amount--a number Wilken pretty much conjured out of the ether--had nothing to do with what elite athletes actually would be worth to schools in an free talent market.

The existential crisis for the current college sports economy is this: two federal courts have now found that the NCAA's athlete compensation rules are anticompetitive, which means they can't be justified under the Sherman Act. Another antitrust lawsuit led by formidable sports attorney Jeffrey Kessler--the man who helped bring free agency to the National Football League--is currently making its way through Wilken's court. Unlike O'Bannon, the Kessler suit seeks an open market with no scholarship cap, full stop. And today's precedent could loom large, as the 9th Circuit's decision contains numerous lines striking down NCAA arguments against allowing players to be paid:

●On the NCAA's claim that athletes would not stay in school if they made money: Indeed, if anything, loosening or abandoning the compensation rules might be the best way to "widen" recruits' range of choices; athletes might well be more likely to attend college, and stay there longer, if they knew that they were earning some amount of NIL income while they were in school.

●On the NCAA's longstanding claim that three throwaway lines in the 1984 Supreme Court decision that broke the association's stranglehold on televised college football, Board of Regents vs. NCAA, have forever enshrined amateurism as a settled matter of federal law: Nothing in Board of Regents supports such an exemption. To say that the NCAA's amateurism rules are procompetitive, as Board of Regents did, is not to say that they are automatically lawful.

The good news for the NCAA? The appeals court ruled that it is a "quantum leap" to tie deferred compensation outside of athletic scholarships to the specifics of the O'Bannon case. This means Kessler likely will have to show that the recruitment of elite football and basketball players players is not rooted in academics, and that scholarship offers are merely a way to attract athletes to play for teams, not attend schools--and that shouldn't be an impossible task, given that National Labor Relations Board regional director Peter Sung Ohr all but reached the same in the concurrent Northwestern University football unionization case.

Today, the NCAA and its member schools can breathe easy: they don't have to allow athletic departments to pay athletes puny amounts of trust fund money. In the future, however, the association may be forced to let athletes earn a whole lot more.