On 8 August, U.S. District Judge Claudia Wilken ruled in favour of former UCLA basketball player O'Bannon and 19 others, declaring that NCAA's longstanding refusal to compensate athletes for the use of their name, image and likenesses (NILs) violates US antitrust laws. In particular, the long-held amateurism justification promoted by the NCAA was deemed unconvincing.

On 14 November, the NCAA has appealed the judgment, claiming that federal judge erred in law by not applying a 1984 Supreme Court ruling. One week later, the NCAA received support from leading antitrust professors who are challenging the Judge Wilken’s reasoning in an amicus curiae. They are concerned that the judgment may jeopardize the proper regulation of college athletics. The professors argued that if Wilken’s judgment is upheld, it

“would substantially expand the power of the federal courts to alter organizational rules that serve important social and academic interests…This approach expands the ‘less restrictive alternative prong’ of the antitrust rule of reason well beyond any appropriate boundaries and would install the judiciary as a regulatory agency for collegiate athletics”.   

Background 

The plaintiff, Edward O’Bannon, competed for the University of California, Los Angeles (UCLA) during the 1991-1995 seasons. In the 1994-95 season, O’Bannon was elected MVP of the UCLA national championship basketball team and also received the John R. Wooden award as the nation’s most outstanding men’s basketball player.  

In 2009, O’Bannon saw his likeness in a video game authorized by the NCAA for which he provided no consent and received no compensation. In July 2009, he filed a class action lawsuit on behalf of current and former NCAA student-athletes against the NCAA, alleging that college football and men's basketball players should be allowed to sell their NIL to the NCAA.

The defendant, the NCAA, is an unincorporated organization consisting of colleges, universities, and conferences. The NCAA rules impose strict limits on the amount of compensation that cannot exceed the value of a full “grant-in-aid” consisting of tuition and fees, room and board and required books.[1] As such, the NCAA prohibits current student-athletes from receiving any compensation from their schools for the use of their NIL, suggesting that the whole college sport relies upon “amateurism”. To participate in NCAA athletics, however, the NCAA requires each student-athlete to sign Student-Athlete Statement (Form 08-3a), which grants the NCAA the right to use the athlete’s NIL to “promote NCAA championships or other NCAA events, activities or programs.”  

Arguments of the parties

Plaintiff  

O’Bannon’s complaint alleged that the NCAA’s college sports amateurism rules harmed student-athletes as it constituted a price-fixing agreement among FBS football and Division I basketball schools. Under antitrust law[1], O’Bannon asserted that the violation unreasonably restrains trade in the market by foreclosing current and former NCAA men’s basketball and Division I-A football (FBS) players from receiving compensation for the use of NIL. The NCAA accomplishes this unreasonable restraint of trade in part by requiring all student-athletes to sign Form 08-3a. Mr O’Bannon asserts that the Form 08-3a is used by the NCAA to mislead and compel uninformed student-athletes to forfeit their rights not to be compensated for their NIL.  

Claimant

 The NCAA put forth a number of procompetitive justifications for amateurism:

• compensating athletes would negatively impact competitive balance among FBS football and Division I basketball teams;  

• paying players would adversely affect the integration of academics and athletics on campuses. In practice, athletes would spend more time doing sports than studying;

• restricting compensation increases output of its product and if lifted, schools might disregard Division I;

• preservation of amateurism is essential to its core identity, as it protect the popularity of sport. The claimant cites the example of the Olympics, which are deemed popular because athletes are not compensated.  

The decision 

On 8 August 2014, the Court found that the NCAA is a cartel that exercises market power, fixes prices, and restrains competition. The NCAA, therefore, must allow schools to redistribute to athletes some of the money it generates by licensing an athlete’s name, image and likeness to companies. In her injunction, Judge Wilken issued that the NCAA is restrained from prohibiting an athlete from getting deferred compensation of $5,000 or less per student-athlete per year. The money is to be paid in a trust fund that could be tapped after college. Furthermore, the NCAA cannot cap the value of a scholarship below the full cost of attending college (which is few thousands more than the current scholarship).[2]

The Court rejected each of the NCAA’s pro-competitive justifications to defend amateurism. Wilken ruled that the NCAA failed to consistently adhere to a single definition of amateurism. In short, Judge Wilken put the longstanding model of amateurism (the core principle of college sport since 1906) at risk in a few sentences: 

“The historical record that the NCAA cites as evidence of its longstanding commitment to amateurism is unpersuasive. This record reveals that the NCAA has revised its rules governing student-athlete compensation numerous times over the years, sometimes in significant and contradictory ways. Rather than evincing the association’s adherence to a set of core principles, this history documents how malleable the NCAA’s definition of amateurism has been since its founding.” 

Additionally, the Court also held that people would not stop watching college sports if players are paid.[3] The fans care about watching football, but not whether athletes are paid or not.

Analysis 

This ruling is a “game-changer” because the Court jeopardizes the long-standing fundamental principle of amateurism on which the whole economic and social system of the NCAA lies. Wilken had no use for the amateurism defence to justify the restraints on paying players. It is particularly ironic that the NCAA seems to be a victim of its own success. No one would have imagined at the time when the NCAA came to existence in 1906, that college sport would grow into such a big business.

Ironically, again, the NCAA was also a victim of its own witness. Daniel Rubinfeld, a prominent antitrust expert, claimed that NCAA operates as a “joint venture which imposes restraints” on trade. This confession is definitely reflected in the Court’s subsequent finding, suggesting that Mr Rubinfeld never denied that the NCAA restricts competition among its members for recruitment.[4] To make matters even more complicated, Mr Rubinfeld had called the NCAA a “cartel” in a prior microeconomics textbook: “The NCAA restricts competition in a number of important ways. To reduce bargaining power by student-athletes, the NCAA creates and enforces rules regarding eligibility and terms of compensation.” Nevertheless, he still considered that the anti-competitive restraint was lawful because it serves procompetitive purposes.

Despite the appearances, however, the situation is not as bad as it looks for the NCAA. It is true that student-athletes will probably be compensated in some form or another. Nevertheless, the cap of $5000 to the compensation could have been higher and it is to be paid to a trust fund. Furthermore, the NCAA can continue preventing student-athletes from endorsing commercial products or selling their NIL rights individually, as the NCAA and its schools have the right to protect them against “commercial exploitation”. Hence, it is likely that Judge Wilken did not intend to blow up the entire NCAA’s system, but to change it gradually. From the point of view of the NCAA, it would have been way worse if the Court had issued an injunction to enter in a collective bargaining agreements with student-athletes.[5] Nevertheless, the ruling opens a space for broader pervasive changes to college athletics in the future.

Appeal 

On 14 November, the NCAA appealed the judgment. The NCAA argues that a federal judge erred in law by not applying a 1984 Supreme Court ruling that the NCAA believes protects amateurism in college sports. The Supreme Court held that “athletes must not be paid” in order to preserve the character and quality of the product. Furthermore, the NCAA argued that other lower district courts have upheld the 1984 ruling.

In support of the NCAA’s appeal, fifteen antitrust-law professors filed an amicus brief. They argue that U.S. District Judge Claudia Wilken “misapplied” the “less restrictive alternative prong” of the rule of reason when she found that the NCAA violated antitrust law. The professors added that precedents show that the Court overstepped its bounds. Furthermore, allowing antitrust courts to “impose their own views” could leave other organizations open to suit. They also argued that following Judge Wilkin’s reasoning in the O’Bannon case, a court could even “require compensation for Little League baseball players” at whatever level that seems ‘fair’ by a district judge.

What’s next? 

If the NCAA loses the appeal, the injunction will take effect the next recruiting cycle; it will affect athletes entering school after 1 July 2016. In such scenario, the ruling will open more space for competition between the schools, in the form of the design of compensation packages. It seems that the volcano did not erupt yet. However, the volcano might finally and irremediably erupt if the next legal battle against the NCAA is successful: the Jeffrey Kessler case. He seeks to remove all scholarship limitations imposed by the NCAA and not only be tied to the NIL.  Kessler aims to introduce a free market in college sport with players receiving salaries in addition to scholarships. In short, he wants to turn recruits into free agents.  An outcome in his favour would change US College Sport forever. I will keep you posted!

[1] O’Bannon v  NCAA, No. 09-3329  CW, at 19  (N.D. Cal. Aug. 8, 2014)

[2] Sherman Antitrust Act, 15 U.S.C.A.  §1 (2011): “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”

[3] Cost of Attendance at Buffalo, for example, is $36,483 while Athletic Scholarship is $33,566. See http://www.ubbullrun.com/2014/6/25/5840110/full-cost-of-attendance-scholarships-what-does-it-mean-at-buffalo

[4] O’Bannon v NCAA, at 28-30.

[5] O’Bannon v NCAA, at 22.

[6] For example, in NBA collective bargaining agreement is the contract between the NBA (the commissioner and the 30 team owners) and the NBA Players Association that dictates the rules of player contracts, trades, revenue distribution, the NBA Draft, and the salary cap, among other things.

Editor’s note: Tomáš Grell holds an LL.M. in Public International Law from Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a research intern.

Concerns about adverse human rights impacts related to FIFA's activities have intensified ever since its late 2010 decision to award the 2018 and 2022 World Cup to Russia and Qatar respectively. However, until recently, the world's governing body of football had done little to eliminate these concerns, thereby encouraging human rights advocates to exercise their critical eye on FIFA. 

In response to growing criticism, the Extraordinary FIFA Congress, held in February 2016, decided to include an explicit human rights commitment in the revised FIFA Statutes which came into force in April 2016. This commitment is encapsulated in Article 3 which reads as follows: ''FIFA is committed to respecting all internationally recognized human rights and shall strive to promote the protection of these rights''. At around the same time, Professor John Ruggie, the author of the United Nations Guiding Principles on Business and Human Rights ('UN Guiding Principles') presented in his report 25 specific recommendations for FIFA on how to further embed respect for human rights across its global operations. While praising the decision to make a human rights commitment part of the organization's constituent document, Ruggie concluded that ''FIFA does not have yet adequate systems in place enabling it to know and show that it respects human rights in practice''.[1]

With the 2018 World Cup in Russia less than a year away, the time is ripe to look at whether Ruggie's statement about FIFA's inability to respect human rights still holds true today. This blog outlines the most salient human rights risks related to FIFA's activities and offers a general overview of what the world's governing body of football did over the past twelve months to mitigate these risks. Information about FIFA's human rights activities is collected primarily from its Activity Update on Human Rights published alongside FIFA's Human Rights Policy in June 2017.

The most salient human rights risks

FIFA faces human rights risks through its events, commercial subsidiaries and business partners, member associations or other parties. This section identifies sources of human rights risks that are most often associated with FIFA's activities.

Bidding and selection

Allegations of corruption have cast a shadow over FIFA's decision to organize the 2018 and 2022 World Cup in Russia and Qatar respectively.[2] If these allegations were proven to be true, it would be conceivable that financial incentives provided by the successful candidates helped them not only to secure the right to stage the tournament, but also to evade certain requirements, including those related to human rights. As Ruggie puts it, ''lack of financial integrity […] is a foundational source of human rights risks''.[3]

Moreover, in the past, countries bidding to host FIFA's tournaments have not been required to present a strategy addressing human rights risks that may arise in connection with the tournament’s organization. This allowed Qatar to win the bidding contest for the 2022 World Cup without explaining how it plans to protect migrant workers from the adverse impacts of the kafala system. Another example is Papua New Guinea that was awarded the 2016 U-20 Women's World Cup despite the country's high rate of sexual violence against women.

Construction

FIFA delegates the organization of the World Cup to the Local Organizing Committee ('LOC'), a separate legal entity created by the government and the national football association of the Host Country. The LOC is responsible, inter alia, for the delivery of World Cup-related infrastructure. In order to meet their deadlines, contractors hired by the LOC may ignore safety standards or force their employees to work overtime. Other reported practices include, for instance, appalling living and working conditions, non-payment of salaries, withholding identity documents or restrictions on the freedom of association.

In March 2017, Norwegian football magazine Josimar uncovered a series of human rights abuses faced by North Korean men working at Zenit Arena in Saint Petersburg. As recently as 14 June 2017, Human Rights Watch documented the mistreatment of construction workers at five other World Cup stadium construction sites in Russia. As the situation in Qatar has not been much better,[4] the Netherlands Trade Union Confederation filed in December 2016 a lawsuit with the Commercial Court of the Canton of Zürich, asking the court to find FIFA responsible for alleged human rights violations of migrant workers. The court dismissed the lawsuit on jurisdictional grounds in January 2017 (for a detailed analysis, see our blogs here and here).

Discrimination

Article 4 of the FIFA Statutes prohibits ''discrimination of any kind against a country, private person, or group of people on account of race, skin colour, ethnic, national or social origin, gender, disability, language, religion, political opinion or any other opinion, wealth, birth, or any other status, sexual orientation or any other reason''. In practice, FIFA must enforce this provision by taking further action to tackle issues such as anti-gay legislation in countries where its tournaments are staged, homophobic chants by fans or gender discrimination in the world of association football. 

Players' rights 

In January 2017, the international players' association FIFPro published a Global Employment Report on working conditions in men's professional football. Out of nearly 14,000 players interviewed, 41% reported having experienced delayed salary payments over the past two seasons. Players who lodge a formal complaint against their club put themselves at risk of being excluded from the squad or subjected to violence and harassment. FIFPro strongly condemned these practices and called upon FIFA to reform its Regulations on the Status and Transfer of Players ('RSTP') to ''provide stronger protections of players against material breaches of contracts by clubs''.[5] Another issue that merits closer attention is human trafficking in football, especially as it often involves minors.[6]

Other 

In addition to the above, FIFA could better address human rights abuses that may occur (i) in the supply chains of its licensees; (ii) in the process of land acquisition for stadiums and event-related infrastructure; or (iii) in connection with event-related security measures.

Overview of the measures taken by FIFA

First and foremost, FIFA strengthened its internal capacity to deal with human rights risks. In 2016, FIFA established the Governance Committee which provides, via its Human Rights Working Group, strategic guidance to the FIFA Council on human rights-related matters. At the operational level, the overall responsibility for the implementation of FIFA's human rights commitment rests with the Secretary General who delegates the day-to-day management of human rights-related work to the Sustainability and Diversity Department. In September 2016, FIFA employed a Human Rights Manager to work within this department. Moreover, in March 2017, FIFA appointed an independent Human Rights Advisory Board with the view of accelerating its efforts to embed respect for human rights. Composed of experts from the United Nations, trade unions, civil society and business, the Advisory Board is scheduled to meet at least twice a year. It has already contributed to the development of FIFA's Human Rights Policy, a landmark document clarifying FIFA's approach to the implementation of its human rights commitment in accordance with the UN Guiding Principles.

The rest of this section looks at the most significant steps taken by FIFA in each of the areas outlined above.

Bidding and selection

The FIFA Council has recently agreed that, as of the 2026 World Cup, human rights requirements will feature in the bidding procedure. This is of paramount importance as it means that countries failing to present an effective human rights strategy should not be allowed to host the World Cup. In other words, the protection of human rights will constitute a material factor in the bid evaluation. Had such requirements existed at the time of the bidding procedure for the 2022 World Cup, Qatar would arguably never have been selected.

The bidding procedure for the 2026 World Cup, the first to feature 48 teams, is currently in an early stage, and therefore bidding requirements are not yet available. The Host Country of the 2026 World Cup will be announced in 2020 at the latest.

Construction

As part of the implementation of the Sustainability Strategy for the 2018 World Cup, FIFA and the Russia 2018 LOC have launched a Decent Work Monitoring System aimed at detecting non-compliance with labour standards at World Cup stadium construction sites. Under this system, two-day on-site inspections are conducted on a quarterly basis by the Klinsky Institute of Labour Protection and Working Conditions, at times accompanied by the Building and Wood Workers' International ('BWI') and the Russian Building Workers Union ('RBWU').[7] After each inspection, companies are provided with a report containing recommendations for further improvement of working conditions. This report is forwarded to FIFA and the Russia 2018 LOC, and, in cases where the health or safety of workers are seriously threatened, also to the competent Russian authorities. As of 14 June 2017, a total of 58 inspections have been carried out.[8]

In Qatar, the Supreme Committee for Delivery and Legacy ('Supreme Committee'), an entity tasked with the delivery of World Cup-related infrastructure,[9] has developed a comprehensive set of Workers' Welfare Standards ('WWS'). Inspired by international labour standards, the WWS are mandatory for all contractors working on World Cup-related construction projects. To see whether contractors are adhering to these standards, the Supreme Committee has designed a four-tier monitoring system which comprises due diligence conducted by the Supreme Committee, the British company Impactt Ltd.,[10] the Qatari Ministry of Labour and contractors themselves. As of February 2017, the implementation of the WWS is further monitored via on-site inspections carried out jointly by the Supreme Committee and the BWI.[11]

Discrimination 

Establishment of the Anti-Discrimination Monitoring System in May 2015 is regarded as the most significant step taken by FIFA to combat discrimination in the world of football. This system uses independent observers who are present at matches identified as involving heightened risks of discriminatory incidents. Based on the reports provided by these observers, FIFA may open disciplinary proceedings and eventually impose sanctions on member associations. For instance, several Latin American associations have been sanctioned for homophobic chants by spectators during the 2018 World Cup qualifying matches.

Internally, FIFA promotes gender equality by requiring each of the six confederations to reserve at least one seat in the FIFA Council for women.[12]

Players' rights

As far as the protection of players' rights is concerned, FIFA informs that it has introduced certain measures intended to preserve confidentiality of the data available in the Transfer Matching System.[13] Furthermore, on 1 March 2015, FIFA modified the RTSP so as to put in place 'fast-track' proceedings for disputes concerning overdue payable claims (for a detailed analysis, see our blogs here and here).[14]

Other

In addition to contractors working on World Cup-related construction projects, other companies having business relationships with FIFA are now required to strengthen their human rights compliance. These include the suppliers of FIFA-licensed balls, artificial turf and technology used in games. Before a license agreement is entered into between FIFA and the supplier, FIFA must satisfy itself that both the supplier and its manufacturer are in compliance with the World Federation of the Sporting Goods Industry ('WFSGI') Code of Conduct, whose purpose is ''to guide WFSGI members in the standards and practices expected in the workplaces that they operate or contract from''.[15] Should FIFA-licensees cease to comply with the standards laid down in the WFSGI Code of Conduct, FIFA may decide to withdraw its license.

Concluding Remarks

The aforementioned report on human rights violations of World Cup-related construction workers in Russia, published by Human Rights Watch in June 2017, came as a major setback to the otherwise encouraging measures taken by FIFA in respect of human rights compliance. This and similar reports demonstrate that FIFA's human rights activities have not yet produced their desired effect. To increase the efficiency of its human rights activities in the future, FIFA should probably engage in a tougher discussion with the competent authorities of the Host Country. This is important because event-related human rights abuses often flow from inadequate domestic legislation and administrative practices of the Host Country.[16] Examples from the past show that FIFA is able to exert pressure on the future Host Country to modify its domestic legislation when it is in the interest of FIFA's sponsors.[17] At the risk of stating the obvious, it is hard to understand why FIFA's sponsors should be prioritized over thousands of people facing human rights abuses in connection with the organization of the World Cup. Thus, a lot will depend on FIFA's amendment of the bidding requirements for the 2026 World Cup. Though it may sound optimistic and far-fetched, if FIFA were to award the World Cup taking into account human rights compliance of the potential Host Countries, it could become a strong force in spreading the human rights gospel across the globe.

[1]    John G. Ruggie, 'For the Game. For the World. FIFA and Human Rights' (April 2016) p. 19.

[2]    Jonathan Calvert and Heidi Blake, 'Plot to Buy the World Cup' (The Sunday Times, 1 June 2014). See also David Conn, 'France Investigates Votes for 2018 and 2022 World Cups and Questions Blatter' (The Guardian, 27 April 2017).

[3]    See Ruggie's report (n 1) p. 21.

[4]    Amnesty International, 'The Ugly Side of the Beautiful Game: Exploitation of Migrant Workers on a Qatar 2022 World Cup Site' (30 March 2016).

[5]    FIFPro, '2016 FIFPro Global Employment Report: Working Conditions in Professional Football' (January 2017) p. 30.

[6]    See Ruggie's report (n 1) p. 25.

[7]    In August 2016, the BWI and the RBWU signed a memorandum of understanding with FIFA and the 2018 World Cup LOC.

[8]    FIFA, 'Statement on Human Rights Watch Report on Russia' (14 June 2017).

[9]    The Supreme Committee works closely with the Qatar 2022 LOC.

[10]   In April 2017, Impactt Ltd. published its first report.

[11]   The Supreme Committee and the BWI signed a memorandum of understanding in November 2016.

[12]   FIFA Statutes, Article 33(5). See also FIFA, '2016 Reform Committee Report' (2 December 2015) p. 9.

[13]   RSTP, Definitions.

[14]   RSTP, Article 12bis.

[15]   WFSGI Code of Conduct, Introduction.

[16]   It should be noted that, in December 2016, the Qatari government introduced certain reforms to its labour laws. However, Amnesty International asserted that these reforms ''barely scratch the surface of labour exploitation''.

[17]   One such example is the well-known 'Budweiser Law' – a law enacted by Brazil in the run-up to the 2014 World Cup allowing beer sales at match venues despite the fact that the sale of alcohol had been prohibited in Brazil's stadiums for almost ten years.