September 30, 2015 / 2:41 PM / 3 years ago

U.S. appeals court finds NCAA pay rules violate antitrust law

(Reuters) - NCAA compensation rules for college athletes violate antitrust law, a U.S. appeals court ruled in a case brought by athletes seeking a slice of the billions of dollars universities reap from football and basketball.

The NCAA logo is seen on the side of a hotel in Dallas, Texas, March 30, 2013. REUTERS/Jim Young

The case came amid mounting public pressure for colleges to give athletes better benefits. Critics say the NCAA’s scholarship policy short-changes athletes who risk injury and devote many hours to practice sessions, travel and competition. The majority of college athletes do not go on to play professionally.

While the ruling involves antitrust law, many see it as a case over whether college athletes, who generate billions of dollars for their schools, should be paid for their labor. The NCAA says it is defending amateurism in college sports.

A California federal judge last year had said the NCAA should allow schools to pay athletes up to $5,000 per year in compensation. In its ruling on Wednesday, the 9th U.S. Circuit Court of Appeals ruled that the NCAA must permit schools to provide student-athletes sums covering up to their cost of attendance. However, it reversed the lower court’s order providing for $5,000 per year beyond that.

Sathya Gosselin, an attorney for the athletes, called the ruling a “landmark victory” because the education-related expenses could still amount to thousands of dollars that an athlete otherwise wouldn’t have seen.

“There is an avenue of competition that is now open to the schools that wasn’t previously available,” Gosselin said. “As revenues soar in big time college athletics, we would expect to see vigorous competition among the schools.”

NCAA president Mark Emmert said in a statement that the association has allowed schools to provide up to the full cost of attendance since Aug. 1, and does not think that should be mandated by the courts.

The ruling likely won’t prompt the NCAA to make any radical changes to its relationships with its broadcasters, said Michael LeRoy, a professor at the University of Illinois College of Law who’s written on antitrust in sports.

However, Northeastern School of Law professor Roger Abrams said the ruling will still increase pressure on the NCAA to develop an alternate compensation formula on its own.

“Its another indication that the NCAA has to wake up and think about comprehensive reform,” Abrams said.

More than 20 current and former athletes filed an antitrust class action against the NCAA. The lead plaintiff, Ed O’Bannon, won a national basketball championship with UCLA in 1995. He testified during trial that he usually spent about 40-45 hours per week on basketball.

“I was an athlete masquerading as a student,” O’Bannon, who spent two seasons in the National Basketball Association, said in court.

Broadcasters including Walt Disney Co (DIS.N) and CBS Corp (CBS.N) have rallied behind the NCAA, arguing in court filings that the idea each participant in a team sporting event has an individual right of publicity “is simply wrong.”

9th Circuit Judge Jay Bybee wrote that the difference between paying education-related expenses and offering cash sums is “a quantum leap.”

“At that point the NCAA will have surrendered its amateurism principles entirely and transitioned from its ‘particular brand of football’ to minor league status,” Bybee wrote.

The three judge panel unanimously agreed to allow education related expenses, but Chief Judge Sidney Thomas said he would have also allowed the $5,000 per year compensation.

The 9th Circuit said athletes have a right of publicity in video games, but it declined to decide whether they also have such rights in live TV broadcasts or archival footage.

Additional reporting by Robert Iafolla, Jonathan Stempel and Steve Ginsburg

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