College football and basketball players have finalized a $40 million settlement with a video game manufacturer and the NCAA's licensing arm for improperly using the likenesses of athletes, leaving the NCAA alone to defend itself in the upcoming Ed O'Bannon antitrust trial.
Lawyers for the plaintiffs filed the settlement agreement with a federal court in Oakland, California, on Friday night in an action that could deliver up to $4,000 to as many as 100,000 current and former athletes who appeared in EA Sports basketball and football video games since 2003.
"I'm thrilled that for the first time in the history of college sports, athletes will get compensated for their performance," said Steve Berman, co-lead counsel for the plaintiffs. "It's pretty groundbreaking."
EA and the Collegiate Licensing Corporation had come to an agreement in principle with the plaintiffs in September 2013, but the settlement was held up by a variety of issues. The NCAA objected to the departure of their co-defendants, and plaintiffs' lawyers representing three different classes of players haggled over the financial cuts that would go to each.
In the end, according to the agreement, 77 percent of the funds that are due to players (after lawyer fees) will go to the class of players represented by Berman, who sued the NCAA on behalf of former Arizona State quarterback Sam Keller. Just over 12 percent will go to players in the class represented by O'Bannon, the former UCLA basketball star. The final 10 percent will go to the class represented by former Rutgers football player Ryan Hart and former West Virginia football player Shawne Alston.
Additionally, O'Bannon, Keller, Hart and the other named plaintiffs would receive payments of $2,500 to $15,000 for their time and efforts in representing the classes.
If the settlement is approved by U.S. District Court Judge Claudia Wilken, the lawyers will receive up to one-third of the settlement funds, or $13.2 million, plus a maximum of $2.5 million in legal fees that they argue is "particularly reasonable in light of the advanced stage of this case." They state that the collective lodestar, or total amount of legal services expended, by the various plaintiffs' firms that have worked on the Keller, O'Bannon and Hart-Alston cases exceeds $30 million, plus expenses of $4 million.
The suits mostly cover players who were on the rosters of Division I men's basketball or Football Bowl Subdivision teams that appeared in the EA Sports video games since 2003. If approved by Wilken, players will be alerted to the availability of payments and will have to register to get paid, using a formula based in part on how many years they were on those rosters. Plaintiffs' lawyers estimate that there are approximately 140,000 to 200,000 annual roster appearances in all three classes.
The fewer players who sign up for the settlement, the more that each player who signs up gets. However, the settlement also could be scuttled if an undisclosed number of players formally opt out of the proposed agreement, as well; only Wilken and the lawyer know that number.
Current players who would be due compensation include any who have appeared in EA Sports games, a legal outcome that creates another challenge to the NCAA's prohibition on players receiving money for the use of their images as athletes.
Asked about the chances that the NCAA might object, Berman said, "The NCAA could do that. But they've released statements saying they wouldn't. To me, the definition of a professional is someone who earns a living at what they do. A payment of $2,000 to $4,000 is not earning a living."
However, Wilken will allow discussion about the video games, the evidence from which is valuable to the plaintiffs' position that the NCAA and member schools knew they were in the wrong.
In the EA-CLC settlement paperwork, lawyers reminded Wilken of some of the more indicting e-mails. They cited a July 2009 e-mail from former Big 12 commissioner Dan Beebe saying that the conference board was "uneasy with the exploitation of player's names and likenesses for commercial purposes." Bill Powers of the University of Texas wrote: "It looks like the NCAA makes money from the licenses. Why should we be defendants in this, rather than plaintiffs representing our students?" Harvey Perlman, chancellor of the University of Nebraska-Lincoln wrote: "(This) whole area of name and likeness and the NCAA is a disaster leading to a catastrophe as far as I can tell."
In June 2013, former University of Michigan president James Duderstadt wrote that "(in) a sense, the NCAA's objective is to preserve the brand so that it provides revenue primarily for a small number of people who get very, very rich on the exploitation of young students who really lose opportunities for their futures. ... And that's what's corrupt about it. The regulations are designed to protect the brand, to protect the playing level and keep it exciting, not to protect the student athletes."
Still, along the way, NCAA officials worked to allow EA to use player avatars in the video games, in which player names were left off but easily downloaded from the Internet by individual users, plaintiffs' lawyers claim. Those officials include former NCAA president Myles Brand.
"EA's internal spreadsheets show that each avatar was matched to dozens of the real student-athlete's identifying characteristics," according to the settlement. "For example, for the NCAA football videogame, EA matched: (1) the name of the real student-athlete; (2) his real-life jersey number; (3) his position played; (4) his hometown; (5) his year of eligibility; (6) his athletic abilities (on at least 22 dimensions, including speed, strength, agility, etc.); (7) his physical characteristics (on at least 26 dimensions, including, weight, height, skin color, face geometry, hair style, muscle shape, etc.); and (8) how he dressed for games in real life (on at least 28 dimensions, including shoes, how they taped, braces worn, undershirts, facemask and helmet styles, etc.)."
In other action on the case Friday, Wilken sided with the NCAA in not allowing a book by Walter Byers, the first NCAA executive director, entered into the evidence during the June 9 trial. The book, "Unsportsmanlike Conduct," is highly critical of the NCAA model that Byers himself helped erect decades ago. The judge also denied the plaintiffs the ability to enter into evidence the ruling of the National Labor Relations hearing officer in Chicago who outlined the reasons why he says players qualify as employees. However, lawyers can orally mention his ruling.
Wilken did allow that plaintiffs can enter evidence related to the amount of injuries players incur in the course of playing for their universities. They'll also be able to highlight the salaries of top NCAA administrators, which have grown as new revenues have flowed into the top tier of college sports. Apparel and other products identified with college athletics alone have grown from a $100 million industry in the early 1980s to $4 billion now, according to one estimate.