College athletes look to antitrust case as best hope for payday

By Joseph Ax and Ben Klayman

NEW YORK/DETROIT, Aug 18 (Reuters) - Football players at Northwestern University may have lost a bid to unionize on Monday, but a broader legal challenge has targeted the practice of excluding college athletes from sharing in the multibillion dollar bonanza they help generate.

Alleging the current system of providing scholarships, but no pay, to the country's best athletes violates U.S. antitrust law, a group of football and men's basketball players is suing the National Collegiate Athletic Association (NCAA).

The Northwestern players were dealt a defeat when the National Labor Relations Board (NLRB) denied their petition to organize a union. But its ruling declined to rule on the case's central issue: whether the athletes are truly amateurs, as the NCAA argues, given the massive revenue they generate for their schools.

That question is squarely at the heart of the 2014 antitrust lawsuit, which claims the NCAA and its biggest conferences constitute an "unlawful cartel" that should be forced to compensate athletes with a share of its earnings.

The lawsuit, filed by the prominent sports lawyer Jeffrey Kessler on behalf of the players poses a threat to the NCAA's "amateur" model, since it seeks a free market for athletes' pay.

"That's the key litigation," said lawyer John Adam, who represented the Northwestern players before the NLRB. "College sport is great, but it's a business. Anyone who doesn't think it's a business isn't keeping up with reality."

The NCAA declined to comment on Tuesday on future challenges but has defended its amateur rules as key to preserving the college sports system.

The NCAA reported $871.6 million in revenue in 2011-12, mostly from media rights, including a $10.8 billion, 14-year contract with broadcaster CBS.

FOCUS ON ANTITRUST

Former Northwestern quarterback Kain Coulter, who spearheaded the NLRB case, told Reuters all options remain on the table.

"We're definitely going to test the waters and see what schools are out there, what players are willing to stand up," Coulter said.

But labor law experts said such cases, complicated by the patchwork of private colleges like Northwestern and the public ones that tend to dominate college athletics, were long shots and the antitrust litigation is more likely to succeed.

Kessler, the lawyer on the antitrust case, said the NLRB ruling "does underscore that antitrust is the most viable route for the players in basketball and football to vindicate their rights."

While the labor board was reluctant to rule on an issue affecting state-run public schools, given its lack of jurisdiction over them, a federal court ruling on antitrust grounds would apply equally to every school.

Professional players unions have historically used "whichever one has the best prospect of success," said Michael LeRoy, law professor at the University of Illinois.

For example, National Football League players sued the league for antitrust violations after their failed 1987 strike, LeRoy said. Kessler, the lawyer leading the NCAA case, won a jury verdict declaring the NFL's free agency system illegal in 1992, also on antitrust grounds.

Courts have generally held that labor law trumps antitrust law when a collective bargaining relationship exists, said Tulane University law professor Gabriel Feldman. But that clearly would not be the case with college athletics given the lack of an existing union structure.

By declining to take up the unionization issue, the NLRB may have made it easier to mount an antitrust challenge that, if successful, would "fundamentally change the structure of college sports," Feldman said.

SUPREME COURT BOUND?

The NCAA has already lost one antitrust case, when U.S. District Judge Claudia Wilken ruled last year that it cannot prevent athletes from earning money from the use of their names and likenesses in broadcasts and video games.

That landmark ruling, in a case brought by former UCLA basketball star Ed O'Bannon, is on hold pending an appeal by the NCAA.

Wilken is also overseeing Kessler's lawsuit, but the case will be transferred to New Jersey where it was initially filed if it reaches trial.

Marc Edelman, a law professor at the City University of New York, said the case is "extraordinarily strong" on the law, especially given the O'Bannon ruling, but that judges sometimes consider political pressure as well.

Matt Mitten, a sports law professor at Marquette University, and Andrew Zimbalist, a sports economist at Smith College, both said they expect the issue to ultimately land at the U.S. Supreme Court, delaying final resolution for a couple of years.

Meanwhile, the increased public attention has helped improve benefits for athletes at some schools, including more scholarship money, advocates for athlete pay said.

"That's what the NLRB case was about: by simply filing a one-page petition, they caused the entire nation to look at it and discuss it," Adam said.

(Reporting by Joseph Ax in New York and Ben Klayman in Detroit; Additional reporting by Robert Iafolla in Washington; Writing by Joseph Ax; Editing by Christian Plumb, Noeleen Walder and Ken Wills)