Oakland, CAAttorneys for college athletes told a California federal judge that the NCAA’s proposed $2.78 billion settlement to provide name, image and likeness compensation (NIL) and revenue sharing with athletes across all sports has been “overwhelmingly positive”. The deal to settle the California labor class action was first filed by former swimmer Grant House in […]
Opposition to Settlement
In January, Law360 reported that a prominent plaintiffs-side sports attorney is joining the Department of Justice and a handful of athletes in trying to stop the settlement, arguing that it would impose a “a price fix [that] harms athletes.” In their amicus brief (filed January 27th) U.S. District Judge Claudia Wilken was urged not to approve the “injunctive” portion of the settlement — the framework under which the NCAA would control how much schools can spend on athletes via name, image and likeness rights. The lawyer had no objection to the damage settlement but believes that the injunctive settlement is inappropriate, counterproductive, and violative of the Sherman Act. According to court documents:
The settlement, which represents more than 184,000 former student athletes, will pay about 0 million per year damages over the next 10 years. According to Law360, the motion stated that, out of “nearly 390,000” athletes in the class, led by former Arizona State University swimmer Grant House, 3,433 opted out of the settlement, and 73 “timely, valid” objections were filed to the court — the combined total making up approximately 0.1% of the full class. The deal also sets a framework to distribute athletic revenues, primarily from the schools in the five so-called power conferences, to the athletes as well as the benefits they already receive in scholarships and other compensation. The athletes at the major conferences, and in other Division I programs that choose to distribute revenue to them, are expected to receive .5 billion to billion in new benefits annually.
- If the injunctive relief were approved, a football powerhouse like Alabama might spend $15 million on football, $3.5 million on men’s basketball, $1 million on women’s basketball, and $500,000 on all their athletes in eleven other varsity sports. Alabama will then be prohibited by the injunction from spending a penny more on compensation to any athlete, whether football, basketball, or exceptional athletes in minor sports, who might similarly be snubbed by dozens of schools choosing who are capped out by other priorities, although they would pay these athletes well but for the cap. Competition for those athletes will be limited by the cap.
- If Stanford—a school that seeks to be athletically competitive in as many sports as possible and which regularly wins the Directors’ Cup for best overall collegiate athletics program—spends the $20 million equitably over 15 sports teams, male and female, then a star Stanford athlete or applicant seeking a more competitive compensation offer may be forced to matriculate at, or transfer to a school that allocates its cap differently, even though Stanford is his or her preferred school, in his or preferred location, with a strong program in his or her sport, and even if Stanford would be pleased to offer him or her more money but for the cap.
- All schools spending the full $20 million will have an artificial constraint on their offers. For an athlete seeking a school that could compete for a national championship, or a state university in his or her home area, or a particular academic strength, the constrained schools may comprise all the schools that are attractive to him or her. Dozens of schools and hundreds of student athletes will face this dilemma.
- The settlement cannot fairly be called “revenue sharing.” If a friend asks me to provide him with two hours of help per month on his work, and says he might share his salary with me, no one would call that revenue sharing. And if he added that he would cap the amount, he would give me at 25% of his salary, we still would not call it revenue sharing since he might give me nothing. That is what we have here—schools may pay their athletes nothing, a little, or as much as $20 million per year per school. They can share if they like, and as much or as little as they like, to whichever athletes they choose, up to the artificial cap.
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The plaintiffs’ attorney had objections to the deal, describing some of its terms “harmful to the rights of college athletes,” and that enforcing it would break anti-trust laws. NCAA President Charlie Barker, however, supports the settlement. In an interview with CBS Evening News on March 18th, Barker said that having a school as the primary relationship for student athletes will “create a much saner way from what we have now… what I hope to get out of [the settlement agreement] is an NIL program that is more transparent, more accountable and works on the idea that this is still a development exercise for young people.” The case is In re: College Athlete NIL Litigation, case number 4:20-cv-03919, in the U.S. District Court for the Northern District of California.The strength of the damage settlement and weakness of the injunctive settlement suggests that the NCAA, having been forced to pay billions for its misconduct in the past, seeks in exchange permission from the Court to violate the antitrust laws and place an artificial cap on athlete compensation for the next ten years. This is improper and contrary to public interest as well as the interests of future college athletes. Settlements of class actions should not be approved if they allow, encourage, or even bless, a violation of law. It gives examples of how the price fix harms competition at schools:
