NCAA Is Not Exempt From Antitrust Scrutiny: The Ed O’Bannon Case Lives

Here is the decision from the 9th Circuit ruling that the NCAA cannot just pay players $5,000 in “deferred compensation” to go away.

Nathaniel Grow, an associate professor at the University of Georgia, broke the news on Twitter. The NCAA reversed a lower court ruling that allowed the NCAA to get out of the Ed O’Bannon lawsuit by giving players up to $5,000 in deferred compensation. Here’s the key part of the decision:


We conclude that the district court’s decision was largely correct. Although we agree with the Supreme Court and our sister circuits that many of the NCAA’s amateurism rules are likely to be procompetitive, we hold that those rules are not exempt from antitrust scrutiny; rather, they must be analyzed under the Rule of Reason. Applying the Rule of Reason, we conclude that the district court correctly identified one proper alternative to the current NCAA compensation rules—i.e., allowing NCAA members to give scholarships up to the full cost of attendance—but that the district court’s other remedy, allowing students to be paid cash compensation of up to $5,000 per year, was erroneous. We therefore affirm in part and reverse in part.

So... that’s pretty big news.

That 9th Circuit stopped short of calling the NCAA a full cartel. But at the point where the NCAA is exposed to antitrust scrutiny is not a good point for the NCAA.

Is there a less restrictive way for the NCAA to apply its rules on amateurism?

If the courts make the NCAA answer that question, that could open up the way for athletes to be paid for their liknesses, signatures, and allow them to get endorsement deals.

The NCAA had been trying to quickly settle the O’Bannon lawsuit to avoid exactly this kind of ruling. We’re about to see why.