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Miami, FL Law Blog for Entertainment Law, Business Law, and Public Interest

Friday, May 30, 2014

Four College Athletes Claim Not Paying Players is in Violation of Antitrust Laws

Four college athletes have filed a class action suit with the representation of well known sports attorney, Jeffrey Kessler. The four players claim that the NCAA has unlawfully capped player compensation at the value of scholarship and that this is in violation of antitrust laws. The NCAA compensation cap only allows players to be compensated with tuition, books and room and board expenses. It does not allow colleges or universities to pay their athletes salaries or compensate them in any other way.


What are antitrust laws?


Antitrust laws are various state and federal laws that regulate business organizations. The purpose of these laws is to promote competition for the benefit of consumers. Private individuals, private organizations and businesses, as well as government agencies can bring legal actions to enforce antitrust laws.


How do antitrust laws relate to this suit?


The basis of this suit is that only allowing college athletes to be compensated in the form of scholarship funds disregards market forces and therefore results in financial damage to athletes. If colleges and universities were allowed to pay their players, this competition between the institutions would result in great benefit to the player.


The plaintiffs also allege that the NCAA is a cartel. A cartel is defined by antitrust laws as a formal agreement between competing entities. Since members of the NCAA are competing against each other and have entered into a formal agreement to abide by certain rules, it seems they fit the definition. The restraint on trade caused by the NCAA is in the form of rules and regulations capping player compensation. This agreement certainly affects the free market. If players could be paid, then colleges and universities with the most money could sign the best players (just like the process in all American major league sports). By only allowing scholarships as compensation, the playing field is leveled and competition is suppressed because prospective athletes are not driven by the most money.


Officials of the NCAA are sticking to the principle that the financial constraints are necessary to promote amateurism. Plaintiffs claim that the rules are a naked restraint on trade without any pro-competitive purpose or effect.


College sports is big business which generates billions in revenues each year. Should the athletes get a bigger piece of the action?

Have an Entertainment Law question?  Contact Manos & Associates, PL.


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