The End of the NCAA?

This week, the Economist points to the hypocrisy that is big-time college athletics:

Under the strict rules of the NCAA, student athletes are not paid for the value they create. Many do get a free education, as well as room and board, a package that can be worth more than $50,000 a year. Defenders of the system say that is plenty.

Yet critics say a scholarship is hardly commensurate with the value of some student athletes. Take Johnny Manziel, the star quarterback at Texas A&M University. According to a study by Joyce Julius & Associates, a research firm, Mr Manziel generated $37m-worth of media exposure for his school last year. Under the rules, he is not allowed to profit from his performance. But critics allege that the NCAA and its members are doing just that. A replica of his number “2” jersey can be bought for around $60 in the university’s online store, and his avatar will appear in an officially licensed videogame.

Similar complaints can be found in an antitrust lawsuit that poses a threat to the current system. The initial challenge was brought in 2009 by Ed O’Bannon, a former basketball player for the University of California, Los Angeles, who tired of seeing his image used in ways that profited only the NCAA and its licensees. He has since been joined by other former college stars. In June a judge will decide whether to certify the lawsuit as a class action involving all current and former student athletes.

If that happens, the NCAA will face astronomical claims. Mr O’Bannon and company want a share of everything from TV contracts to trading-card deals. A settlement upending the system would be the most likely result. Such a deal might set aside a portion of the revenue generated by elite college sports to pay ex-players and create a trust to compensate current student athletes when they graduate. But it would also raise thorny questions, not least over how the money is divided.

Sports Illustrated recently put together a short primer on O'Bannon vs. NCAA. CBS Sports discussed newly released emails from NCAA officials that show deep concern over the implications of the lawsuit:

[N]ew emails made public Friday and published in part at al.com strongly suggest that the NCAA was aware that EA was using real athletes in their games but did nothing to stop them.

"The jersey number along with the position and vital statistics is clearly an attempt to have the public make the association with the current student-athlete," NCAA membership services official Steve Mallonee wrote in a 2005 email to NCAA colleagues. "And it appears to be working ... The biggest concern I have is that such a position really does allow for the maximum commercial exploitation of the (student-athlete), and if that occurs, will it be long before we can defend not giving them a piece of the profits?"

Former NCAA official Bo Kerrin wrote that he considered the threat of revenue sharing with athletes over the games a "real concern," and NCAA Vice President David Berst participated in another 2005 email exchange with an Ivy League compliance coordinator who raised the same issues.

"This seems to go beyond the plausible deniability inherent in selling a jersey with a uniform number but no name on the back," the coordinator, Brian Barrio, wrote. "Is anyone at the NCAA tracking on this issue?"

For a range of informed views on what the lawsuit might mean, see this nice overview by Inside Higher Ed of a panel discussion at the University of North Carolina.

Next stop is a June 20th certification hearing to determine if the suit will be allowed to proceed. Stay tuned.