July 17, 2014 5:00am PT by Eriq Gardner
Why TV Broadcasters Should Get Behind NCAA Athlete Unionization (Analysis)
This story first appeared in the July 25 issue of The Hollywood Reporter magazine.
The future of college sports is now in the hands of a federal judge in Oakland after a nearly three week trial in June. If amateur athletes prevail in an antitrust lawsuit claiming the NCAA is a cartel that restrains them from licensing their names and images, U.S. District Judge Claudia Wilken could issue sweeping orders impacting such TV broadcasters as CBS, Fox and NBC Universal that collectively spend more than two billion dollars on college football and basketball rights each year.
The athletes want to be paid for their role in a business that generates substantial revenue for NCAA schools but nothing except scholarships for its athletes thanks to "amateurism" policies that date to 1906. As conferences ink huge TV deals and top coaches command $7 million salaries, the movement to pay players has gained support from NFL legends past (Joe Theismann) and present (Adrian Peterson).
So far, broadcasters mostly are siding with the NCAA rather than those athletes. But a strong argument can be made that TV outlets are better off switching sides. Two cases -- a federal antitrust lawsuit led by former UCLA basketball star Ed O'Bannon, a unionization effort by Northwestern football players at the National Labor Relations Board -- finally might determine if, when and how college players are compensated. What has been overlooked is that the latter unionization efforts hold three important advantages for broadcasters. If the athletes win the antitrust lawsuit, broadcasters might wish to think hard about this.
First, unionization would probably clear up the question of whether broadcasters own rights to on-field performances. This is an issue addressed indirectly in the O'Bannon case after Judge Wilken raised the specter they might not. Last April, she ruled, "Whether Division I student-athletes hold any ownership rights in their athletic performances does not depend on the scope of broadcasters’ First Amendment rights but, rather, on whether the student-athletes themselves validly transferred their rights of publicity to another party."
The broadcasters were so troubled by the implications of this statement that they asked to brief the judge on why the NCAA should be given an opportunity to appeal. The judge allowed the trial to move ahead anyway, and as a possible outcome, the judge could bar the NCAA from forcing its athletes to sign waivers.
So why would unionization be a solution for broadcasters?
As part of the decision last March by a NLRB regional office to allow NU football players to vote on a union, these athletes were determined to be employees. Under intellectual property law, a work created by an employee as part of his or her job is owned by the employer. Few people remember this, but in the 1980s, Major League Baseball fought its players union over who owned rights to player performances. In 1986, a federal appeals court ruled, "Because the Players are employees and their performances before broadcast audiences are within the scope of their employment, the telecasts of major league baseball games, which consist of the Players' performances, are works made for hire."
In the absence of a ruling that NCAA athletes have given up rights to their performances, athletes may soon be demanding payments directly from broadcasters. If the TV industry refuses, then college stars could sue the likes of Fox (which jointly operates the Big Ten Network) and ESPN (which in August will launch the SEC Network). Besides the legal fallout, the public could begin blaming broadcasters as the ones most strongly resisting college athlete compensation.
Marc Edelman, a sports law professor at Baruch College in New York, thinks "work for hire" would apply to unionized college athletes and be a potential saving grace for broadcasters. Of course, the NCAA likely would have to pay something to its players after negotiating with their union. In the NFL and NBA, the players union negotiates a percentage of league revenue that goes toward salaries. If universities were negotiating with athletes, anything from a pension fund to an annual stipend would be on the table.
But ultimately, a deal would pave a second advantage for broadcasters. Those negotiations between universities and a players union "would facilitate a single, uniform licensing agreement for use of likenesses," says Edelman.
In other words, rather than having to negotiate with agents of individual players, broadcasters could go to universities as they already do for rights to athletes' images, names and performances. If broadcasters wanted to do things like advertising campaigns and digital extensions, it wouldn't have to worry about clearing rights with thousands of individuals. It would be business as usual.
A union for NCAA athletes would achieve a third advantage for broadcasters: Thanks to the legal concept known as the "nonstatutory labor exemption," collectively bargained work conditions would be given a pass from antitrust scrutiny.
The NFL and NBA -- and their broadcast partners -- already know this benefit. After all, where else in Corporate America do employers conspire together to assign recent college graduates and set salary caps on these draftees? Collective bargaining is the reason why this is tolerated. The same sort of benefit would apply to college sports should an agreement between the NCAA and its union arise. And so, if athletes begin looking to examine who exactly is facilitating the alleged NCAA cartel, broadcasters would be inoculated from potential antitrust lawsuits.
The path to the broad unionization of NCAA athletes will be slow and arduous. The NLRB ruling concerning the NU athletes is already under appeal. It might only apply to NU. Or private universities. There's undoubtedly a great deal of fighting ahead on the labor front in college sports. But Ryan Rodenberg, a Florida State University sports law professor, agrees that "monetary pressure" from broadcasters (i.e., the billions they spend) can spur along change.
Of course, unionizing NCAA athletes would end any notion that they are "amateurs."
Do TV execs care? Former CBS Sports president Neal Pilson testified in the O'Bannon case that paying players would change public perception of college sports and could cause a 15 percent-to-20 percent drop in TV ratings. But CBS Sports chairman Sean McManus is less certain, saying, "The system needs to be adjusted."
There’s precedent for an entertainment company coming around to the idea that paying NCAA athletes makes sense. After battling college athletes for years over the use of their names and faces in video games, Electronic Arts revealed in June that it had agreed to fork over a whopping $60 million to about 100,000 current and former college football and basketball players. But the game publisher went even further than the historic settlement. That month, in the O'Bannon case, EA executive Joel Linzner testified that if there were an efficient way to work with players as a group, then he would be interested in acquiring rights from them.
Obviously, a college athletes players association could be that group. Will broadcasters use their power of the purse to support a union, if not for reasons of fairness then for self-interest in a legal game that is hardly winding down to the buzzer?