Does NCAA Ban On Paying Student Athletes Violate Federal Law?

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RENEE MONTAGNE, HOST:

The nation's top college basketball teams face off next week in the NCAA tournament. And with considerably less fanfare than March Madness, a panel of federal judges will hear arguments over whether colleges should be allowed to pay basketball and football players. Jacob Goldstein from our Planet Money team reports.

JACOB GOLDSTEIN, BYLINE: Money is everywhere in college sports. Take, for example, last weekend's Duke versus University of North Carolina game.

(SOUNDBITE OF COLLEGE BASKETBALL GAME)

JAY BILAS: And we're ready for basketball here on a Saturday night in Chapel Hill.

GOLDSTEIN: The game was on ESPN, which pays hundreds of millions of dollars a year for the right to show college games. At one end of the court was UNC coach Roy Williams.

(SOUNDBITE OF COLLEGE BASKETBALL GAME)

BILAS: I think Roy Williams has to be wondering why his team's not further ahead given...

GOLDSTEIN: Williams made $1.8 million last year, according to USA Today. That's a lot of money, unless you were the coach at the other end of the court.

(SOUNDBITE OF COLLEGE BASKETBALL GAME)

BILAS: The last thing that Mike Krzyzewski wants to see...

GOLDSTEIN: Duke coach Mike Krzyzewski made $9.7 million last year, according to USA Today. The people running around in the middle of the court - the players - are, of course, not getting paid. That's because a long time ago, a bunch of colleges got together and said scholarships are fine, but paying athletes is against the rules. Next week's arguments in federal court will turn on a simple question - are those rules a violation of federal law?

The case was brought by a former UCLA basketball star named Ed O'Bannon. A few years ago, O'Bannon was working at a Toyota dealership near Las Vegas. One day after work, he was hanging out at a friend's house. His friend's kid was playing this college basketball video game. And O'Bannon says one of the players in the video game looked really familiar.

ED O'BANNON: He was 6'8," 225 pounds, guy was bald-headed, left-handed, number 31 jersey. And I was like wow, you know, that is me. I can't believe I'm on this video game.

GOLDSTEIN: O'Bannon was excited to see himself in the game until his friend pointed something out.

O'BANNON: My friend, he says, what's crazy about this is, you know, we paid - I don't know - a hundred dollars or whatever for the game and you didn't see any of it. You didn't get a dime. When he said it, I felt like I had been kicked.

GOLDSTEIN: O'Bannon versus the NCAA was filed in 2009. O'Bannon's lawyers say the NCAA rule against paying athletes for appearing in video games and on TV violates antitrust law - the part of the law that says companies can't get together and make agreements about, say, how much they're going to pay their workers. But sports are a little weird when it comes to antitrust law. Gary Roberts, a law professor at Indiana University, says for a sports league to exist at all, the different businesses - the teams - have to get together and make at least some agreements.

GARY ROBERTS: The teams have to agree on what teams are going to be in the league, where they're going to play, what times they're going to play. Are we going to have the game on television? You can't have the product unless you have agreements.

GOLDSTEIN: Courts have recognized that these kinds of agreements can be good for consumers, for fans. And the NCAA says the ban on paying college athletes belongs in this category. It means fans have a choice between professional sports, like the NFL or the NBA, and amateur sports - college sports. The NCAA didn't reply to requests for an interview for this story, but Gary Roberts joined a brief supporting the NCAA's appeal. And he sums up the colleges' argument like this...

ROBERTS: We want to produce amateur athletics, not professional athletics. And the only way we can do that is to set restrictions on what colleges can give to their student athletes.

GOLDSTEIN: So far this argument has not held up in the O'Bannon case. Last summer, a judge in a lower court ruled that the NCAA was violating antitrust law. Colleges should be allowed to pay athletes. But the judge did say the NCAA could cap payments to athletes at $5,000 a year and could require schools to hold the money in a trust fund until the athletes leave school. Ed O'Bannon says the decision was a win for him, even though it applies to future students.

O'BANNON: I wanted them to change the rule. That's the only reason why I wanted to get into this.

GOLDSTEIN: The NCAA appealed the lower court decision last year. A ruling from the appeals court is expected in the next few months. Jacob Goldstein, NPR News. Transcript provided by NPR, Copyright NPR.