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Thursday, October 03, 2013
The EA Settlement and Eligibility

Last March, in an Open Letter to College Athletes, I opined that as college athletes’ names and likenesses become increasingly more valuable for use in commercial products, sellers of commercial products and services may become more willing to use and profit from the identities without permission in exchange for the cost to settle the athlete’s publicity rights lawsuit.  This results in a pseudo-licensing fee; in other words, the settlement operates as an ex post licensing transaction that was not negotiated and paid ex ante.   The issue then becomes whether any legitimate purpose is served by burdening athletes with such unnecessary, time-consuming, and costly litigation.  Why should athletes not be permitted under NCAA rules to license the use of their names and likenesses in commercial products and receive the substantive equivalent payment that they otherwise would receive in litigation suing the seller for violating the athlete’s right of publicity?

As far as eligibility is concerned, I do not know how the NCAA could legally sanction college athletes for collecting damages in a court of law through the enforcement of their own property interests against third parties who commercially exploit them without the athlete’s permission (i.e. without a license).  As third-party beneficiaries of the NCAA bylaws, college athletes would have standing to challenge such an eligibility decision on the grounds of arbitrary and capricious enforcement.  The first question would be, how is the NCAA's endorsement rule rationally related to the preservation of amateurism?  Given how commercialized the big business of college sports has become and the increasing exploitation of college athletes, I am not convinced that if the NCAA faced a Jeremy Bloom-like challenge to its endorsement rule today that a Colorado state court or a court in a different jurisdiction would have much sympathy for the NCAA and its assertion that the endorsement rule prevents college athletes in big-time college sports from becoming "billboards for commercialism."  The recent rulings of the Third and Ninth Circuits not only suggest a much more skeptical view of amateurism principles that would allow commercial entities to profit off the backs of the unpaid labor that makes those profits possible but also signify a movement towards courts' recognition of college athletes receiving compensation for the use of their identities in commercial products and services.  Secondly, the discipline or suspension of a college athlete for exercising his property rights in a court of law would likely be viewed as arbitrary and capricious enforcement and a violation of public policy.


Rick - I agree that the judicial climate has changed, and continues to evolve in favor of "amateur" athletes, relative to a challenge here. Further, your points are well-taken on a legal challenge in court, and I have personally explored such types of challenges on behalf of my clients. My post, though not directly referenced in your post but immediately follows chronologically, deals with the NCAA administrative law system within which I maintain part of my Sports Law practice, and what impact the Manziel NCAA administrative law ruling could have on active NCAA SAs who opt to collect on the EA settlement. The legal challenges for why an active NCAA SA could collect on the EA settlement are different arguments than the arguments I would make before NCAA Student-Athlete Reinstatement (SAR). Thanks

Blogger Tim Epstein -- 10/03/2013 2:20 PM  


Although I'm always hesitant to try to predict anything the NCAA and/or any of its various committees will do or not do in any given situation, I don't see this particular issue (whether "amateurism principles" preclude current players from receiving damages or settlement proceeds) being handled at the SAR level. If the terms of the EA settlement were to provide that current players within the class receive payment before their eligibility expires, and the court approves those terms, I don't believe the NCAA would have the legal authority to interfere with a court-approved settlement agreement.

Having said that, if in fact you were in front of the SAR committee or any other committee trying to convince the NCAA that the settlement should not affect the eligibility of current athletes, I think you can make the additional point that the EA settlement results in all players in a sport receiving something, as opposed to just one athlete getting something that the other athletes do not (i.e. Manziel who is permitted to keep any damages). I'm suggesting this because for some reason the NCAA views something received by one player vs. all players as a much bigger ordeal when it comes to "amateurism principles".

Finally, this is a minor point but I don't want to leave without saying it. NCAA decisions should not be characterized as "administrative law rulings" because the NCAA is not a government agency; if it were then it would be legally required to give athletes greater due process protections in their proceedings.

Blogger Rick Karcher -- 10/04/2013 6:21 AM  


SAR would be the body to deal with if a player accepted an impermissible benefit and was found to be inneligible. My comment is assuming that scenario. Certainly the NCAA is not bound to go there at the outset, and with something this big, we should not be surprised if the President stepped in directly as he has done in recent years. Again, my argument is not getting into whether the NCAA has the legal authority to block collection on a settlement. I'm just trying to see how this would shake out if it were within the NCAA system. The NCAA made a preliminary eligibility ruling on whether Manziel can take in his IP case, so I wanted to run this through the same exercise for the EA Sports money.

Your point on how the EA Sports money is an easier case for the NCAA than Manziel is well-taken and I agree with this from a fairness standpoint, but as you suggest, the NCAA has some overarching principles that don't always jive with my interpretation of fairness.

As to your point on administrative law, that is my lazy way of analogizing the various bodies within the NCAA system. Agreed that the NCAA is not a governmental body or governmental agency. In no way am I suggesting that anyone is owed constitutional due process within the NCAA system, and, in fact, I have many publications out there emphasizing that point and the mistake that most people (including counsel) make in this area.

Blogger Tim Epstein -- 10/04/2013 4:59 PM  

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