Offering equal pay to college athletes won't workNovember 18, 2013: 8:47 AM ET
The landmark lawsuit O'Bannon v. NCAA rests on the argument that sports stars deserve to be paid beyond mere scholarships. But the plaintiff's suggestion for how to do that doesn't make sense.
By Daniel Roberts, writer-reporter
FORTUNE -- A baton has been passed in the lawsuit that experts are calling the most significant in the history of college sports.
Former UCLA basketball star Ed O'Bannon first filed his antitrust suit in July 2009, arguing that he and other college athletes are owed restitution when their image is used for corporate gain—video games, jerseys, advertisements, game broadcasts—and that the NCAA has joined forces with companies to ensure that players do not get it.
On Nov. 8, U.S. District Judge Claudia Wilken certified the suit as a class action, but only partially: Wilken approved the potential for lawsuits against NCAA rules that bar athletes from engaging in group licensing deals, but she denied certification of suits based on athletes being paid for past use of their image in video games and TV broadcasts. That effectively shifts the focus from former college athletes to current and future ones; current athletes can sue the NCAA, but alums cannot.
The question at the heart of this lawsuit remains the same, however, and is a controversial one indeed: Is the NCAA's "amateurism" label, which is what has allowed it to mandate that college athletes cannot be paid, unfair?
The courts may ultimately decide that the answer is yes. But O'Bannon's legal team has a difficult road ahead facing the NCAA, an organization capable of using its considerable resources to stall litigation. The plaintiffs won a victory in September when video game maker Electronic Arts (EA) and the Collegiate Licensing Company agreed to settle; the two companies will dole out a reported $40 million to some 125,000 players (that number may grow) and EA will not put out a college football game in 2014.
But the argument against EA and the CLC was the easier one to win, and the victories of this lawsuit may stop there. There will be major pressure on the NCAA now to settle before the June trial, but don't expect it. "This is a fight to the death," suggested attorney Alan Milstein at a University of New Hampshire Law School panel on the lawsuit this month. "The NCAA conceding its belief that athletes should not get paid would be like the Catholic Church giving up its idea of Immaculate Conception."
The main issue now becomes TV money and whether the NCAA ought to dole out some of it to the players. But a key question is exactly how players, if they were to get paid, would share the money. O'Bannon's side proposes that all players share money equally, regardless of their stardom. That argument satisfied Judge Wilken, who acknowledged that some players are more recognizable than others, but reasoned that equal sharing would "not necessarily… create a conflict of interest."
Sorry, but that doesn't make sense. The reason compensation for college athletes is a hot issue isn't just because of TV rights for entire teams. It's because companies are making money off certain individual mega-stars.
Think of Heisman Trophy-winning Texas A&M quarterback Johnny Manziel. Or, as he is known to many college football fans, "Johnny Football." In the offseason, the NCAA investigated claims that Manziel had been paid money by memorabilia dealers to autograph footballs. It found no proof that he had, and Manziel was only suspended for half of one game for an "inadvertent" violation of a rule governing autograph signing. If the NCAA had concluded that Manziel was paid, he could have faced a much longer suspension. But many feel that he should be allowed to make money from his name. He is unquestionably one of college football's biggest individual stars. As UNH athletic director Marty Scarano told Fortune before the O'Bannon panel, Manziel "would command big money. His blockers, not so much."
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The idea that other players on the A&M squad are worth the same as Manziel is nice in theory, but in practice it just isn't true. Does it seem fair that Manziel and his teammates would be paid the same? Would other star players be okay with that arrangement down the road? How should the rules deal with a star player who has the potential to earn real money right now, while still in college?
"Let him go make it," says Joe Rosen, an attorney, baseball agent and sports law professor in Boston. "That's the best way, in my opinion, to deal with the disparity between players—just allow them to handle their own deals. A guy like [Alabama quarterback] AJ McCarron is a good example—we don't know if he'll ever play a down in the NFL. But he certainly is a superstar for Alabama, and so he can make a lot of money off his likeness right now, and he might not have the opportunity to do that later on."
Manziel, incidentally, has taken steps to protect his future earning power. His family has applied to trademark the "Johnny Football" nickname, and earlier this year filed a lawsuit, since settled, against a t-shirt maker using the phrase.
To be sure, O'Bannon's argument for equal pay was the right one legally—it was the only way the group would be certified as a class. But it will disproportionately benefit lesser athletes. If O'Bannon wins, college athletes will be able to enter into group licensing deals. (And sports law professor Michael McCann, writing for SI.com, suggests the possibility of a trade association.) Judge Wilken is assuming all players would just accept being part of the class. But why should they? The next Johnny Manziel, wherever he is, would be wise to opt out and challenge the new system.
In almost all cases, one or two sports dominate the merchandise, ticket sales, and publicity at any college—usually football, men's basketball, and women's basketball. In those situations, it's a stretch to say that the guys on the rugby team are owed the same money as the football players. As Scarano said on the UNH Law panel, "99.9% of the student athletes in Division I are anonymous people that love their institutions and feel they're getting a very good deal."
Indeed, a full or partial scholarship—which O'Bannon argues is inadequate—is more than enough for most. It's four years of education, and it has great value. The non-stars don't necessarily merit more money, whether within a class or not. It is the players who get made into stars on ESPN, featured on merchandise, and used in ads for big games that deserve more.
Many, many people—from fans to players to parents and even administrators who cannot say so publicly—feel that the NCAA has exploited athletes for years and ought to be paying them money. And there will be a lawsuit, or a series of lawsuits, that brings the NCAA to its knees. But it may not be this one. This lawsuit doesn't do enough for the individual "amateur" stars we're all thinking of when we discuss these issues.