Class action seeks to challenge NCAA restraints and bring just compensation to college athletes
OAKLAND, Calif.–(BUSINESS WIRE)–#antitrust–College athletes have filed an antitrust class-action lawsuit against the National Collegiate Athletic Association (NCAA) accusing it of unlawfully prohibiting them from receiving benefits for the use of their name, image and likeness, according to attorneys at Hagens Berman.
The lawsuit filed June 15, 2020, in the U.S. District Court for the Northern District of California, Oakland Division accuses the NCAA, Pacific-12 Conference, the Big Ten Conference, the Big Twelve Conference, Southeastern Conference and Atlantic Coast Conference of illegally limiting the compensation that Division I college athletes may receive for the use of their names, images, likenesses and athletic reputations. The complaint says the entities violated federal antitrust laws in abiding by a particular subset of NCAA amateurism rules that prohibit college athletes from receiving anything of value in exchange for the commercial use of their name and likeness.
New Antitrust Claims Against the NCAA
The lawsuit cites a recent example in Zion Williamson, a Duke freshman and future number one pick in the 2019 NBA draft, who suffered a sprain and ripped his Nike sneakers on live television during a match between Duke and the University of North Carolina.
“Williamson wore Nikes because Duke has a multi-million dollar sponsorship contract with the company that requires the school’s athletes to wear Nike apparel during all competitions. But, while the value of this lucrative deal is directly related to and derived from the commercial benefits that Nike gains by associating its products with college athletes—particularly star players like Williamson—Williamson himself earned nothing from the arrangement because the NCAA prohibits all Division I athletes from being compensated for the commercial use of their names, images, and likenesses.” The suit says this was the moment when “the true nature of big-time college sports—and the powerful commercial influences that surround them—were laid bare.”
By the following day, Nike, the manufacturer of the shoe Williamson was wearing, had suffered a $1.1 billion decline in its stock market value that analysts attributed directly to the incident, the suit says.
Attorneys say college athletes are long overdue for their fair share of the massively lucrative college sports industry.
“NCAA coaches take home multimillion-dollar salaries. Billion-dollar television deals are made, extravagant facilities are built, and commercial sponsorships churn in more revenue for the NCAA,” said Steve Berman, managing partner of Hagens Berman and attorney for college students in the class action. “The college sports industry has been immensely profitable for every party involved except the players themselves – the very ones who make the business of college sports possible and fill seats and build cult followings of fans.”
“For too long, the NCAA’s bylaws, constitution and rules have governed all aspects of college sports, and we think these outdated and unnecessary regulations are unlawfully keeping college athletes from compensation that is rightfully theirs,” Berman added. “In social media presence alone, the NCAA, schools and other major players have profited hand over fist. In the instance of UCLA’s Katelyn Ohashi, in 2019, her top-scoring gymnastic routine went viral, and she was suddenly one of the most famous college gymnasts ever. But NCAA rules kept her from making one cent from her standout performance.”
In a video op-ed featured by the New York Times, Ohashi argued that college athletes should be able to earn income from their athletic achievements. She said that in her “senior year [her] routine went viral with over 100 million views,” but she was not able to earn a single dollar from this social media popularity.
The lawsuit seeks to hold the NCAA accountable to college athletes via injunction and damages for the NCAA’s antitrust violations regulating the profits gained from the use of college athletes’ names, images and likenesses, specifically:
- An injunction voiding rules prohibiting compensation to college athletes for use of their name, image and likeness.
- A damages class based on payments college athletes would have received if not for the NCAA’s restraints. These revenues would be for payments that would have been made to use NCAA athletes’ images on social media platforms and revenues from group licenses that would have been negotiated by each school.
College Athletes Speak Out: In Their Own Words
The suit’s named plaintiffs include Grant House, a current member of Arizona State University (ASU) men’s swimming and diving team, and Sedona Prince, who currently competes for the University of Oregon women’s basketball team.
Coming out of high school, ESPN ranked Sedona the number 8 recruit in the nation, and she received full scholarship offers from numerous top Division I programs. When she went on to become a college athlete, the NCAA’s rules preventing college athletes from utilizing their own name, image and likeness rights came into play when she was faced with challenging medical bills following a leg injury sustained while representing Team USA at the U18 FIBA Americas Championship in summer of 2018.
“I had to undergo several surgeries, and my bills were in the tens of thousands of dollars. And on top of that, I was stressed about the potential of my injuries keeping me from playing again,” Sedona said. “Even with all of this facing me, I was still unable to receive any outside compensation from endorsements or social media because of the NCAA. It’s unfair.”
In the 2019-20 season, when the NCAA forced her to spend a year on the sidelines at the University of Oregon after she transferred, some fans made “Free Sedona” t-shirts. They asked if she wanted to sell them, but Sedona knew that if she sold any merchandise with her name or likeness she could get into trouble with the NCAA.
“For all the hard work college athletes put in, for all the risks we take and injuries we sustain, and for all the money we generate, we should at least be able to share in the profits that can be made off of our own names, images and likenesses,” Sedona said. “If not us, who can rightfully claim that and profit from it?”
Grant House swam in his first college meet in the fall of 2017 and he was an immediate impact player for ASU, breaking multiple school time records. He is an Olympic hopeful, dominating the ASU pool and championships, and is training under the same coach of record-breaking Olympian Michael Phelps.
“The way the rules are right now, the NCAA puts college athletes who are shooting for the Olympics at a huge disadvantage to other athletes training to compete,” Grant said. “Our ability to fund our Olympic training efforts are essentially squashed by the NCAA’s rules on name, image and likeness. While Olympic athletes in general rely heavily on endorsements and other image deals to afford the cost of competing and training, the NCAA shuts us out of that opportunity entirely.”
The “Shady” Business of College Sports
The NCAA proclaims that its overarching purpose is “to create a safe, and equitable environment that allows student-athletes to reach their full potential in academics, athletics and life” and that it is “united around one goal: creating opportunities for college athletes.”
Yet, more than 100 coaches at Division I schools earn over $1 million per year, with the top 25 football coaches earning an average of $5.2 million annually and the top 25 basketball coaches earning an average of $3.2 million annually. The median salary for an athletic director at a Division I institution is now over $500,000 a year, and college athletes remain powerless to realize the commercial value of their own names and likenesses.
“With so many cameras pointed at student-athletes and the inability to deal directly with the athletes, companies instead enter into sponsorship and endorsement deals with the NCAA, conferences, schools, and coaches,” the suit states. “As of 2019, Nike, Adidas, and Under Armor had exclusive rights to outfit 97 percent of all Division I football and basketball programs. Schools and coaches derive millions of dollars each year in income and non-cash benefits from these deals and college athletic programs have become defined by the apparel company that outfits their teams.”
Companies take advantage of the opportunity to derive immense profits by associating their brands with talented college athletes, and the lawsuit states that, “…many have used their power, money, and influence in the world of college sports to coerce young athletes and their families into shady under-the-table arrangements and, in some cases, eligibility-destroying conduct.”
The lawsuit points out that notably absent from NCAA bylaws is any proscription or limitation on the amount of money that large corporate interests can pour into college sports and university athletic programs. Moreover, because the NCAA lacks jurisdiction as a private entity to regulate agents or third parties directly, any penalties it imposes for rule violations fall disproportionately on college athletes.
Attorneys also call to attention the social media sponsorships that athletes are barred from profiting from: “While athletes are not allowed to profit from social media activities, social media sponsorships have become a staple in negotiations of corporate partnership deals for many major college athletic programs. In addition to television deals and apparel contracts, social media plays an important role in schools’ quest for more revenue, providing brand exposure, fan interaction, and increased awareness of events at a relatively low cost to athletic departments.” In 2015, USC’s athletics department’s social media activity was reportedly generating revenue for Fox Sports (the school’s rights holder) near the mid-six-figures amount annually, according to the lawsuit.
Hagens Berman Sobol Shapiro LLP has represented classes of college students before, achieving a $208 million settlement against the NCAA concerning antitrust-related student scholarship limits, a combined $60 million settlement against Electronic Arts and the NCAA regarding player likeness rights in videogames, and an additional settlement valued at $75 million regarding concussions and safety protocols and a trial victory overturning NCAA rules limiting education based compensation. The firm’s sports litigation legal team also includes former NCAA athletes.
Hagens Berman is a complex class-action law firm with nine offices across the country. The firm’s tenacious drive for plaintiffs’ rights has earned it numerous national accolades, awards and titles of “Most Feared Plaintiff’s Firm,” and MVPs and Trailblazers of class-action law. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.