NCAA Wins in Long Run with Legal Settlements

An interesting guest column was published in the most recent issue of SportsBusiness Journal by a couple of prominent sport management scholars regarding the NCAA and its ability to evade court rulings like Adrian Peterson evading a linebacker.

Mark Nagel and Richard Southall, co-authors of the forthcoming second edition of Sport Facility Management: Organizing Events and Mitigating Risks, published by Fitness Information Technology (FiT), wrote about some recent settlement agreements by the NCAA. In the Nov. 30-Dec. 6, 2009, issue of SBJ, they describe how the NCAA has successfully implemented a legal “four-corners offense,” ending lawsuits with settlements and thus eliminating the potential for a judge or jury to force the NCAA to change portions of the model it uses to run the most powerful organization in college athletics.

Nagel and Southall primarily detailed the NCAA’s settlement agreement with former Oklahoma State pitcher Andy Oliver, who received $750,000 from the NCAA in October, just two weeks before their trial was scheduled to go to a jury trial. Oliver was initially suspended by the NCAA in 2008 because in 2006 his adviser had contact with the Minnesota Twins, which drafted him out of high school.

Oliver certainly shouldn’t be blamed for settling the case out of court, because $750,000 is a big figure, although it’s rather small compared to the NCAA’s 2008 income believed to be in the neighborhood of $614 million. As Nagel, an associate professor of sport and entertainment management at the University of South Carolina, and Southall, an assistant professor in exercise and sport science at the University of North Carolina, write:

Within this landscape it remains to be seen whether there is a potential plaintiff sitting on a metaphorical legal bench who cannot be induced to play the NCAA settlement game. Most of the business-related cases against the NCAA have been settled because plaintiffs have had vested financial interest in settling rather than engaging in protracted legal battles whose outcomes were not assured. However, if this potential plaintiff does not need to protect a future career and is already financially secure, then the NCAA may be unable to hold the ball indefinitely.

Nagel and Southall conclude their guest column by stating that, “Perhaps Ed O’Bannon or Sam Keller is such a plaintiff …”

The "EA Sports" Sam Keller

That leads to a law column written by Anita M. Moorman, JD, an associate professor of sport administration at the University of Louisville, and Marion E. Hambrick, a doctoral candidate in the same program, in the September 2009 issue of FiT’s Sport Marketing Quarterly. They write about three pending court cases involving the business activity of licensing, two of which involve O’Bannon and Keller, who have received plenty of press for their lawsuits against the NCAA.

O’Bannon’s case filed against the NCAA and Collegiate Licensing Company (CLC) focuses on former student-athletes and the fact that the NCAA and third-party commercial entities, particularly the CLC, have benefited financially from merchandise sales while the former athletes have been prevented from receiving compensation.

The "real" Sam Keller

All student-athletes are required by the NCAA to sign form 08-3a, a seven-part form that covers a wide array of items. In Part IV, titled “Promotion of NCAA Championships, Events, Activities or Programs,” the form states: “You authorize the NCAA [or a third party acting on behalf of the NCAA (e.g., host institution, conference, local organizing committee)] to use your name or picture to generally promote NCAA championships or other NCAA events, activities or programs.”

The NCAA has used that one sentence to enable its organization and commercial entities to reap massive financial rewards from the sale of anything from jerseys with a player’s number on it to video games featuring every identifiable aspect of an athlete but his/her name. O’Bannon, a former UCLA basketball player who also had a short stint in the NBA, is concerned with former student-athletes still being constrained by the language in form 08-3a.

Keller, a former quarterback at Arizona State and Nebraska, is focusing more on enabling current student-athletes to receive compensation, specifically from the NCAA’s relationship with Electronic Arts (EA). EA Sports creates immensely popular video games that, as mentioned earlier, have every descriptive indicator of student-athletes (e.g., jersey numbers, height, weight, hometown, skin color, skill set) except for their names.

If either Keller or O’Bannon wins his lawsuit, the NCAA would be looking at potentially massive payouts to literally thousands upon thousands of former and current student-athletes, not to mention major alterations to its model of operations with regard to licensing. That’s why the NCAA’s strategy of a legal “four-corners offense” as described by Nagel and Southall has become so frequently, and effectively, implemented.

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