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In major blow to NCAA, judge rules that colleges can pay athletes

August 9, 2014, 12:53 AM UTC

A federal judge struck a major blow against the NCAA’s ban on paying college athletes by ruling that they are entitled to a limited share of licensing revenue.

The landmark decision on Friday that student basketball and football players can earn money from the use of their likenesses could dramatically upend college athletics, which has, until now, been based on the idea of amateurism.

U.S. District Court Judge Claudia Wilken ruled in an antitrust case that NCAA rules prohibiting payments “unreasonably restrain trade.” She said that schools should be free to give athletes “a limited share of the revenues generated from the use of their names, images, and likenesses in addition to a full grant-in-aid.”

The case, brought in 2009 by former UCLA basketball star Ed O’Bannon, unfolded over three weeks in Oakland, Calif. The plaintiffs argued that the NCAA was a cartel whose rules made schools wealthy while athletes received little to none of the profits from licensing of their names and images.

NCAA attorneys, meanwhile, defended the system by saying it’s necessary to ensure a competitive balance among schools and that profits from money-making sports was used to fund programs without lucrative television deals. Donald Remy, the organization’s chief legal officer, responded to the judge’s ruling with disappointment.

“We disagree with the Court’s decision that NCAA rules violate antitrust laws,” he said in a statement. “We note that the Court’s decision sets limits on compensation, but are reviewing the full decision and will provide further comment later. As evidenced by yesterday’s Board of Directors action, the NCAA is committed to fully supporting student-athletes.”

There was no mention of whether the NCAA would appeal the decision.

The judge’s ruling puts an injunction on the NCAA enforcing rules that block major schools and conferences from creating trusts funded with a limited share of licensing revenue for football and basketball recruits. Those funds could be payable when the athletes leave school or after their eligibility expires.

In her ruling, the judge said the NCAA could cap the amount of money that goes to the trust. But that cap must be no less than $5,000 for every year an athlete competes, she said. In addition, athletes would still be eligible for athletic scholarships covering tuition and housing.