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Fair Play Pay: Compensating College Athletes

It is not news that college athletics are big business. March Madness holds the entire country's rapt attention each year, and the revenues it generates for the NCAA are significant. The broadcast rights are worth more than $1 billion annually as of 2016. And, while the NCAA has indicated that 90% of that money goes to the benefit of the athletes, that may not truly be the case. March Madness is over, but many question whether the NCAA promulgates another form of madness, its amateurism rules that forbid compensation of college athletes.

The NCAA Dictates that College Athletes are Not Allowed to be Paid

The NCAA has always had strict rules governing how college athletes are compensated for their participation in sports. The term it uses is "amateurism" and it means that college athletes must be true amateurs for the entire time they compete for an NCAA member school. The NCAA has this rule, it says, to ensure that "the young men and women competing on the field or court are students first, athletes second."

The NCAA therefore mandates that college athletes can only receive what is known as a "grant-in-aid" that cannot exceed the cost of tuition and fees, room and board, and required textbooks. Schools are not allowed to offer athletes any other kind of financial support.

College athletes themselves are prohibited from seeking out any other kind of compensation or engaging in professional sports whatsoever. This includes:

  • Entering contracts with professional teams
  • Collecting prize money above actual and necessary expenses
  • Trying out, practicing or competing with a professional team
  • Receiving benefits from an agent or prospective agent
  • Agreeing to be represented by an agent
  • Delaying initial full-time collegiate enrollment to participate in organized sports competition

In order to be eligible to compete, then, college athletes must remain uncompensated "amateurs." These restrictions have significant real-life consequences. Recently one high profile athlete complained of going to sleep hungry because he could not afford food and the grant-in-aid meal plan he was provided with was insufficient. The rules regarding meal plans were changed soon thereafter.

But, many question whether minor changes to alleviate the most grievous issues are sufficient. They ask if the NCAA's "amateur" athletics system is fundamentally unfair - with the NCAA and its member schools taking in so much money, shouldn't the student-athletes responsible for bringing in those substantial revenues be compensated for their time and effort?

College Athletes Fight for Their Fair Share

Over the past several years, amateur college athletes have challenged the NCAA and its definition of "amateurism" in the courts and before the National Labor Relations Board (NLRB). Though the results have been uneven, their efforts have secured some significant victories for all student athletes.

O'Bannon v. NCAA: An Antitrust Test Case

One of the most well-known cases is the antitrust class action O'Bannon v. NCAA that was filed in 2009. The lead plaintifff, former UCLA basketball player Ed O'Bannon, sued the NCAA over whether he should have been compensated post-graduation for the use of his image in a video game licensed by the school. The district court judge initially found for O'Bannon, though this was partially overturned by the Ninth Circuit. Both sides appealed to the U.S. Supreme Court, which turned down the case.

Though a mixed victory for student-athletes, the case did achieve a district court ruling that said the NCAA's amateurism restrictions violated antitrust laws. And, the other named defendants in the case - video game maker Electronic Arts and the Collegiate Licensing Company - did settle and created a $40 million fund to compensate current and former student-athletes whose likenesses were used in video games from 2003 onwards.

More importantly, however, is the fact that O'Bannon clarified the boundaries of amateurism and also provided a clearer path for future antitrust suits against the NCAA.

Alston v. NCAA: Further Progress

An antitrust suit filed in 2014 against the NCAA has made further progress for collegiate athletes. That case again challenged the NCAA's amateurism rules, and also included 11 conferences, including major conferences such as the Pac-12, Big Ten, Big 12, SEC, and ACC.

Unlike O'Bannon, the plaintifffs in Alston have secured a settlement from the NCAA. On February 3, 2017, the organization agreed to pay nearly $209 million to thousands of current and former college athletes who could receive $5000 or more from the fund. The settlement, however, does not resolve several aspects of the lawsuit, including the removal of all restrictions on college athlete compensation.

College Athletes as Employees: Cases Before the NLRB

In addition to fighting the issue in court, college athletes have also taken their compensation fight to the NLRB. They argue that, due to the nature of the relationships they have with their colleges or universities, college athletes should be treated as employees and have the right to unionize or earn minimum wage.

As with the antitrust litigation, the results have been mixed. In 2014, a petition by Northwestern University's football players asked for the right to unionize. An NLRB regional director initially ruled in the players' favor, but the full national panel ultimately dashed their hopes and denied the petition. Crucially, however, the NLRB did not address the issue of whether college athletes can be considered employees. That omission led to the stunning news this February that the lead counsel to the NLRB had issued a letter determining that athletes at 17 private colleges are employees.

Among all of the efforts on behalf of student athletes, this likely represents the biggest step forward in terms of their right to be compensated appropriately for their contributions to the NCAA and their institutions. While it does not affect public colleges and universities, it is a good first step. By saying that athletes are under the mandate of the National Labor Relations Act, the NLRB is giving them new rights and a stronger position to leverage when it comes to negotiating.

Sharing the Wealth: Student Athletes Deserve to be Compensated

From their coaches and universities to the NCAA, CBS, video game makers, and advertisers - student-athletes generate significant revenue that benefits many people and organizations. It is only fair, then, that they should share in the value they've created through their talent and hard work. While no one is arguing that college athletes should be millionaires - they should also not go to bed hungry.

There has to be a way to strike a balance - and the courts, the NLRB, and the athletes themselves have begun the process.

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