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Federal Judge Clears Way for NCAA Athlete Licensing Pay

By Daniel Taylor, Esq. on August 11, 2014 | Last updated on March 21, 2019

A Federal judge ruled on Friday that the NCAA can no longer prevent college football and basketball players from sharing in proceeds generated by use of their likenesses.

The ruling by U.S. District Court judge Claudia Wilken found that NCAA rules prohibiting athletes from being paid for use of their names, images, and likenesses violate federal antitrust laws, reports CBS Sports. The judge issued an injunction prohibiting the NCAA from enforcing its current rules, but he did not grant proposals by the plaintiffs -- former UCLA basketball player Ed O'Bannon and 19 other former NCAA athletes -- to allow athletes to enter into paid endorsement deals or individual licensing agreements.

What led to O'Bannon's five-year legal battle against the NCAA, and what does the ruling mean for current and future NCAA athletes?

Suit Brought by Former UCLA Star O'Bannon

The ruling stems from a lawsuit brought by O'Bannon after the former UCLA basketball superstar-turned-car-salesman recognized himself in a video game licensed by the NCAA.

O'Bannon's lawsuit alleged that NCAA rules prohibiting athletes from licensing their own likenesses violated the Sherman Antitrust Act. The lawsuit originally included EA Sports, the makers of the video game that spurred the lawsuit. However, EA Sports agreed to a proposed $20 million settlement in the case, after earlier agreeing to a separate $40 million settlement to compensate college players for use of their images in video games made by the company.

Effect of the Ruling

Although the ruling will soon allow Division I college basketball and FBS college football players to begin receiving compensation for use of their likenesses, it stopped short of allowing players to license their likenesses individually.

Instead, money for the players will be pooled and deposited in trust accounts, payable to players upon completion of school. The amount of this compensation is yet to be determined, but the injunction issued by the judge prohibits the trust fund cap from being less than $5,000 a year (in 2014 dollars) for every year an athlete remains eligible to compete.

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