Friday, August 15, 2014

NCAA Reform and Title IX

Last week a federal district court judge ruled in favor of the former college athletes, lead by Ed O'Bannon, who were challenging NCAA rules that prevented them from sharing in the proceeds that their colleges and universities earned by licensing their names and likenesses for commercial purposes like television broadcasts. The court agreed with the athletes that NCAA restrictions on athlete compensation are a form of price fixing that unreasonably restrains trade, and, as such, violate federal antitrust law.  As a result of the court's decision, the NCAA must allow schools to use broadcast proceeds to provide stipends that compensate athletes for the true cost of attendance, which is often more than the cost of tuition, room and board, and books to which athletic scholarships are currently limited.  And it must allow schools to hold some of the money they receive from television broadcasters for using players names and likenesses in a trust fund, to be shared among the players when they graduate. Though these changes will result in only modest compensation for former athletes -- the court specified that the NCAA could restrict payments from the trust fund to ensure that athletes only receive up to $5000 -- the case is still a very big deal.  No longer can the NCAA invoke the concept of amateurism to justify whatever restrictions it would like to place on athlete compensation.

Notably, the O'Bannon plaintiffs came from the sports of men's basketball and football, which are the sports that generate broadcast revenue.  Accordingly, the decision only speaks to athletes in those sports.  Yet, the decision is bound to have an indirect effect on women's sports, as a result of Title IX.  As economist Andrew Schwarz explains, both in Jane McManus's column on espnW, as well as in his own Deadspin column yesterday, Title IX requires schools to allocate scholarship dollars in manner proportionate to the gender ratio of student athletes.  A school that decides to offer male football recruits some additional compensation would  have to ensure that a proportionate dollar amount is allocated to female athletes as well.  Otherwise, they have a compliance problem.  (Or more likely, a worse compliance problem, as many schools already do not provide enough scholarship dollars to female athletes.)

As McManus points out at the end of her column, the effect of the O'Bannon decision on women's sports could be to inject a little more money into women's sports.  But is that really a victory?   To the extent the decisions legitimizes a version of college athletics that operates, as McManus says, "as platform for ticket sales, TV contracts and cash" rather than an "educational tool" is it really a victory for college athletes at all?