Lawsuit against NCAA, college conferences seeks greater athlete compensation

Case action lawsuit could allow payment, University Prof. Elzinga, Athletics Director Littlepage think changes could be problemativs

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Last month, antitrust attorney Jeffrey Kessler filed a lawsuit against the NCAA and five major college conferences on behalf of two football and two basketball players at Clemson, the University of Texas at El Paso, Rutgers and the University of California Berkeley — students Martin Jenkins, Kevin Perry, J.J. Moore and William Tyndall, respectively. With the exception of Jenkins, a junior, the four have completed their NCAA eligibility and ended their college athletic careers.

The class action lawsuit accuses the NCAA and the “Power Conferences” of price-fixing by limiting compensation for student athletes. The four athletes are also seeking individual damages. Should it be determined price-fixing is in fact occurring, the case would open the possibility of paying student athletes across the country, including at the University.

The complaint against NCAA and conferences

The complaint filed asserts the ACC, the Big 12, the Big 10, Pac-12 and the SEC “have lost their way far down the road of commercialism, signing multi-billion dollar contracts wholly disconnected from the interests of ‘student-athletes,’ who are barred from receiving the benefits of competitive markets for their services even though their services generate these massive revenues.”

It accuses the NCAA and these five conferences of entering “into what amounts to cartel agreements, with the avowed purpose and effect of placing a ceiling on the compensation that may be paid to these athletes for their services.”

This case is at the heart of the debate over whether to pay college athletes and what purpose they serve at their respective universities. The public remains strongly divided on the issue. One camp argues paying student athletes is only fair and would fix an illegal system. The other side posits that additional compensation would unravel the college sports system.

Timothy Nevius, one of the lawyers working with Kessler on the case and a former associate director of enforcement at the NCAA, said he believes the current system is broken. For him, the goal of this lawsuit is to strike down an unjust element of college sports and then rebuild.

“In the class-action lawsuit, we’re seeking an injunction,” Nevus said. “The injunction is simply the ruling by a judge that determines that the restrictions were illegal. Then we would have to determine what new system should be in place, particularly with respect to compensation.”

Nevius said this newly constructed system would ideally reflect an open and competitive market.

“The way we see it now, we would strike down the current rule and have no limit in place and the market would determine the value of the students,” Nevius said. “The free market would be deciding your value.”

Problems with greater compensation

This position is not without complications, however. Greater compensation would greatly change the face of college athletics, but could also impact how the participating institutions themselves function.

Economics Prof. Kenneth Elzinga, an antitrust expert, said he sees potential issues with this case and with generally allowing greater student athlete compensation.

Though he is not involved with the case, Elzinga said it may be difficult to functionally apply antitrust law and policy to this particular circumstance. As it stands, college athletes are not employees and are generally viewed as students first and athletes second.

“This is a labor market in which schools are saying to someone, ‘We’re going to offer you an education as well as an opportunity to [compete],” Elzinga said. “So it’s a little bit like, if I may use a parallel, an internship. Many economists would say, ‘What’s really happening in this labor market is the intern doesn’t really have a lot to offer, and they’re willing to do that, in effect paying tuition. But by paying a labor service they’re offering a labor service below the productivity they have in order to build up human capital.’”

Therefore, he said, it makes sense that student athletes are not receiving a wage in the same way a professional athlete does.

Elzinga said there are other reasons he believes the current system is preferable to one of unchecked compensation, including how “paying” athletes would impact broader athletic programs.

“If you have athletes being paid for their labor services, you will get great heterogeneity — first of all, some athletes will be worth a lot, some will not — even on the same team, presumably,” Elzinga said. “How does [one] build a team with that?”

According to Elzinga, raising allowed compensation would impact more than just team dynamic. If it becomes permissible to pay student athletes, there will be pressure to spend high amounts on athletes in high-grossing, popular sports like football and basketball, which could negatively impact less prominent sports, he said.

“The implications may be even greater for the non-revenue sports [than for-revenue sports],” Elzinga said. “Their existence may become very tenuous if we had an open market for football and basketball players; there won’t be much money left for the non-revenue generating sports.”

He also said the academic prestige and capabilities of certain institutions could be at risk with this sort of change. Universities whose identities are strongly connected with their athletic reputation, for example, might be compelled to cut spending on academics in order to spend on athletics.

Non-compensational changes proposed for NCAA

Paying student athletes is not the only suggested athletic reform, however. Many opposed to greater compensation still feel it is important to reform the current college athletics system, especially given how difficult it is for some student athletes to succeed academically.

According to University of North Carolina professor Steven King, who has suggested one such alternative, being a student athlete is like working two full time jobs.

“It’s a difficult proposition to have them be both full-time students and full-time athletes,” King said. “There’s a study that the NCAA did, and the average number of hours student athletes spent training [per week] was 39 hours. How can we expect someone to be successful with two full time jobs? We’re not setting them up for success.”

King’s plan, co-authored by UNC football’s offensive assistant coach Ryan McKee, is to change the NCAA-required number of credits student athletes take per semester — allowing them to take fewer credits while they are competing and defer required credits over an additional two years.

“There would still be the expectation that they’re going to get a degree,” King said. “We’re just making it easier for them to do so and make it easier for them to focus on the major classes that they have to take.”

Though scholarships for these student athletes would be stretched across two additional years, King said their eligibility to compete would not. The only major change made would how students are tied-up academically during their four-year eligibility period.

University opinion

University Athletics Director Craig Littlepage also spoke about potential changes to athletic policy without enabling unlimited compensation. He expressed support for expanding school resources in cases where it would make easier the commitments of student athletes, and spoke to some of the ways universities are looking to make changes.

“Many schools support expanding permissible uses of current funding options through the NCAA’s Special Assistance Fund and the Student Athlete Opportunity Fund,” Littlepage said in an email. “The concept of stipends for SAs has been considered nationally but it was rescinded after the initial NCAA proposal was implemented. Discussions continue on a national scale about stipends being provided to student-athletes. I would support allowing stipends based on some type of federally defined need-based system that is administered through each institution’s financial aid office. That way, student-athletes that need the resources could qualify.”

For Littlepage, though, making the college experience easier for athletes does not mean paying them. He is, in fact, against such a possibility.

“Personally, I do not support paying athletes for participation,” he said. “SAs that want pay-for-play have the NFL, NBA, WNBA, MLB and MSL, etc. as options. College athletics should be for those that are truly interested in pursuing a college education and their sport. Our college participants are students first and are not employees.”

The University declined to comment on the litigation.

Expected timeline

It’s uncertain how quickly the lawsuit will proceed or reforms to NCAA policy would occur. A similar antitrust case filed in 2009 involving former UCLA basketball player Ed O’Bannon is only just beginning its trial phase.

Though Nevius said the O’Bannon case might serve as a rough time reference, he anticipated the case would not take as long.

“We’ve already filed suit, but there will be a number of motions and pretrial hearings to take place before we get to the trial phase, if in fact we do get there,” Nevius said. “It will be many months and possibly years depending on how things go, but we are going to move as quickly as possible.”

In the meantime, it is possible that the NCAA and the five defendant conferences will see some changes. King, for one, hopes to have his proposal finalized and submitted in time for the next NCAA meeting, in which case his proposed change could soon be in effect.

“Right now, we’re just talking about the idea and getting people to discuss it,” King said. “Our plan is to have a proposal ready by the next executive meeting. They only vote every January for a new year so we have some time to get it in front of them.”


Published April 23, 2014 in Focus





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