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Settlement stirs up questions about profits from collegiate athletics

Lawsuits were brought by former and current college athletes over the use of their images and likenesses
University Business, November 2013
EA Sports has announced it will not publish a 2013 version of its popular college football video ame. (Hector Alejandro)
EA Sports has announced it will not publish a 2013 version of its popular college football video game. (Hector Alejandro)

Paying college athletes is a hotter topic than ever in the wake of a lawsuit that saw EA Sports agree to discontinue its widely popular college football game.

Athletes appear to be the only ones who don’t profit from their likeness being used in games, says Mark D. Simpson, a partner at Saul Ewing LLP. (While not involved with the case, Simpson is a member of the law firm’s Higher Education Practice Group).

Of course, EA Sports profits. So do the Collegiate Licensing Company, for the licensing of trademarks used in the games, and the NCAA, for use of its name and logo. And, Ewing guesses that if the NCAA allowed athletes to authorize the use of their likeness in games and for them to be paid, that gaming companies “would do so in a heartbeat, and would pay them handsomely.”

But for now at least, the NCAA prohibits this.

On Sept. 26, Cam Weber, general manager of American football for EA Sports, announced the company would not be publishing a new college football game next year. The same day, Electronic Arts and the Collegiate Licensing Company settled all lawsuits brought against the companies by former and current college athletes over the use of their images and likeness in video games and other merchandise, according to the Associated Press.

“Just like the 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,” Weber wrote in a statement on the company’s website. “The ongoing legal issues combined with increased questions surrounding schools and conferences have left us in a difficult position.”

The settlement details have not been made public, but ESPN reported the company will pay out around $40 million, and 200,000 to 300,000 players will benefit. That comes out to about $200 per member of the class action suit. It’s not clear if current student athletes would even be able to accept the payment, per NCAA rules that prohibit them to be paid.

According to Donald Remy, NCAA chief legal officer, the NCAA has been told the terms are still under negotiation. He would not comment.

So are paychecks on the horizon for college athletes? All signs point to “maybe.”

“For this to happen, the NCAA is going to have to fundamentally change the way, and the rules under which, it operates,” says Simpson. “Let’s face it, college athletics brings in huge dollars, and none of that would be possible if it were not for the athletes. Add on the growing number of NCAA scandals that are uncovered each year, and everything, in my opinion, points in the direction of allowing collegiate athletes to be openly compensated in some fashion.”

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