NCAA court ruling says pay up, but how much?

For many the question of whether student athletes should receive any type of compensation was answered by the courts this week, when Federal Judge Claudia Wilken ruled against the NCAA in the antitrust case of Ed O'Bannon.

The traditional model for college players has been compensation limited to scholarships and education.  With Friday's historic ruling, the doors for compensation opened, but not without its own set of rules and regulations.  O'Bannon, a former UCLA basketball star player, along with 19 others had filed the lawsuit based on antitrust law violations for use of their likeness.  The lawsuit focused on television broadcasts and video games, and the associated revenues generated from their names.

In her introduction Judge Wilken ruled against the NCAA, and also video game company Electronic Arts, where she stated the following:

"Competition takes many forms.  Although this case raises questions about athletic competition on the football field and the basketball court, it is principally about the rules governing competition in a different arena -- namely, the marketplace."

The Sherman Antitrust Act passed in 1890 is based primarily on competition and was a strong argument in the case, kind of ironic when you think about the NCAA's basis for not compensating student athletes to keep competition fair.  This law deals with conduct that by its very nature is interpreted to destroy competition.  While monopolies play a role, the Sherman Antitrust Act does not impeded fair monopolies that arise out of competition, so long as that competition is based on the merits of success.

While the ruling set limits of $5,000 compensation per year per player for larger schools, and creates a payout that will be held in a trust to be paid after the player leaves the NCAA, many fear this will change the face of college football.  A subsequent injunction is forthcoming from Judge Wilken and will further define the outcome of this case.

Bobbleheads and jerseys were not included in the licensing revenues, but does this open the door for other challenges on market based items?  At the very least it represents a huge hit to the NCAA, which as an organization has been widely criticized in recent years for their practices.  It will be interesting to watch what happens going forward as the playing field levels and the conferences consider their choices.  The NCAA is a multi-billion dollar industry who now must share at least some of the wealth with its players.