Sports Markets and the Sports Economy

(credit to: http://www.al.com/sports/index.ssf/2013/09/ea_will_not_make_college_footb.html)

By Jon Solomon | [email protected] 
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on September 26, 2013 at 3:37 PM, updated September 26, 2013 at 7:19 PM

BIRMINGHAM, Alabama - Electronic Arts Sports and Collegiate Licensing Company have settled all claims brought against them by plaintiffs in the joint Sam Keller and Ed O’Bannon lawsuit over the use of college athletes’ names, images and likenesses, according to a court filing today.

Terms of the settlements are confidential until presented to the court for preliminary approval, the filing said. “This settlement does not affect Plaintiffs’ claims against Defendant National Collegiate Athletic Association,” the court filing stated.

EA, which earlier today announced it won’t produce its 2014 college football video game, reached similar settlements in cases brought by former Rutgers football player Ryan Hart and former West Virginia football player Shawne Alston.

More than 100,000 athletes will be eligible for compensation at varying amounts depending on each class members’ claims, said Rob Carey, an attorney for Keller, the former Nebraska and Arizona State quarterback.

“This is a big day and it’s nice to get one big piece of it resolved,” Carey said. “It’s like you’re already in Vegas and still gambling because we still have the NCAA portion of the case that I think everybody on our team likes better than EA because of the hypocrisy.”

Earlier today, the NCAA told USA Today Sports it will fight all the way to the U.S. Supreme Court if necessary. Also, EA said its popular college football video game won’t be produced next year and may be gone for good.

The manufacturer said it’s ending the game for 2014 due to ongoing lawsuits concerning the use of college athletes’ names, images and likenesses. Shortly before the settlement was filed, EA said it was trying to settle the lawsuits, two of which resulted in the company asking the Supreme Court to take after losing federal appeals rulings.

“This is as profoundly disappointing to the people who make this game as I expect it will be for the millions who enjoy playing it each year,” Cam Weber, the general manager of American football for EA Sports, wrote on the company’s website.

The company said that it is “stuck in the middle” of a dispute between NCAA and college players who seek compensation.

“Just like companies that broadcast college games and those that provide equipment and apparel, we follow rules that are set by the NCAA — but those rules are being challenged by some student-athletes,” the statement said.

EA noted that the NCAA and a number of conferences have withdrawn their support of the game.

“The ongoing legal issues combined with increased questions surrounding schools and conferences have left us in a difficult position — one that challenges our ability to deliver an authentic sports experience, which is the very foundation of EA Sports games.”

Settlement amounts will vary

In the settlement, some class members will have more valuable rights than others depending on the scope of their claims. The settlements could date back as far as 2003.

For instance, not every player on NCAA rosters listed in the video games also have avatars, Carey said. “The settlement, I would anticipate, would recognize the strengths and weaknesses of each claim,” Carey said.

The definition of the class-action suit includes active players, meaning current college players figure to receive payments from EA and CLC. NCAA rules prohibit athletes from making money off their name in school, but there is a recent precedent.

Texas A&M quarterback Johnny Manziel is suing a man who sold shirts using the football player’s trademarked “Johnny Football” nickname. The NCAA has said it would allow Manziel to collect damages if his corporation’s lawsuit wins as long as those proceeds are not paid to Manziel until after his eligibility expires.

Carey said the Keller settlement is compensation “for property theft” and would not affect a current athlete’s eligibility if money changed hands in the settlement.

A spokeswoman for NCAA said the association could not comment on whether the payments are permissible under NCAA rules until reviewing the settlement terms.

Attorneys for the plaintiffs are now focused on the NCAA, which has not settled over video games. Because the NCAA looked the other way to allow the games to use players’ likenesses, schools’ royalty payments were four times higher than they should have been, Carey said.

In July, the NCAA opted not to renew its licensing agreement with EA, citing the “current business climate and costs of litigation.” The NCAA said then it was confident in its legal position using trademarks in video games.

That caused a ripple effect across the country. Conferences and schools had to decide whether to continue issuing their marks with the video game. The SEC, Pac-12 and Big Ten were among those that decided not to renew.

Over the summer, EA lost a key appeal to dismiss the complaint by Keller that the company illegally used his likeness in the NCAA Football video game without permission.

A panel of judges on the 9th Circuit Court of Appeals in California voted 2-1 that EA was not protected by free speech. Judge Jay S. Bybee, writing in the majority opinion, said the First Amendment does not apply to EA’s use of Sam Keller’s image “because it literally recreates Keller in the very setting in which he has achieved renown.”

EA Sports faced significant challenges in the litigation once damaging e-mails showedNCAA officials knew the video games used real players. Also, a former EA Sports executive producer testified that the games were designed to replicate actual players.

NCAA hires new trial and appeal attorneys

Meanwhile, the NCAA’s chief legal officer told USA Today Sports the association isprepared to go to the Supreme Court if necessary to defend lawsuits involving the use of college athletes’ names, images and likenesses. The NCAA has also added a new defense team.

“We’re prepared to take this all the way to the Supreme Court if we have to,” NCAA chief legal officer Donald Remy told USA Today. “We are not prepared to compromise on the case.”

The O’Bannon suit doesn’t just seek damages from the video games. The plaintiffs, who now include five current college football players, are also going after a 50-50 share of TV revenue in college sports.

Remy told USA Today Sports the NCAA has hired former U.S. solicitor Seth Waxman to handle appeals and retained the California-based firm of Munger, Tolles and Olson to handle trial work. Waxman’s bio says he has given more than 65 oral arguments in the U.S. Supreme Court and many more in the lower federal and state courts.

The NCAA’s interest in going the distance in the O’Bannon case isn’t a surprise. Nonetheless, the legal preparations from the NCAA signal the start of a new stage in the case, which is awaiting a certification decision. Certifying the class-action suit would potentially make the NCAA liable to billions of dollars in damages if it loses at trial.

“I guess they’re figuring they’re going to trial,” Michael Hausfeld, the O’Bannon plaintiffs’ lead attorney, said of the NCAA. “I think that’s an interesting acknowledgment.”

Major power brokers in college sports have insisted that although governance changes will occur within the NCAA, paying players will not happen.

“The NCAA has never made any indication that they are intent on doing anything other than taking their association over the cliff if necessary,” Hausfeld said. “You don’t challenge a system half-heartedly. If you undertake the challenge, you have to be prepared to follow it through and we are.”

Hausfeld said the response to last week’s “All Players United” protest by some college football players suggests the public supports athletes gaining balance in their relationship with schools.

“I don’t think the NCAA ever thought current athletes would come forward,” Hausfeld said. “They have. Change is happening. (NCAA President) Mark Emmert and the NCAA are under siege. They know it and they’re acting like it. So what are they taking to the Supreme Court?”