Wake Forest Law Review
2Feb

FTX Arena – Miami-Dade County Feeling the Heat

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By Sam Kiehl

Anytime you are stuck in a relationship that you want out of, it’s tough. But that’s especially so when you’re only five hundred twenty-six days into a nineteen-year contract with an embattled cryptocurrency exchange that allegedly used customer funds to make risky trades and reportedly owes creditors more than $3 billion.[1]  Fortunately for Miami-Dade County, a federal bankruptcy judge recently terminated the naming rights agreement of the Miami area arena between the county and FTX.[2]

In March 2021, the Miami-Dade County Board of County Commissioners approved a $135 million deal with FTX for naming rights of what was formerly American Airlines Arena.[3]  While $2 million a year went to the Miami Heat, the professional basketball organization that uses the twenty-one thousand capacity arena as its home venue, approximately $90 million of the agreement was allocated to the county’s anti-poverty and gun violence mitigation program, known as the Peace and Prosperity Plan.[4]

In response to the announcement that FTX would initiate Chapter 11 proceedings, however, Miami-Dade County and the Miami Heat immediately sought to terminate the business relationship between the parties and find a new naming rights partner for the arena.[5]  On November 22, 2022, the county petitioned the U.S. Bankruptcy Court for the District of Delaware to remove FTX’s name from the venue.[6]  This request came just over a month after the arena had finally replaced the aircraft associated with the arena’s original sponsor, American Airlines, with FTX’s logo on the arena’s roof.[7]

Most recently, on January 11, 2023, Judge Dorsey of the bankruptcy court approved a stipulation ending the naming rights agreement between the two parties.[8]  The order, which is retroactive to December 30, 2022, terminated all licenses and other rights granted by FTX to Miami-Dade County in accordance with the original agreement under any trademarks or trade names, including naming rights.[9]  The order does not prevent FTX and the county from asserting additional damage claims under the agreement moving forward.[10]  This means that starting soon, if not already, all FTX signage and advertising will be removed from the arena, which will proceed under the name Miami-Dade Arena until a new naming rights partner is found.[11]  Removing signage is not a small undertaking.  This will include removing FTX’s logo from the arena’s roof, the basketball court, entrances into the stadium, and even the logo from the polo shirts worn by security.[12]

While a naming rights deal of this magnitude being terminated so quickly into its term is surprising, it is not unheard of.  Remember Enron?  Several years before the Houston-based energy company’s massive collapse in the early 2000s, Enron entered a thirty-year $100 million contract with the professional baseball team, the Houston Astros, to acquire naming rights to their stadium.[13]  Less than three years into the contract, the Astros sought to terminate the deal when the Enron scandal became household news.[14]  Unlike FTX, Enron had already paid for the year ahead.[15]  So, despite Enron’s bankruptcy filing, the company refused to consent to the Astros’ seeking a third party to replace Enron in the naming rights arrangement.[16]  Enron’s main argument was that the naming rights contract did not include a provision that allowed the Astros to terminate the contract based on the company’s bankruptcy filing.[17]  Ultimately, due to public pressure and bad optics, the Astros agreed to pay Enron’s creditors $2.1 million to buy back the naming rights in an out-of-court settlement.[18]

Miami-Dade County and the Heat avoided misfortune to the extent suffered by the Astros, as FTX was already in arrears due to a $5.5 million payment going unpaid on January 1, 2023.[19]  Beyond this, the county learned from the Astros mistake and included a provision in its contract with FTX that said in the event of a default, which included an “insolvency event,” FTX would still be liable to pay “all unpaid fees for the three contract years following the date of termination” within sixty days.[20]

An overarching question following this debacle is whether it leads to concerns for another arena that houses the professional basketball team, the Los Angeles Lakers.  The Lakers, following Miami’s lead, entered into a massive $700 million twenty-year contract for the naming rights of their arena with another crypto exchange, Crytpo.com.[21]  Miami-Dade County and the Lakers both entered into these contracts worth hundreds of millions of dollars stretching across decades with FTX and Crypto.com during the peak of cryptocurrency in 2021.[22]  Counties and professional sports organizations may have to ask, moving forward, how much consideration should go into assessing the financial creditworthiness and long-term viability of a partner in a naming rights deal?  Or are they just going to continue to ask, who can show me the money?

All in all, while dealing with this fractured partnership has assuredly been tough on Miami-Dade County and its residents, at the very least, they may find some solace knowing that Madonna will be performing at Miami-Dade Arena later this year.[23]

[1] Ryan Browne, Collapsed Crypto Exchange FTX Owes Top 50 Creditors Over $3 Billion, New Filing Says, CNBC (Nov. 21, 2022, 9:34 AM), https://www.cnbc.com/2022/11/21/collapsed-crypto-exchange-ftx-owes-top-50-creditors-3-billion-filing.html. 

[2] Dean Budnick, Miami Terminates FTX Arena Naming Rights Deal Following Crypto Exchange’s Bankruptcy, Variety (Jan. 15, 2023, 2:00 PM), https://variety.com/2023/music/news/ftx-arena-miami-naming-rights-terminated-bankruptcy-1235490252/; Christina Vazquez, Companies Already Inquiring with Miami-Dade County, Miami Heat Regarding Arena Naming Rights Deal, Local 10 (Jan. 17, 2023, 6:21 PM),  https://www.local10.com/news/local/2023/01/17/companies-already-inquiring-with-miami-dade-county-miami-heat-regarding-arena-naming-rights-deal/. 

[3] Budnick, supra note 2.

[4] Id.; Budnick, supra note 2.

[5] Miami-Dade County and Miami Heat Statement on FTX, NBA.com (Nov. 11, 2022, 6:47 PM), https://www.nba.com/heat/news/miami-dade-county-and-miami-heat-statement-on-ftx. 

[6] Budnick, supra note 2.

[7] Id.

[8] Julia Musto, FTX Bankruptcy Judge Terminates Miami Heat Arena Naming Rights Deal, Fox Bus. (Jan. 11, 2023, 2:38 PM), https://www.foxbusiness.com/economy/ftx-bankruptcy-judge-terminates-miami-heat-arena-naming-rights-deal. 

[9] Id.

[10] Id.

[11] Judge Terminates FTX Naming Rights Deal for Miami Heat Arena, CBS News (Jan. 11, 2023 9:32 PM), https://www.cbsnews.com/news/ftx-miami-heat-arena-naming-rights-deal-terminated/. 

[12] Id.

[13] Charles Bowles & Ed Flynn, Sports Stadiums: What’s in A Name?, Am. Bankr. Inst. J., July 2015, at 38, 38 (2015).

[14] Id. at 39.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Judge terminates FTX naming rights deal for Miami Heat arena, supra note 11.

[20] Sam Reynolds, FTX Owes Miami $16.5M For Arena Sponsorship Cancellation, CoinDesk (Nov. 12, 2022, 1:07 AM), https://www.coindesk.com/business/2022/11/12/heres-how-much-ftx-owes-miami-after-arena-sponsorship-cancellation/. 

[21] Ronald D. White, FTX’s Downfall Casts a Shadow Over Other Sports-Rights Deals. What’s Up, Crypto.com Arena, L.A. Times (Nov. 18, 2022, 5:00 AM), https://www.latimes.com/business/story/2022-11-18/ftx-was-a-sports-sponsorship-mvp-its-collapse-is-roiling-the-sports-marketing-world. 

[22] Id.

[23] Madonna Announces ‘The Celebration Tour’, Madonna.com (Jan. 17, 2023), https://www.madonna.com/news/title/madonna-announces-the-celebration-tour.

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2Mar

EA Sports: It’s in the Licensing

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By: Natalie Galdos

College football is coming back to EA Sports.[1]  Daryl Holt, EA Sports vice president and general manager, announced Feb. 2, 2021 that EA Sports will revive its college football video game series.[2]  While Holt declined to share any timeline for the arrival of the next installment of the college football series, fans are looking forward to the game’s release, which previously sold millions of copies worldwide.[3]  The new game, EA Sports College Football, will be the beloved franchise’s first college football title since EA discontinued the NCAA Football franchise in 2013.[4]  EA Sports previously cited an ongoing class-action legal dispute with ex-athletes over using their likeness without compensation as the reason for the cancellation after a class action lawsuit,[5] O’Bannon v. NCAA.[6]

Ed O’Bannon, a former All-American basketball player, was depicted in an EA Sports college basketball video game.[7]  Because the NCAA has long held that college athletes are by definition “amateurs” and cannot profit in any way from their status as student-athletes, O’Bannon never consented to the use of his likeness in the video game, and he was not compensated for it.[8]  Thus, in 2009, O’Bannon sued the NCAA and the Collegiate Licensing Company, the entity which licenses the trademarks of the NCAA and a number of its member schools for commercial use, in federal court.[9]  EA Sports and the Collegiate Licensing Company settled in 2014 for $40 million.[10]  Without active licensing agreements, EA Sports had to stop all distribution of its college sports video games.[11]  This time, however, EA Sports stated the new game would not include names, images, or likeness (“NIL”) of any student-athletes.[12]  By using generic players, EA Sports hopes to sidestep the hot-button issue of NIL rights and compensation.[13]  However, with a new Supreme Court case on the horizon, EA Sports’ plans could all change.

On March 31, 2021, the Supreme Court will hear arguments for Alston v. NCAA[14] which is an NCAA case on student-athlete compensation.[15]  Former and current college athletes argue the NCAA’s rules restricting on education-related benefits, violated antitrust law under the Sherman Act.[16]  In Alston, the district court found for the athletes, holding that the NCAA must allow for certain types of academic benefits, such as “computers, science equipment, musical instruments and other tangible items not included in the cost of attendance calculation but nonetheless related to the pursuit of academic studies.”[17]  The U.S. Court of Appeals for the Ninth Circuit affirmed, recognizing the NCAA’s interest in “preserving amateurism,” but concluding that the NCAA’s practices violated antitrust law.[18]  Further while the Alston litigation has been ongoing, six states have passed legislation addressing an athlete’s ability to receive compensation for use of their NIL, and more than two dozen other states are considering similar bills.[19]

If the Supreme Court decides that the NCAA’s amateurism rules violate federal antitrust law, this could allow for student-athletes to be compensated by anyone for their NIL.  Further, if this decision is upheld, EA Sports’ plan not to use the NIL of existing college players may all change.

Since EA Sports is willing to pay athletes from years ago for use of their NILs, Alston may immediately open the door for current athletes to profit directly from video games.[20]  From EA Sports’ perspective, it would be beneficial to integrate real college players in its games.  For example, NCAA Football 13 and 14 featured Robert Griffin III and Denard Robinson, respectively.[21]  Both players were already in the NFL when their respective video games were released.[22]  Thus, EA Sports was willing to put them on the cover of their video game because their time at Baylor and Michigan was “still fresh enough in the collective memory[.]”[23]  The connection to real players can allow EA College Sports to go back to its dominance in the college football gaming world.

Overall, the best decision for the Supreme Court may be to reaffirm the Ninth Circuit as a win for college athletes and EA Sports.  The Supreme Court could rule that student-athletes may never be paid a salary for playing, but could receive the compensation they deserve through signing autographs, marketing deals and other forms of pay for being a brand.[24]  In this model, the NCAA can still benefit because this structure can still follow the NCAA’s amateurism requirement of no “pay for play.”  Here, nobody would pay the athlete to play; EA Sports or any other video game is simply paying for their brand and likeness.  Therefore, affirming the Ninth Circuit would provide the most benefit to the student-athletes and the gaming community as a whole so that companies like EA Sports can bring back the video games as we know and love them.

[1] Michael Rothstein, EA Sports to do College Football Video Game, ESPN (Feb. 2, 2021), https://www.espn.com/college-football/story/_/id/30821045/school-plan-ea-sports-do-college-football.

[2] Id.

[3] Id.

[4] Zoe C. Jones, EA Sports Revives its College Football Video Game—But it Won’t Include Real Student-Athletes, CBS News (Feb. 2, 2021, 4:48 PM), https://www.cbsnews.com/news/ea-sports-college-football-game-its-happening/.

[5] Tony Manfred, EA Sports Cancels its College Football Video Game Amid a Wave of Lawsuits, Bus. Insider (Sept. 26, 2013, 4:34 PM),  https://www.businessinsider.com/ea-sports-cancels-ncaa-football-videogame-2013-9.

[6] 802 F.3d 1049 (9th Cir. 2015).

[7] Id. at 1055.

[8] Id. at 1054–55; see also Kat Bailey, How EA Is Bringing Back College Football and Sidestepping the NCAA’s Biggest Problems, Vice (Feb. 5, 2021, 10:49 AM), https://www.vice.com/en/article/epd85k/ea-ncaa-college-football-despite-obannon-lawsuit.

[9] O’Bannon, 802 F.3d at 1055.

[10] Mike Hume & Rick Maese, EA Sports Revives College Football Franchise as Courts Mull NCAA’s Stance on Amateurism, Wash. Post (Feb. 2, 2021, 12:00PM), https://www.washingtonpost.com/video-games/2021/02/02/ea-sports-college-football/.

[11] Id.

[12] Jones, supra note 4.

[13] Hume & Maese, supra note 10.

[14] Petition for Writ of Certiorari, NCAA v. Alston, 208 L.Ed.2d 504 (U.S. 2020) (No. 20-512), 2020 WL 7366281.

[15] NCAA Case on Athlete Compensation Set For Supreme Court on March 31, Atlantic (Feb. 1, 2021, 12:01 PM), https://theathletic.com/news/ncaa-athlete-compensation-supreme-court/9Zgc5xkjnWHx.

[16] Melissa Quinn, Supreme Court Takes up NCAA Antitrust Dispute Over Compensation for College Athletes, CBS News (Dec. 16, 2020, 11:09 AM),  https://www.cbsnews.com/news/supreme-court-ncaa-case-athlete-compensation/.

[17] In re NCAA Ath. Grant-In-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1088 (N.D. Cal. 2019).

[18] Alston v. NCAA, 958 F.3d 1239, 1243 (9th Cir. 2020); Quinn, supra note 16.

[19] Hume & Maese, supra note 10.

[20] Bailey, supra note 8.

[21] Id.

[22] Id.

[23] Id.

[24] Hayes Rule, A Breakdown of Alston v. NCAA, Medium (May 4, 2019), https://medium.com/the-bearfaced-truth/a-breakdown-of-alston-v-ncaa-what-is-the-future-of-paying-college-athletes-3483569905b4

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2Feb

The Big (Trademark) Game: The NFL’s Battle to Protect Its “Super Bowl” Trademark

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By Blake Witty

This Sunday, nearly one in three Americans[1] will turn to their televisions to watch Patrick Mahomes and the Kansas City Chiefs take on Tom Brady and the Tampa Buccaneers in Super Bowl LV.[2]  The Super Bowl has become a mainstay in American culture and is arguably the most followed and prestigious event on the American sports calendar.  Being such a massive event, one would expect that many small businesses would try to use the Super Bowl name to attract football fans and customers alike to events.  However, this is not the case because of the National Football League’s (“NFL”) aggressive defense of the trademarked phrase “Super Bowl.”[3]  This blog post will look at the NFL’s recent history showcasing its fervent desire to protect its trademark and also explore whether the NFL actually has the right to go as far as it does (and if it’s even worth it for them).

The NFL has had the Super Bowl trademark since 1969 and has sent many cease and desist letters to businesses allegedly violating the trademark over the years.[4]  The most prominent example of the NFL flexing its trademark muscle was all the way back in 2007 when the League sent a cease and desist letter to the Fall Creek Baptist Church in Indianapolis, which caused the church to cancel their event.[5]  The League claimed the church was violating NFL rules because the church was charging patrons $3 to come watch the game.[6]  While the NFL has since eased its protocols by allowing places of gathering to use the Super Bowl moniker, these places of gathering still cannot charge admission fees to events that are advertised with the phrase “Super Bowl.”[7]

There have also been examples of the NFL having success in court in restraining suppliers from using its intellectual property, including the Super Bowl trademark.  For example, in NFL Properties, LLC v. Does 1 Through 100[8], the NFL successfully obtained permission by the court to seek a seize and desist order to stop the defendants from selling counterfeit merchandise and tickets with NFL trademarks ahead of Super Bowl 50.[9]  More recently, in NFL Properties, LLC v. Does 1–200[10], the NFL was granted a temporary restraining order, seizure order, and order to show cause when the defendants were also purported to be planning to sell counterfeit merchandise and tickets that bore NFL trademarks, including the Super Bowl trademark, ahead of last year’s Super Bowl.[11]  Further, in NFL Properties, LLC v. Humphries[12], the NFL won a default judgment to dispose of, once again, counterfeit items that bore NFL trademarks.[13]  Finally, in Titlecraft, Inc. v. NFL Properties, LLC[14], the NFL was granted a motion for summary judgement when a company manufactured custom wood trophies that were too similar in appearance to the legendary Vince Lombardi trophy awarded to each Super Bowl champion.[15]  The court held the aspects of the two trophies were similar enough to grant the NFL summary judgment for copyright infringement.[16]  While these cases are not centered on the issue of use of the NFL’s Super Bowl trademark by small businesses, they do show one thing: the NFL has had its share of successes in court in regard to protecting its trademarks.

Even considering all of these successes, how far can the NFL really go to protect its trademarks, especially the Super Bowl trademark?  Some commentators argue that the NFL can go quite far, while others are not as convinced.  For example, one commentator advises to not use the words “Super Bowl” at all to promote a business or watch party and to not use the names of the teams competing in the game to advertise.[17]  Another asserts that bars and restaurants should not use “Super Bowl” to advertise their showings of the game and that sweepstakes or giveaways should also avoid using it.[18]  Yet others think the NFL has really strayed out of bounds.[19] One article argues that one cannot trademark factual information and the NFL would only have a trademark infringement claim if a company claimed endorsement from the NFL or used the phrase “Super Bowl” in a very vague way.[20]  For example, few would suspect that a small bar that advertised a Super Bowl watch party is actually sponsored by the NFL.[21]  This potential confusion is what trademarks are truly intended to protect against.[22]  It is also important to note that there is a trademark concept called “nominative fair use.”[23]  Under this doctrine, a trademarked phrase or logo is permissible to use as long as there is no suggested relationship between the advertiser and the trademark’s owner.[24]  That is why this post and all these other articles are able to use the Super Bowl name.[25]  Maybe these small businesses or bars could also use this doctrine to argue for the use of the Super Bowl name. These small businesses or bars perhaps could say that there is no way a person could reasonably believe that the business or bar was sponsored by the NFL. The NFL would definitely object to this, but it could be an interesting argument.

So what’s the actual answer here?  Does the NFL have as broad of trademark rights as it purports, or does it have a weaker case than it lets on?  It appears to me that the NFL likely does have a ton of latitude. Much of the reasoning behind this conclusion is that a small restaurant or bar would likely need to assert its trademark use defense in court: a tall ask given the NFL’s vast legal team.[26]  As one commentator puts it: “any small business owner would be an eleventy-billion-point underdog in a courtroom match-up.”[27]  So while there could potentially be a case, the NFL’s legal resources in addition to their past court successes make any legal challenge difficult.

But there is also the question, is all this even worth it for the NFL? Instead of using the Super Bowl name to advertise, many companies have come up with their own slogans, the most common of which is probably “The Big Game.”[28]  Further examples include Budweiser using the term “Bud Bowl”[29] or Animal Planet using “Puppy Bowl.”[30]  Fans and consumers clearly know what is being referenced and these phrases are not trademarked so there is no infringement.  There is also a risk of bad publicity if the NFL keeps sending cease and desist letters to small businesses and churches.[31]

So should the NFL actually care about its Super Bowl trademark as much as it does?  They probably still should.  For example, if the NFL allows one small company to use the Super Bowl name, this single snowflake could form a snowball in which others want to use the name, leading to an avalanche that the NFL might not be able to stop.[32]  And again, with the NFL having such a large amount of legal resources[33], it probably is not that much of an inconvenience.  To top it off in regard to any bad publicity: the NFL probably does not “care about a few fans who get annoyed.”[34]

Thus, the answer to our overall question is yes, the NFL probably does have the latitude to defend its Super Bowl trademark as much as it does (or it at least has the resources to defend its actions) and yes, all this is probably worth it for the NFL.  So if you are thinking about hosting a watch party at your local bar or planning some sort of gathering for the game in which you’ll charge admission, it might be a good idea to not use the name “Super Bowl.”  Just like all of us, the NFL is watching.

[1] Helen Coster, Super Bowl TV Audience Rises Slightly to 99.9 Million Viewers, Reuters (Feb. 3, 2020, 3:19 PM), https://www.reuters.com/article/us-football-nfl-superbowl-ratings/super-bowl-tv-audience-rises-slightly-to-99-9-million-viewers-idUSKBN1ZX2LI.

[2] Cody Benjamin, 2021 Super Bowl Sunday: Everything to Know About Super Bowl LV with Time, TV, Odds, How to Watch and More, CBS Sports (Feb. 2, 2021), https://www.cbssports.com/nfl/news/2021-super-bowl-sunday-everything-to-know-about-super-bowl-lv-with-time-tv-odds-how-to-watch-and-more/.

[3] James Leggate, NFL’s Super Bowl Trademark Is Why Some Companies Call It ‘The Big Game’, Fox Business (Jan. 28, 2020), https://www.foxbusiness.com/markets/nfl-super-bowl-trademark-why-some-companies-call-big-game.

[4] Id.

[5] Marcus Baram, NFL Sacks Super Bowl Church Parties, ABC News (Apr. 14, 2009, 8:22 AM), https://abcnews.go.com/US/story?id=4229536&page=1.

[6] Id.

[7] Michelle Kaminsky, Super Bowl Legal Blitz: Inside the NFL’s Legendary Trademark Defense, Forbes (Jan. 30, 2018, 6:20 AM), https://www.forbes.com/sites/michellefabio/2018/01/30/inside-the-nfls-legendary-trademark-defense/?sh=37eb44203293.

[8] NFL Properties, LLC v. Does 1 Through 100, No. 16-CV-00474, 2016 WL 9223833 (N.D. Cal. Feb. 2, 2016).

[9] Id. at *1, *3.

[10] NFL Properties, LLC v. Does 1–200, No. 20-CV-20265, 2020 WL 7493120 (S.D. Fla. Jan. 28, 2020).

[11] Id. at *2–3.

[12] NFL Properties, LLC v. Humphries, No. C 16-474, 2016 WL 2606708 (N.D. Cal. May 26, 2016).

[13] Id. at *1–2, *4.

[14] Titlecraft, Inc. v. NFL Properties, LLC, No. 10-758, 2010 WL 5209293 (D. Minn. Dec. 20, 2010).

[15] Id. at *1, *4.

[16] Id.

[17] Superb Owl or Super Bowl Trademarks, Intell. Prop. Ctr. (Feb. 1, 2019), https://theipcenter.com/2019/02/superb-owl-or-super-bowl-trademarks/.

[18] Wilkinson Barker Knauer, LLP, As Super Bowl Approaches, Advertisers Should Be Aware of the NFL’s Efforts to Protect Its Golden Goose – 2018 Update on Super Bowl Advertising and Programs, Lexology (Jan. 11, 2018),  https://www.lexology.com/library/detail.aspx?g=86464d4b-5b77-4bb8-ad2a-12f9a7204d71.

[19] Timothy Geigner, It’s That Time of Year: No, the NFL Can’t Stop Every Business From Using ‘Super Bowl’ in Every Instance, Techdirt (Jan. 31, 2020, 9:34 AM), https://www.techdirt.com/articles/20200130/10363443827/that-time-year-no-nfl-cant-stop-every-business-using-super-bowl-every-instance.shtml.

[20] Id.

[21] Kaminsky, supra note 7.

[22] Id.

[23] Wilkinson Barker Knauer LLP, supra note 18.

[24] Id.

[25] Leggate, supra note 3.

[26] Kaminsky, supra note 7.

[27] Id.

[28] Geigner, supra note 19.

[29] Leggate, supra note 3.

[30] About Puppy Bowl, Animal Planet, https://www.animalplanet.com/tv-shows/puppy-bowl/about (last visited Feb. 2, 2020).

[31] Baram, supra note 5.

[32] Leggate, supra note 3.

[33] Kaminsky, supra note 7.

[34] Baram, supra note 5.

Post image of quarterbacks Patrick Mahomes and Tom Brady created by Wake Forest Law Review Online staff using official NFL imagery, courtesy www.nfl.com.

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20Oct

Chasing Equality: Is Caster Semenya’s Battle Against the IAAF Really Over?

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Caster Semenya celebrates her silver medal at the London 2012 Olympic games. Original photo by Jon Connell, via flickr.

By Kelsey E. Rector

South African runner Caster Semenya is a two-time Olympic gold medalist and has dominated track events like the 800 meter and other mid-distance races over the last decade.[1] All her life, Semenya has been questioned about her sex, especially with respect to competing as an elite female track athlete.[2] Her performance came under fire because Semenya, who was raised as a woman, presents as a woman, and identifies as a woman, has differences in sex development (“DSD”) which cause her body to naturally produce more testosterone than the average female.[3] DSD has many potential causes,[4] but in the most general terms, means that a person has an “atypical development of their chromosomal, gonadal, and/or anatomic sex.”[5]

In competitive sports which rely on gender binaries to group athletes for fair competition, one of the major issues has been to determine how to handle challenges that DSD women are not “female” for the sake of competition.[6] As a result, the recent solution by World Athletics (formerly the International Association of Athletics Federations, or “IAAF”) has been to adopt new rules to protect fair competition which would require DSD women, who are considered “relevant athletes,” to regulate their elevated testosterone levels or bar them from competing in certain women’s track events.[7]

Last month, Semenya lost her appeal challenging the World Athletics regulation which prohibits certain athletes with elevated testosterone levels from competing as females in specified track events.[8]

The regulations set forth by World Athletics state that “relevant athletes,” like Semenya, are barred from competing in restricted events, such as the women’s 800 meter, unless they reduce their blood testosterone to a level of less than five nmol/L for at least six months and sustain it thereafter to maintain eligibility.[9] Similar regulations were proposed by the IAAF in 2014, but when challenged the IAAF failed to produce enough scientific evidence to justify the necessity of the regulation.[10] Despite conflicting studies regarding whether increased testosterone even provides a significant competitive advantage for DSD athletes, the IAAF proposed the current regulations and claimed that they were essential to preserving fair competition for women.[11]

Semenya filed a claim against IAAF in the Court of Arbitration for Sports (“CAS”), claiming that the DSD regulations were “unfairly discriminatory, arbitrary and disproportionate and therefore violate the IAAF Constitution . . . .”[12]

There are several issues with regulations such as these. First, the regulation explicitly targets those individuals who do not fit within a convenient, traditionally defined, binary division of sex. The regulation applies to DSD individuals, but not non-DSD women who may also naturally produce testosterone at high levels.[13] Second, the regulation only applies to certain track events and not to other sports or events.[14] It is interesting to note that the events in the restricted category are restricted to those events in which identified DSD athletes compete in the most significant numbers, but not to those where the performance gap between DSD women and non-DSD women was the widest.[15] Third, and perhaps most troubling, the regulation requires artificial lowering of natural testosterone levels—which can have side effects—in order for an athlete to compete as a woman.[16] We do not ask Michael Phelps to shorten his ridiculously long arms for fair competition, nor do we question Usain Bolt’s long legs in men’s racing—so is it even appropriate to regulate naturally produced hormones which may only give athletes a slight advantage?[17]

Following arbitration, CAS found that the DSD regulations were discriminatory, but upheld them because the regulations were “a necessary, reasonable and proportionate means of achieving the aim of what is described as the integrity of female athletics and upholding of the ‘protected class’ of female athletes in certain events.”[18] The court noted several concerns with the regulations, such the potential for compromising athletes’ confidentiality, the ability of the IAAF to practically apply the regulations, risks to athletes’ health from hormonal treatment, and the inclusion of certain events (the 1,500 meter and 1 mile) as restricted events.[19] The court implied that it was not its place to determine whether a different regulation could be implemented that was more fair and less discriminatory.[20] Instead the court stated that its role was limited to evaluating the regulation as presented in order to determine if it was necessary, reasonable, and proportionate.[21]

Following the CAS decision, the World Medical Association (“WMA”) released a statement encouraging doctors not to take part in implementing the regulations.[22] Specifically, the WMA president stated, “We have strong reservations about the ethical validity of these regulations. They are based on weak evidence from a single study, which is currently being widely debated by the scientific community.”[23] Nevertheless, the regulation was upheld on appeal by the Swiss Federal Supreme Court.[24]

The Swiss Court stated that it could only evaluate “whether the CAS decision violates fundamental and widely recognized principles of public order.”[25] The court determined that fairness in sport was a legitimate concern and that DSD athletes were not being forced to undergo examinations or treatment.[26] While technically the court is correct that athletes aren’t being forced into evaluation or treatment, if an athlete withholds her consent, she will be barred from competing.[27] That doesn’t exactly seem like a fair choice.[28]

So what comes next? First, given the concerns expressed in the CAS opinion, there may be challenges to the application of the DSD regulation once it starts to be enforced.[29] For example, an athlete who agrees to adjust her testosterone levels through hormone treatment may not be able to consistently keep them at the required level throughout her eligibility period.[30] If World Athletics chooses to enforce the policy anyway, that athlete would have a strong argument that she attempted to follow the regulation and that it would be unfair to bar her from competition for fluctuating testosterone levels.[31] In the meantime, Semenya will likely take her case to the European Court of Human Rights to determine “whether demanding women with intersex variations to change their natural bodies as eligibility condition for a certain sport events conforms to the European Convention on Human Rights.”[32]

[1] Athlete Profile: Caster Semenya, World Athletics, https://worldathletics.org/athletes/south-africa/caster-semenya-14330057 (last visited Oct. 20, 2020) (showing races won, current season times, world ranking, and other statistics).

[2] Robyn Dixon, Gender Issue Has Always Chased Her, L.A. Times (Aug. 21, 2009), https://www.latimes.com/archives/la-xpm-2009-aug-21-fg-south-africa-runner21-story.html. See also Erin Buzuvis, Caster Semenya and the Myth of a Level Playing Field, 6 Modern Am. 36 (2010) (discussing how Semenya’s voice, musculature, and speed provoked questions about her gender after she won the 800m at the World Championships in 2009).

[3] See Sofia Christensen, Semenya Lawyer Prepares Testosterone Rule Challenge in European Court, Yahoo News (October 1, 2020), https://sports.yahoo.com/semenya-lawyer-prepares-testosterone-rule-142841526.html.

[4] DSD is a term encompassing a variety of conditions including but not limited to: 46 XX congenital adrenal hyperplasia, 5-alpha reductase deficiency, Klinefelter syndrome (47 XXY), Swyer syndrome (46 XY gonadal dysgenesis), and Androgen insensitivity syndrome. Kyla Boyse, Disorders of Sex Development (DSD) Resources, Mich. Med. (updated Nov. 2012),  https://www.med.umich.edu/yourchild/topics/dsd.htm.

[5] Semenya v. Int’l Ass’n of Athletics Fed’n, CAS Case No. 2018/O/5794, at 110–11 (Ct. Arb. Sport Apr. 30, 2019), https://www.tas-cas.org/fileadmin/user_upload/CAS_Award_-_redacted_-_Semenya_ASA_IAAF.pdf.

[6] See generally Maayan Sudai, The Testosterone Rule—Constructing Fairness in Professional Sport, 4 J. L. & Biosciences 181, 182 (2017) (stating that the issue of sex classification has plagued professional sport authorities since at least 1968).

[7] See World Athletics, Eligibility Regulations for the Female Classification, 2 (effective Nov. 2019) https://www.worldathletics.org/download/download?filename=656101dc-7716-488a-ab96-59d37941e9ac.pdf&urlslug=C3.6%20-%20Eligibility%20Regulations%20for%20the%20Female%20Classification; Testosterone Rules for Female Athletes ‘Unscientific’, BBC (Mar. 21, 2019), https://www.bbc.com/news/health-47640359.

[8] George Ramsay & Jill Martin, Caster Semenya Loses Appeal in Swiss Court over Restriction of Testosterone Levels, CNN (Sept. 9, 2020), https://www.cnn.com/2020/09/09/sport/caster-semenya-ruling-athletics-spt-intl/index.html; Lena Holzer, The Decision of the Swiss Federal Supreme Court in the Caster Semenya Case: A Human Rights and Gender Analysis, Opinio Juris (Sept. 30, 2020), http://opiniojuris.org/2020/09/30/the-decision-of-the-swiss-federal-supreme-court-in-the-caster-semenya-case-a-human-rights-and-gender-analysis/; Sean Ingle, Caster Semenya’s Olympic Hopes Fade as Runner Loses Testosterone Rules Appeal, The Guardian (Sept. 8, 2020), https://www.theguardian.com/sport/2020/sep/08/caster-semenya-loses-appeal-against-world-athletics-testosterone-rules.  

[9] World Athletics, supra note 7, at 4–5. The regulations define relevant athletes as those with listed DSDs, testosterone levels higher than five nmol/L, and who have androgen sensitivity allowing the testosterone to have an androgenizing effect. Id. at 4. Restricted events currently include the women’s 400 m, 400 m hurdles, 800 m, 1,500 m, and 1 mile. Id.

[10] See Alexandria Adkins, Comment, Trapped in the Binary Divide: How Forced Contraceptives Violate the World Anti-Doping Code, 35 Am. U. Int’l L. Rev. 531, 542–43 (2020). These regulations required hyperandrogenic females to reduce natural testosterone levels through the use of oral contraceptives. Id. at 542.Dutee Chand, a hyperandrogenic sprinter from India successfully challenged the necessity, reasonableness, and proportionality of the regulations. Id. at 543.

[11] Sudai, supra note 6, at 186–89.

[12] Semenya v. Int’l Ass’n of Athletics Fed’n, CAS Case No. 2018/O/5794, at 2 (Ct. Arb. Sport Apr. 30, 2019), https://www.tas-cas.org/fileadmin/user_upload/CAS_Award_-_redacted_-_Semenya_ASA_IAAF.pdf.

[13] Adkins, supra note 10, at 561.

[14] Id. at 562.

[15] Semenya, CAS Case No. 2018/0/5794, at 156.

[16] Adkins, supra note 10, at 556.

[17] Matt Butler, Nobody Asked Bolt to Shorten His Legs or Phelps to Shrink His Feet, so Why is Caster Semenya Being Told to Reduce Her Testosterone?, i News (Sept. 16, 2020), https://inews.co.uk/sport/athletics/caster-semenya-iaaf-testosterone-cas-sebastian-coe-260629. But see Malcom Gladwell & Nicholas Thompson, Caster Semenya and the Logic of Olympic Competition, New Yorker (Aug. 12, 2016), https://www.newyorker.com/sports/sporting-scene/caster-semenya-and-the-logic-of-olympic-competition (rationalizing the regulations by stating that these are different types of advantages, and that testosterone places Semenya outside the protected class of women).

[18] Semenya, CAS Case No. 2018/0/5794, at 160.

[19] Id. at 152–160.

[20] Id. at 160.

[21] Id.

[22] WMA Reiterates Advice to Physicians not to Implement IAAF Rules on Classifying Women Athletes, World Med. Ass’n (May 2, 2019), https://www.wma.net/news-post/wma-urges-physicians-not-to-implement-iaaf-rules-on-classifying-women-athletes/.

[23] Id.

[24] Press Release, Swiss Fed. Sup. Ct., DSD Regul.: Caster Semenya’s Appeal against the Decision of the Ct. of Arb. for Sport Dismissed (Sept. 8, 2020). The court opinion is in French (which I do not speak), as such I cite to the Press Release which was released in English. The case citation is: Tribunal Fédéral [TF] [Federal Supreme Court] Aug. 25, 2020, 4A_248/2019 (Switz.).

[25] Press Release, Swiss Fed. Sup. Ct., supra note 24.

[26] Id.

[27] World Athletics, supra note 7, at 5.

[28] Holzer, supra note 8.

[29] Semenya v. Int’l Ass’n of Athletics Fed’n, CAS Case No. 2018/0/5794, 158–59 (Ct. Arb. Sport 2019).

[30] Id.

[31] Id.

[32] Holzer, supra note 8.

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13Oct

How Losing Football Coaches Stand to Gain from the NCAA’s Decision to Waive Bowl Eligibility Requirements

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Florida State Head Coach Mike Norvell leads the Seminoles onto the field prior to their first—and, so far, only win—of the season, Oct. 3, 2020. Photo Courtesy Ross Obley, Seminoles.com.

By Jonathan Carter

The 2020–21 NCAA football season is shaping up to be much different than seasons past,[1] and a recent rule change recommended by the NCAA Division I Football Oversight Committee (“Oversight Committee”) could result in coaches with losing records benefiting from the disarray.[2] Due to COVID-19, currently only 112 of the 130 total Football Bowl Subdivision (“FBS”) teams are playing to compete in forty-one scheduled bowl games.[3] To play in a bowl game, an FBS team usually must first satisfy the NCAA requirements governing bowl eligibility by becoming a “deserving team.”[4] Most importantly, the team must have “won a number of games against [FBS] opponents that is equal to or greater than the number of its overall losses.”[5] This rule mandates that an FBS team have a win-loss record equal to or greater than 50 percent before becoming eligible to play in a bowl game.[6]

With many schools’ football teams sitting this season out, it is likely impossible that enough FBS teams will satisfy this traditional bowl eligibility requirement.[7] Current NCAA rules provide exceptions in the event that there are not enough eligible teams to fill every bowl slot, but these exceptions are generally based on a team’s academic—rather than athletic—performance.[8] In response to the novel circumstances created by COVID-19, the Oversight Committee recently recommended the removal of normal bowl eligibility requirements for the 2020–21 bowl season.[9] This recommendation would eliminate the current win-loss record requirement, but must first be approved by the Division I Council, which is scheduled to meet on Oct. 13–14.[10]

Consequently, if approved, the rule change could have a direct impact on whether FBS coaches with losing records are entitled to receive additional compensation from their universities. In addition to a fixed salary, college coaching contracts frequently include bonus provisions that entitle a coach to additional compensation if certain on-field or off-field events occur.[11] While off-field performance bonuses are generally conditioned on the academic performance of the coach’s players, on-field performance bonuses are related to the team’s athletic accomplishments during the season.[12] The specific terms of coaches’ contracts vary, but a college coaching contract might condition the payment of on-field bonuses on: the team winning a specified number of games, the team playing in or winning a national championship, or the coach winning a national coach of the year award.[13]

Moreover, most FBS college coaching contracts contain an on-field bonus provision that entitles a coach to additional compensation if the team appears in a bowl game.[14] This reflects the university’s goal to incentivize the coach to win games and is consistent with the current trend of paying coaches significantly more for their services.[15] The economic justification for this trend is premised on the idea that teams who win games and play in bowl games gain national notoriety and generate more athletic revenue for the university.[16] As a result, universities and FBS coaches who entered into coaching contracts that include on-field bowl game bonus provisions did so under the assumption that the coach would at least have to satisfy the traditional NCAA bowl eligibility rules to receive that bonus.[17] The Oversight Committee’s new recommendation, however, would make this assumption false by allowing FBS teams with losing records to play in bowl games.[18] Ultimately, the recommendation’s effect will be determined by a football team’s win-loss record and the language of the bowl game bonus provision found in the coach’s contract.

To illustrate, Mike Norvell was hired to coach the Florida State Seminoles football team in December 2019.[19] Among other on-field performance bonuses contained in his agreement, Norvell is entitled to receive at least $100,000 if the Seminoles play in any bowl game while under Norvell’s direction as head coach, regardless of the team’s record or ranking.[20] The Seminoles currently have an overall win-loss record of 1–3[21] and have yet to face many talented ACC opponents listed on their schedule.[22] In a normal NCAA football season, if the Seminoles were to finish the regular season with a losing record they would almost certainly be ineligible to play in a bowl game.[23]

If the Oversight Committee’s recommendation is approved, the Seminoles could remain bowl eligible with a losing record and play in one of the forty-one scheduled bowl games.[24] This unprecedented outcome would entitle Norvell to receive an additional $100,000 on top of his approximately $4 million annual salary for what many would consider an unsuccessful season.[25] Interestingly, Norvell’s bonus provision is similar to that of many other major college football coaches including UCLA’s Chip Kelly,[26] Alabama’s Nick Saban,[27] and Texas A&M’s Jimbo Fisher,[28] in that their contracts entitle them to receive a bonus simply because they are the head coach of a team that appears in a bowl game.

Other coaching contracts, however, may avoid this result because of qualifying language in the bonus provision that requires the team to win a specified number of regular season games in addition to playing in a bowl game. For example, under the “bowl participation” bonus provision of the University of Oregon’s football coach, Mario Cristobal, his team “must have at least 7 regular season wins” for him to receive a $100,000 bonus for appearing in a bowl game.[29] Similarly, Clemson’s football coach, Dabo Sweeny, is only entitled to receive $50,000 for playing in a bowl game if his team also wins “eight or more regular season games.”[30] Thus, these universities have insulated themselves from the potential effect of the Oversight Committee’s recommendation by requiring their team to win a majority of their regular season games.

Historically, putting together a winning season was the first step an FBS coach was required to take before receiving any bonus for a team’s on-field performance. Among many other changes, COVID-19’s impact on college football has put this requirement into question. If the Oversight Committee’s recommendation is accepted by the Division I Council, FBS coaches with losing seasons could be entitled to receive bonuses from their universities for coaching in bowl games that they traditionally would not be eligible to play in.

[1] See Ivan Maisel & Adam Rittenberg, How College Football is Trying to Answer Its Biggest Return-To-Play Questions, ESPN (Jul. 1, 2020), https://www.espn.com/college-football/story/_/id/29387826/how-college-football-trying-answer-biggest-return-play-questions.

[2] See Greg Johnson, Waiving Bowl Qualification Requirements Recommended, NCAA (Sept. 24, 2020, 6:56 PM), http://www.ncaa.org/about/resources/media-center/news/waiving-bowl-qualification-requirements-recommended.

[3] David Scott, Every College Football Team is Likely Bowl Eligible in 2020. Here’s Why, What to Know, The Charlotte Observer (Sept. 22, 2020, 3:10 PM), https://www.charlotteobserver.com/sports/article245890615.html.

[4] See Nat’l Collegiate Athletic Ass’n, 2020–21 NCAA Division I Manual § 18.7.2 (2020), http://www.ncaapublications.com/productdownloads/D121.pdf [hereinafter NCAA Manual].

[5] Id.

[6] Id.

[7] David Cobb, NCAA Committee Recommends Waiving Bowl Eligibility Requirements for 2020 College Football Season, CBS Sports (Sept. 24, 2020, 8:27 PM), https://www.cbssports.com/college-football/news/ncaa-committee-recommends-waiving-bowl-eligibility-requirements-for-2020-college-football-season/.

[8] Id.; NCAA Manual, supra note 4, § 18.7.2.1.3.

[9] Johnson, supra note 2; see also NCAA Manual, supra note 4, § 18.7.2.3 (“The Division I Football Oversight Committee . . . shall have the authority to waive all postseason bowl game requirements based on objective evidence that demonstrates circumstances that warrant the waiver. . . .”).

[10] Johnson, supra note 2.

[11] Martin J. Greenberg, College Coaching Contracts Revisited, 12 Marq. Sports L. Rev. 127,  179–83 (2001); Randall S. Thomas & Lawrence Van Horn, College Football Coaches’ Pay and Contracts: Are They Overpaid and Unduly Privileged, 91 Ind. L.J. 189, 219–22 (2016).

[12] See Greenberg, supra note 11, at 179–83; Randall & Van Horn, supra note 11, at 219–22.

[13] See Randall & Van Horn, supra note 11, at 219–20; see also, e.g., Amended Coaching Contract #1 Between Mario Cristobal, Coach, and Univ. of Ore. (June 3, 2019) [hereinafter Cristobal Contract], https://2michy3wy0l30d34041dt1et-wpengine.netdna-ssl.com/football/wp-content/uploads/sites/3/2018/08/Cristobal-Mario-2017-24-amendment-1.pdf; Coaching Contract Between Dan Mullen, Coach, and Univ. of Fla. 17–18 (Nov. 26, 2017), https://2michy3wy0l30d34041dt1et-wpengine.netdna-ssl.com/football/wp-content/uploads/sites/3/2019/07/Dan-Mullen-Florida.pdf; Restated Coaching Contract Between Tom Herman, Coach, and Univ. of Tex. at Austin 8–9 (May 19, 2016), https://2michy3wy0l30d34041dt1et-wpengine.netdna-ssl.com/football/wp-content/uploads/sites/3/2015/10/Thomas-J.-Herman-Restated-1-0-Culture-LLC-17-36122-Restated-Head-Football-Coach-Employment-Agreement.pdf.

[14] See coaching contracts cited supra note 13; see also Greenberg, supra note 11.

[15] See Richard T. Karcher, The Coaching Carousel in Big-Time Intercollegiate Athletics: Economic Implications and Legal Considerations, 20 Fordham Intell. Prop. Media & Ent. L.J. 1, 27–33 (2009).

[16] Id.

[17] See, e.g.,Randall & Van Horn, supra note 11, at 198–99.

[18] Johnson, supra note 2.

[19] Teresa M. Walker, Florida State Makes Memphis’ Mike Norvell New Head Coach, Associated Press (Dec. 8, 2019), https://apnews.com/article/38ac32d5b32b4dc3aa929e6a6b55a743.

[20] Coaching Contract Between Mike Norvell, Coach, and Fla. State Univ. 7–8 (Dec. 7, 2019) [hereinafter Norvell Contract], https://2michy3wy0l30d34041dt1et-wpengine.netdna-ssl.com/football/wp-content/uploads/sites/3/2018/08/Norvell-Contract-12-11-19.pdf.

[21] Anthony Anderson, Williams, Crawford Lead No. 5 Notre Dame Past Florida State, Associated Press (Oct. 11, 2020), https://apnews.com/article/college-football-jordan-travis-kyren-williams-shaun-crawford-football-cdb11adf56ddb2ca56af9780ca4de865.  

[22] Florida State Seminoles Schedule 2020, ESPN, https://www.espn.com/college-football/team/schedule/_/id/52 (last visited Oct. 13, 2020).

[23] See, e.g.,Tim Linafelt, Clock Strikes 12 On Streaks, Noles’ Football Season, Fla. State Seminoles (Nov. 24, 2018), https://seminoles.com/clock-strikes-12-on-streaks-seminoles-season/.

[24] Johnson, supra note 2.

[25] Norvell Contract, supra note 20, at 3–4, 7–8.

[26] Coaching Contract Between Chip Kelly, Coach, and Univ. of Cal. L.A. 5 (Nov. 25, 2017), https://2michy3wy0l30d34041dt1et-wpengine.netdna-ssl.com/football/wp-content/uploads/sites/3/2018/08/Chip-Kelly-UCLA.pdf (providing at least $40,000 bonus for coaching in any bowl game).

[27] Second Amended and Restated Contract Between Nick Saban, Coach, and Univ. of Ala. 9 (Sep. 4, 2018), https://2michy3wy0l30d34041dt1et-wpengine.netdna-ssl.com/football/wp-content/uploads/sites/3/2018/08/Nick-Saban-Alabama.pdf (providing at least $65,000 bonus for coaching in any bowl game).

[28] Coaching Contact Between Jimbo Fisher, Coach, and Tex. A&M Univ. 5–6 (Aug. 17, 2018), https://2michy3wy0l30d34041dt1et-wpengine.netdna-ssl.com/football/wp-content/uploads/sites/3/2015/10/Jimbo-Fisher-Texas-AM.pdf (providing at least $100,000 bonus for coaching in any bowl game).

[29] Cristobal Contract, supra note 13.

[30] Amended and Restated Coaching Contract Between Dabo Sweeny, Coach, and Clemson Univ. (Nov. 18, 2019) 7–8, https://2michy3wy0l30d34041dt1et-wpengine.netdna-ssl.com/football/wp-content/uploads/sites/3/2018/08/7127_SwinneyDabo_2019-1-1_CONTRACT.pdf.

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8Nov

Fair Pay to Play Act: The Baseline for the NCAA’s New Compensation Rules

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By Alexander Hill

On October 29, 2019, the National Collegiate Athletic Association (the “NCAA”) announced that it would begin the process of directing its divisions to consider amendments to their bylaws to allow collegiate athletes to benefit from their names, images, and likenesses.[1] In this announcement, the NCAA stated these changes would come in a manner “consistent with the collegiate model.”[2] The NCAA’s decision follows California’s enactment of Senate Bill 206, commonly known as the “Fair Pay to Play Act” (the Act), which (upon its effective date of January 2023) will allow players to profit from their names, images, and likenesses, as well as sign agents to represent them in licensing contracts.[3] Additionally, Congress and other state legislatures are considering proposed legislation that would have similar effects as the Act.[4] However, the NCAA’s language of “consistent with the collegiate model” has an eerie similarity to the argument for restriction on amateurism that it made in O’Bannon v. Nat’l Collegiate Athletic Ass’n when it argued that compensation for college athletes goes against the “identity of college sports.”[5] In comparison to the Act, how much can the NCAA limit the athletes’ ability to profit of their name, image, and likeness?

This post addresses the extent of the legal limitations under the Sherman Antitrust Act on the NCAA when implementing these changes “consistent with the collegiate model.” It analyzes these two procompetitive factors in light of the details of the California Act, and whether the rights granted to athletes under this bill hinder these purposes to the extent that the Rule of Reason allows the NCAA to structure its own likeness compensation rules more narrowly than the Act under the Sherman Antitrust Act.

The Act allows athletes to hire agents to represent them in contracts with third parties to use the athletes’ likenesses in different ways, as well as allow the third parties to compensate the athletes in turn.[6] However, the Act restricts schools from compensating the players when they use the athletes’ likenesses themselves.[7] Additionally, athletes cannot enter into contracts if those contracts conflict with the terms of contracts entered into by the teams for which they play.[8]

To this point, the prospect of amateurism as a procompetitive factor in college sports has allowed the NCAA to refuse cash compensation for name, image, and likeness under the Sherman Antitrust Act, as evidenced by O’Bannon.[9] In O’Bannon, the Ninth Circuit Court of Appeals noted that the NCAA’s rules on player compensation are subject to the Sherman Antitrust Act and should receive the scrutiny classified as the “Rule of Reason.”[10] In the Rule of Reason analysis, the court addresses whether a restriction on trade is procompetitive, and if it is procompetitive, whether there is another way to promote the goal of the restriction in a less restrictive way.[11] In the O’Bannon case, the court found that the NCAA’s restriction on cash payments from schools to athletes for their name, image, or likeness beyond grants for educational expenses of the athlete failed the Rule of Reason analysis.[12] In its reasoning, the court noted the restriction promoted two procompetitive purposes: “preserving the popularity of the NCAA’s product by promoting its current understanding of amateurism” and “integrating academics and athletics.”[13] The court held that third parties, specifically EA Sports, which for years had made video games based on college athletics, could not use the athletes’ likeness without compensating them.[14]

In the court’s reasoning, however, the court mainly addressed the procompetitive factor of “preserving the popularity of the NCAA’s product by promoting its current understanding of amateurism” and did not really address the issue of “integrating academics and athletics.”[15] The court failed to address the fact that the NCAA already has in place certain eligibility requirements that require athletes to take certain kinds of classes during their tenure in school, as well as a GPA requirement that all athletes have to meet.[16] Whether or not players are compensated appears to have no bearing on the athletes’ integration into their college’s academics in any way. Where students are required to still maintain a certain level of academic achievement, an allowance for compensation would be a less restrictive alternative to restricting compensation for athletes while still maintaining the procompetitive factor of integrating athletics to academics. Therefore, allowing compensation for athletes would pass the Rule of Reason under the third prong. So, the only procompetitive factor that could be restricted would be restricting the popularity of the NCAA’s product.

When analyzing the restriction on the popularity of the NCAA’s product, the court in O’Bannon only focused on recruitment of players and payments to the players by the colleges themselves.[17] As noted above, the court held that colleges could not compensate athletes for their likenesses because it would hinder the popularity of the NCAA’s product.[18] Similar to this holding, the Act prohibited the ability of schools to pay their athletes for their likenesses.[19] So, that requirement would actually be consistent with O’Bannon. Looking at the allowance for athletes to hire agents, there is no reason why this would restrict the popularity of the sport. Applying the Rule of Reason analysis, allowing players to hire agents would not be more restrictive on the popularity of the NCAA’s product than would allowing players to earn compensation from third parties. If mandating that third parties must pay collegiate athletes for their likeness is not restrictive on this procompetitive aspect by O’Bannon, certainly allowing the athletes to hire agents to ensure they are fairly represented in a contract would meet the same standard under the Rule of Reason. So, naturally, allowing the athletes to hire agents would pass the Rule of Reason analysis and the NCAA would not be able to prevent students from being able to hire agents.

Additionally, if the court already held in O’Bannon that third parties are required to compensate the athletes[20], the requirement in the Fair Pay to Play Act that prevents the NCAA from implementing a rule prohibiting the athletes’ ability to profit off of their likeness is consistent with the holding in O’Bannon. Therefore, it appears that the allowances for athletes in the Fair Pay to Play Act are consistent with the court’s holding in O’Bannon.

In conclusion, it appears that the Fair Pay to Play Act’s grant of rights to athletes are consistent with the holding in O’Bannon, and any restriction beyond the Fair Pay to Play Act by the NCAA would be inconsistent with the ruling in O’Bannon.

[1] Board of Governors Starts Process to Enhance Name, Image and Likeness Opportunities, NCAA (Oct. 29, 2019, 1:08 PM), http://www.ncaa.org/about/resources/media-center/news/board-governors-starts-process-enhance-name-image-and-likeness-opportunities.

[2] Id.

[3] Allen Kim, California Just Passed a Law That Allows College Athletes to Get Paid, CNN (Sep. 29, 2019, 4:01 PM), https://www.cnn.com/2019/09/30/sport/california-sb-206-ncaa-trnd/index.html

[4] Michael McCann, What’s Next After California Signs Game Changer Fair Pay to Play Act into Law?, Sports Illustrated (Sep. 30, 2019), https://www.si.com/college/2019/09/30/fair-pay-to-play-act-law-ncaa-california-pac-12

[5] O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049, 1058 (9th Cir. 2015).

[6] Fair Pay to Play Act, S.B. 206, 2019 Cal. State Senate (Cal. 2019).

[7] Id.

[8] Id.

[9] O’Bannon, 802 F.3d at 1079.

[10] Id.

[11] Id. at 1070.

[12] Id. at 1079.

[13] Id. at 1076.

[14] Id. at 1067.

[15] Id. at 1076.

[16] Id.; Amateurism, NCAA (last visited Nov. 4, 2019), http://www.ncaa.org/student-athletes/future/amateurism

[17] O’Bannon, 802 F.3d at 1076.

[18] Id.

[19] Cal. S.B. 206.

[20] O’Bannon, 802 F.3d at 1067.

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