# College football if O'Bannon wins the lawsuit **URL:** \ **Category:** The Game Room\ **Created:** [August 9, 2013, 12:41pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799 "2013-08-09T12:41:33Z")\ **Posts on this page:** 20\ **Page:** 11
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [April 14, 2014, 1:06pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/201 "2014-04-14T13:06:10Z")
The more discussion I hear about this, the more I side with the student-“athletes”. ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [April 24, 2014, 8:45pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/202 "2014-04-24T20:45:54Z")
John Infante of _The Sporting News_ has an interesting take today on why the NCAA is going Custer vs the Sioux in the O’Bannon suit. [http://www.sportingnews.com/ncaa-football/story/2014-04-24/obannon-case-ncaa-news-summary-against-players-pay-college-sports](http://www.sportingnews.com/ncaa-football/story/2014-04-24/obannon-case-ncaa-news-summary-against-players-pay-college-sports) Infante’s first point, that this lawsuit is activist litigation designed to strip the NCAA of its current power, is the one that hits home the most to me. I think the schools are destined to lose this one; the scenario I envision is that, just as they’re reeling and locked in ferocious combat with O’Bannon, that Jeffrey Kessler and his plaintiffs wade into the fight with even more ferocity to deliver the knockout blow. ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [April 27, 2014, 1:45am UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/203 "2014-04-27T01:45:19Z")
On Thursday, the NCAA approved a reorganization allowing members of the five power conferences greater autonomy, an action that will allow said schools to offer a slightly improved scholarship package to athletes. The NCAA says that the timing of this decision was coincidental to the Northwestern union vote and that it has been debated for two years. That may well be true but it’s certainly not coincidental to the continuous legal losses the schools have suffered in the O’Bannon lawsuit, which was initially filed in 2009 and has been moving the needle of public opinion ever since. In an interview some months ago, Southern Cal AD Pat Haden wondered why the schools weren’t actively making contingency plans in the event of a court loss, a question that’s been bothering me as well (I’m suspicious about an ace in the hole). Since USC is obviously one of the power schools affected by the new decision, either Haden was being completely disingenuous or he thought the additional perks the schools were considering were not nearly enough to head off litigation both current and future. If the latter, I think he’s absolutely correct. How is offering a little travel money to families going to be better than the free house Reggie Bush’s parents received, the $300,000 Cam Newton was offered or the half million bucks Johnny Manziel could have commanded for his sophomore year at Texas A&M? I mentioned in the union thread that schools will be sorry that they didn’t work out things with athletes’ unions because that would give them someone to negotiate with, someone who had to look out for all of its members, including the third string long snapper. With no union and all the outside income restrictions off, the paydays for a select few players are going to be enormous. That will divert far more booster money, and ramp up the arms race overall, far more than working out a nice little stipend for the football players union. And basketball players are gonna cost even more, at least on an individual basis. ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [May 18, 2014, 2:45pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/204 "2014-05-18T14:45:34Z")
Because the question of booster payments as tax events has arisen in various discussions about college sports after the O’Bannon and Kessler lawsuits, I did some light research on gift taxes, which I think is the applicable mode here. First, gifts in the form of college tuition payments are exempt from gift tax calculations, which raises some very interesting possibilities for booster involvement. Second, even if the gift is of outright cash to a player, the first $14,000 is excluded from gift taxes (which are paid by the donor – there are no tax ramifications to the giftee), after which graduated rates of 18-40% begin to apply. The taxes are then allowed (not required) to be netted against a donor’s lifetime estate/gift exclusion of over $5 million. So there is an affordability factor but not an onerous one at modest amounts, say $50,000 a year or so. By my calcuations, gift tax on $50,000 would be $7,320, which could be avoided simply by reducing the lifetime exclusion above by that amount. That’s a pretty reasonable deal for a fat cat booster. Things get more complicated if a booster offers a “job” so he can deduct the payments because fair market value comes into play but that’s the IRS’s concern. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [June 1, 2014, 7:40am UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/205 "2014-06-01T07:40:57Z")
I think they are getting away with [del]murder[/del]theft here, but at least some former college players will get some money. The best part is the settlement does not include the NCAA. [ > [@](#): > > Depending on how many athletes apply for the settlement, the payments could range from as little as $48 for each year an athlete was on a roster to $951 for each year the image of an athlete was used in a videogame. > > “We’re incredibly pleased with the results of this settlement and the opportunity to right a huge wrong enacted by the NCAA and EA against these players and their rights of publicity,” said Steve Berman, one of the lead attorneys in the case. “We’ve fought against intense legal hurdles since filing this case in 2009 and to see this case come to fruition is a certain victory.” > > The settlement is with Electronic Arts and Collegiate Licensing Co., which licenses and markets college sports, and does not include the NCAA. The case against the NCAA is scheduled for trial early next year. ]([http://hosted.ap.org/dynamic/stories/N/NCAA\_LAWSUIT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-06-01-00-15-46](http://hosted.ap.org/dynamic/stories/N/NCAA_LAWSUIT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-06-01-00-15-46)) ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [June 1, 2014, 3:50pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/206 "2014-06-01T15:50:36Z")
What I think this means most is that the NCAA’s one time co-defendant didn’t think it could win its case in court. And a powerful voice in college football is saying pretty much the same thing. Outgoing Florida president Bernie Machen said Friday that the big schools need a lot more autonomy and went so far as to intimate that a new football division would be established for the schools that can afford the new realities. He said that if the rich schools aren’t allowed to get out ahead of the pending litigation, the litigation will decide how much the athletes get for them. Predictably, Boise State president Bob Kustra complained that this was a naked power play designed to squelch the big schools’ embarrassment when they lose to a school with a fraction of its budget (Boise State budget – $37 million, Alabama $124 million, for instance). He fears relegation to second class status for the schools of the other six Division 1 conferences. As for the lawsuit itself, the NCAA applied for a delay (until March 2015!) in the June 9 start date. That marks the fifth time it has asked for a postponement; the other four have been denied. I think it’s becoming clearer with each day that big changes are coming to college football. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [June 1, 2014, 5:12pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/207 "2014-06-01T17:12:09Z")
That’s not what it means at all. You really can’t make that sort of deduction from settlements. It means the plaintiffs were willing to accept an amount that was less than EA/Collegiate Licensing’s exposure divided by its perceived chances of winning in court. That’s the calculation every defendant makes before settling. Given that the class is 150,000+ players, $40 million is a pretty small settlement. If the plaintiffs won, even a judgment of $1000 per player would have cost $150 million. Hell, it probably would have cost $20 million to litigate the case to trial even if the defendants won; it’s not as though they could recover their costs. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [June 1, 2014, 8:21pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/208 "2014-06-01T20:21:56Z")
> [@Really\_Not\_All\_That\_Bright](#): > > That’s not what it means at all. You really can’t make that sort of deduction from settlements. It means the plaintiffs were willing to accept an amount that was less than EA/Collegiate Licensing’s exposure divided by its perceived chances of winning in court. That’s the calculation every defendant makes before settling. Given that the class is 150,000+ players, $40 million is a pretty small settlement. If the plaintiffs won, even a judgment of $1000 per player would have cost $150 million. Hell, it probably would have cost $20 million to litigate the case to trial even if the defendants won; **it’s not as though they could recover their costs**. From EA? Are you kidding? They have revenue of nearly $4B/year and are sitting on over $2B in equity. A $200M judgement or settlement wouldn’t have crippled them, although it might have hurt a bit for a short time. I agree that EA must have seen it was in their own best interest to settle now for this amount tho, so this must be less than they thought they’d likely have to pay after a trial. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [June 1, 2014, 8:34pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/209 "2014-06-01T20:34:13Z")
“Recover their costs” means get them back from the losing party (the football players.) ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [June 1, 2014, 10:18pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/210 "2014-06-01T22:18:15Z")
> [@Really\_Not\_All\_That\_Bright](#): > > That’s not what it means at all. You really can’t make that sort of deduction from settlements. It means the plaintiffs were willing to accept an amount that was less than EA/Collegiate Licensing’s exposure divided by its perceived chances of winning in court. That’s the calculation every defendant makes before settling. Given that the class is 150,000+ players, $40 million is a pretty small settlement. If the plaintiffs won, even a judgment of $1000 per player would have cost $150 million. Hell, it probably would have cost $20 million to litigate the case to trial even if the defendants won; it’s not as though they could recover their costs. Yeah, I probably shouldn’t’ve drawn such a simplistic conclusion. Still, some context is needed. The lawsuit against the schools, similar in many ways to the one against EA (and I think it was very smart and very fortunate that EA got themselves separated from the NCAA), continues with most legal analysts wondering where the schools’ defense will ultimately be constructed. So far, they’ve lost just about all the preliminaries. The separate division threatened by Florida president Machen is designed, contrary to the schools’ protestations, to head off the lawsuit by being a little more generous to the athletes. I don’t think this is a winning play – O’Bannon (with Kessler on deck) has become activist litigation; it’s purpose is to overhaul the system and win full economic rights for the players. The schools’ toss of a few more shekels into the pot doesn’t cede control and that’s what is now at stake. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [June 1, 2014, 10:27pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/211 "2014-06-01T22:27:57Z")
Well, ultimately this dispute is not really between the players and schools. The schools that are making money would be more than happy to do more for their players if the NCAA would let them. It’d be a valuable recruiting tool. Basically, this is a dispute between the NCAA and the players. The NCAA’s only real argument is the one it’s always used: that the principle of _amateurism_ must be defended. Considering the amounts of money involved for everyone except the players, I don’t think that can be justified any longer. I still think the end result will be what I originally predicted: the NCAA will lift (or be forced to lift) the restrictions on players taking outside money. Boosters, local business, Nike, what have you, they’ll all be able to pay players directly. That also neatly avoids the issue of whether schools will have to pay non-revenue athletes: no, but if they can get sponsorship more power to them. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [June 1, 2014, 11:42pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/212 "2014-06-01T23:42:03Z")
> [@Really\_Not\_All\_That\_Bright](#): > > “Recover their costs” means get them back from the losing party (the football players.) Ah apologies. Now that I re-read it, I see what you meant. Thanks for 'splaining. ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [June 1, 2014, 11:44pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/213 "2014-06-01T23:44:31Z")
Yeah, the big schools are probably ready to go for it. One interesting side effect brought up by [SI.com](http://SI.com)’s Andy Staples – some of the schools in the five power conferences may find themselves left behind as well. Schools like Wake Forest, Minnesota and maybe even Mississippi State are having trouble competing more than once in a while now; this stands only to get worse when the crazy boosters are allowed to run amuck. They’ll be outgunned even worse. ---
**Author:** ![That\_Don\_Guy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/that_don_guy/32/538_2.png) [@That\_Don\_Guy](https://boards.straightdope.com/u/That_Don_Guy)\ **Post date:** [June 2, 2014, 7:57pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/214 "2014-06-02T19:57:53Z")
I wonder if the schools can now get away with something like, “All financial aid given to students from this school (not just athletic scholarships, although that is clearly the intended target) is subject to the condition that an amount up to the value of the aid is to be repaid from any revenues earned by the student based on activities in which the student was representing the school.” Meanwhile, the case vs. the NCAA is still on, and apparently it involves mainly getting a share of the TV money, in which case, what chance do athletes in sports besides FBS football and Division I men’s basketball have? It’s not as if ESPN and the SEC / Big 10 / Pac-12 / Lonnghorn Networks don’t have TV contracts in other sports - and assuming the Longhorn Network’s contract deals directly with the University of Texas rather than the Big 12, can the school get away with giving the men more than the women in the same sport? ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [June 2, 2014, 8:49pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/215 "2014-06-02T20:49:16Z")
> [@That\_Don\_Guy](#): > > I wonder if the schools can now get away with something like, “All financial aid given to students from this school (not just athletic scholarships, although that is clearly the intended target) is subject to the condition that an amount up to the value of the aid is to be repaid from any revenues earned by the student based on activities in which the student was representing the school.” Once we reach the era of fair market negotiations, some of the schools could certainly propose this as part of the recruiting pitch. As long as all of them don’t conspire to offer the same thing, schools and their boosters should be as free to offer a variety of incentives as any other business entity might. > [@That\_Don\_Guy](#): > > Meanwhile, the case vs. the NCAA is still on, and apparently it involves mainly getting a share of the TV money, in which case, what chance do athletes in sports besides FBS football and Division I men’s basketball have? It’s not as if ESPN and the SEC / Big 10 / Pac-12 / Lonnghorn Networks don’t have TV contracts in other sports - and assuming the Longhorn Network’s contract deals directly with the University of Texas rather than the Big 12, can the school get away with giving the men more than the women in the same sport? I’m not a Title IX expert (or maybe even any other kind) but isn’t it mostly about providing equal opportunities? It seems like there are a million different ways that the courts could order the tv revenue split up at any given school. They might order it to be split evenly among all the scholarship athletes or they could apportion it according to the revenue derived by each individual sport. ESPN pays something anyway for some of the women’s sports, my tv is offering plenty of college softball playoffs these days. I could see it going either way. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [June 2, 2014, 10:27pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/216 "2014-06-02T22:27:41Z")
The NCAA isn’t subject to Title IX. The schools are. I don’t think they can get away with paying some players and not others if there is a resulting gender disparity (which obviously there will be.) ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [June 9, 2014, 12:16pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/217 "2014-06-09T12:16:31Z")
Trial starts today, five years after filing. Not getting discouraged during all that time is pretty remarkable. And after the trial they’re probably looking at five more years of appeals. ---
**Author:** ![OldGuy](https://avatars.discourse-cdn.com/v4/letter/o/3bc359/32.png) [@OldGuy](https://boards.straightdope.com/u/OldGuy)\ **Post date:** [June 10, 2014, 12:31am UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/218 "2014-06-10T00:31:40Z")
> [@Red\_Wiggler](#): > > Second, even if the gift is of outright cash to a player, the first $14,000 is excluded from gift taxes (which are paid by the donor – there are no tax ramifications to the giftee), after which graduated rates of 18-40% begin to apply. The taxes are then allowed (not required) to be netted against a donor’s lifetime estate/gift exclusion of over $5 million. I doubt very much that the IRS would consider a gift directly from a booster to a college athlete to be a gift for tax purposes. An individual is not a tax-exempt entity so the gift to an individual has to be given with no specific consideration in return. I’m pretty sure the IRS would deem the gift as payment for services. And when the IRS makes a ruling like that, the onus of proof is generally on the taxpayer to prove otherwise. ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [June 10, 2014, 12:12pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/219 "2014-06-10T12:12:54Z")
> [@OldGuy](#): > > I doubt very much that the IRS would consider a gift directly from a booster to a college athlete to be a gift for tax purposes. An individual is not a tax-exempt entity so the gift to an individual has to be given with no specific consideration in return. I’m pretty sure the IRS would deem the gift as payment for services. And when the IRS makes a ruling like that, the onus of proof is generally on the taxpayer to prove otherwise. It might change to that, emphasis on “might.” Even if tax ramifications become a bigger factor, it will only affect the amount of gifts/payments, not the larger point of whether they will occur or not. Boosters and corporations _will_ pay college athletes to attend their schools and hawk their products. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [June 10, 2014, 8:17pm UTC](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799/220 "2014-06-10T20:17:37Z")
My favorite part of yesterday’s proceedings was when Dr. Roger Noll, professor of economics at Stanford University, said: [ > [@Dr. Roger Noll](#): > > The NCAA is a cartel that creates a price-fixing scheme among its members. ]([http://sportsillustrated.cnn.com/college-football/news/20140609/ed-o-bannon-v-ncaa-trial-cartel-price-fixing/](http://sportsillustrated.cnn.com/college-football/news/20140609/ed-o-bannon-v-ncaa-trial-cartel-price-fixing/)) I don’t think this is going to be dragged out much more now that it’s finally begun. [Previous page](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799.md?page=10) [Next page](https://boards.straightdope.com/t/college-football-if-obannon-wins-the-lawsuit/665799.md?page=12)