Revisiting the Ed O’Bannon Lawsuit
To lay the groundwork for our upcoming coverage of Name, Image, and Likeness, I am republishing a series from 2014! It was originally located on my old Emory University scholar blog. Some of the details are out of date, but the core principles still hold. I was originally going to update it but decided to leave it (almost) unedited.
I wrote five posts in 2014 that totaled almost 5000 words. I almost posted the entire thing in one piece but decided that bite-sized chunks are the way to go.
A lot of this is outdated – but it's worth reviewing in its original form because it shows how quickly things change. And how some things endure. I think it is also appropriate to revisit the O’Bannon case before jumping into current day events. The O’Bannon case was the pivotal event that got us to where we are now.
2014 Series Part 1: O’Bannon Lawsuit
Of all the sports in the world, my favorite is college basketball. But I do have to admit that being a college basketball fan often feels a bit dirty. Major college sports have evolved to be a strange animal that often seems exploitive of the athletes and counterproductive for educational institutions. This topic is top of mind due to the progression of the O’Bannon versus the NCAA lawsuit.
For those not following the case, O’Bannon versus the NCAA is an antitrust case concerned with NCAA rules that allow schools to profit from merchandise such as jerseys with a player’s name video games that feature a player’s likenesses without compensation being offered to the player. This issue results from the strangeness of a system whereby schools and coaches are essentially operating as profit-maximizing professionals while student-athletes are bound to a code of amateurism. Essentially, the O’Bannon suit argues that athletes are a vital element of the major college sports industry and that these athletes should receive a bigger portion of the revenues. The next critical date is June 20th (remember this was 2016), when it will be decided if the suit can proceed as a class-action lawsuit.
While the suit is classified as an antitrust case, and the plaintiffs' key objection is that the NCAA has engaged in price-fixing, my view is that this case is really about marketing issues. In particular, I view the case as about creating brand equity and the distribution of the value of this “marketing asset.” This is a complicated issue. Sports products are co-created by leagues, schools, and players. To take a notable and extreme example, one of the most successful sports products of the 1980s and 1990s were the Bulls teams headlined by Michael Jordan. In this case, the NBA, the Bulls, and Jordan all reaped tremendous benefits.
At the college level, the benefits of brand equity flow more towards the coaches and institutions than the players. The NCAA and its member institutions might argue that this is a legitimate distribution because their “brands” are a product of history and alumni loyalty rather than the presence of specific players. For example, while a great many Tim Tebow jerseys were sold in Gainesville from 2006 to 2009, it is also clear that Florida would have continued to sell-out games, appear on television, and receive significant benefits from being part of the SEC, even if Tebow had gone to another program.
In addition to being fundamentally about “marketing assets,” this topic may also be addressed through analytics. This past week the Wall Street Journal (remember this series was originally from 2014) reported the results of a study conducted for the plaintiffs by Roger Noll that suggests that a 2009 Michigan basketball player would have made about $250,000 per year if revenue distribution rules used in professional leagues were employed. While this analysis's details are not available, it sounds as though the calculations are based on revenues and revenue sharing rates across professional leagues.
Because this case can fundamentally change the business of college athletics, we think this is an issue worthy of comment and study. Over the next few weeks, we plan to offer a series of short articles that examine several of the key issues in the case and perhaps offer some analyses that speak to players' ability to grow a school’s brand equity.
Afterword:
Revisiting this series from 4 years ago is like opening a time capsule. It’s interesting how many of the same issues are still debated. It is also interesting which of the key issues (to my mind) continue to be neglected. The story is fundamentally about branding, but the debate and the proposals are amazingly deficient in the treatment of branding issues.
In Part 2 (2014 Series Part 2). I dig into the university side of the equation.
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