Northwestern Antitrust Lawsuit Places NCAA’s Transfer Restrictions In Crosshairs

Another day, another legal challenge to the NCAA structure.

NCAA_logo.svgNow that the Chicago Cubs have won a World Series this century, Northwestern University’s men’s basketball program can claim the honor of Chicago’s most pitiful team.

In the 77 years that the NCAA tournament has existed, Northwestern has never gone to the “Big Dance.” The Wildcats are the only team in a Power Five Conference to have never made the NCAA tournament and also one of only five original Division I schools to have never tasted the real postseason.

And if even half of the horrifying allegations contained in a blockbuster lawsuit filed Monday in the Northern District of Illinois by former point guard Johnnie Vassar are true, it could be another 77 years before Northwestern experiences March Madness as recruits will rightfully steer clear of the dysfunctional program.

Vassar, one of the nation’s top high school recruits, played sparingly in the 2014-2015 season before Northwestern coaches allegedly put him through a “campaign of harassment, pressure, and deception” to force Vassar to relinquish his scholarship so the Wildcats could use it for another player. This is because the NCAA forbids schools to pull scholarships for athletic reasons thanks to much-needed reforms passed in 2014. So even if Vassar’s play was subpar, Head Coach Chris Collins could cut him, but Vassar would retain his scholarship, which would count against the team’s 13-scholarship limit.

Unfortunately for Vassar, he could not easily transfer to another school either. NCAA Bylaw 14.5.5.1, mandates that athletes transferring from one Division I school to another Division I school must sit out of competition for one full academic year while his five-year eligibility window continued to run unless he obtained a transfer exception from the NCAA. Unable to obtain an exception and therefore unable to compete for a new team immediately, Vassar had no real choice but to stay at Northwestern.

This then led to Northwestern trying to “run off” Vassar. He claims that Northwestern placed him in the “Wildcat Internship Program” and forced him to perform early-morning janitorial duties to maintain his scholarship. Yet, when picking up trash and shoveling snow in front of his former teammates did not make Vassar drop out of the $70,000 per year school, he claims that Northwestern falsified his timesheets to create grounds for dismissing him from the internship and revoking the scholarship. As if that were not bad enough, Northwestern also allegedly offered Vassar a cash payout to leave the school — an offer I am sure the NCAA is proud of. Remember, academics first!

However, modern college athletics is a business, which means money trumps all else. In 2014, NCAA Division I men’s basketball generated more than $1.5 billion in revenue. Even a perennial loser like Northwestern can spare $110 million to renovate its basketball facilities after breaking ground on a $220 million lakefront athletic facility last year.

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With money as college athletics’ main focus, it is no wonder that revenue-generating athletes are treated as commodities rather than human beings. Vassar occupying a scholarship spot means one less chance for Northwestern to attract a top recruit and one less chance for that potential star to propel the team to the NCAA tournament to generate more revenue for the school.

Yet viewing athletes as commodities is not entirely negative, particularly when dealing with antitrust issues, which is really at the heart of Vassar’s lawsuit. In addition to his contract and fraud claims against Northwestern, Vassar has named the NCAA as a Co-Defendant while seeking class action certification to dismantle the NCAA’s transfer rules for violating Section 1 of the Sherman Act.

At its most basic level, Vassar’s lawsuit seeks an answer as to why coaches and every other student on campus can transfer freely, but athletes are greatly restricted. Remember, the NCAA’s top piece of propaganda is that athletes are no different from any other student. Yet a scholarship journalism major who writes for the Daily Northwestern can transfer to Missouri and write for The Maneater immediately. So why does Vassar have to sit out a year before joining a new team?

The NCAA claims that this year-out requirement exists to “help student-athletes adjust to their new school” and “help offset th[e] dynamic” of poor academic performance by transferring student-athletes over time. Yet the rule applies whether the transferring athlete has a 2.0 or 4.0 GPA. The NCAA also states on its website that the year off “is an opportunity to adjust to your new school and focus on your studies rather than sports.”

Apparently the NCAA also has a bridge in Brooklyn to sell you.

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If the NCAA is so concerned about academic integration, then why can freshmen compete immediately? Shouldn’t they have to take a year to focus on studies after making the jump from high school? What about transfers from junior colleges? They can play immediately, but don’t they need time to “adjust” to their new school too?

Again, follow the money.

Schools pour enormous resources into recruiting and they expect a return on that investment. Allowing revenue-generating athletes to change schools freely would not help the bottom line. Furthermore, coaches have a legitimate concern about athletes going to a rival with full knowledge of the prior school’s playbook. This is totally valid, but has nothing to do with academics.

If academics truly come first, then athletes, just like any other student, should have the freedom to seek out the best fit to pursue his or her bachelor’s degree. By revoking that freedom, the NCAA is shuttering a free market and engaging in anticompetitive behavior, which provides Vassar’s lawsuit with some strong legs to stand on.

Vassar can thank former UCLA basketball star Ed O’Bannon for his monumental lawsuit that stripped away the NCAA’s antitrust shield — at least in the Ninth Circuit. While many commentators claimed that the NCAA prevailed in O’Bannon, since it escaped having to directly pay athletes, one less talked about outcome was that the Court applied a Rule of Reason analysis to the NCAA’s restrictions on payments for use of athletes’ names, images, and likenesses. As I wrote at the time, “In essence, the NCAA can no longer do whatever the hell it wants. The rules it makes in preserving the fading notion of amateurism must be reasonable and not unfairly restrictive from here on out. Score one for the athletes today, but look for the NCAA to keep fighting all the way to the Supreme Court.”

Yet when the United States Supreme Court denied certiorari earlier this year in the O’Bannon appeal, it signaled that it would not alter the Court’s ruling that the NCAA is no longer above antitrust laws.

Of course, that does not mean Vassar’s case is a slam dunk. Vassar’s attorney, Steve Berman one of the nation’s top class-action attorneys, is litigating this matter in the Seventh Circuit where he suffered a devastating loss in Agnew v. NCAA, 683 F.3d 328 (7th Cir. 2012). In Agnew, the plaintiffs challenged the NCAA’s cap on scholarships and the (now former) prohibition of multi-year scholarships as violating the Sherman Act. The Court dismissed the Complaint entirely before determining the antitrust issues due to the plaintiffs’ failure to identify a commercial market. Perhaps this is why Berman spent more than five pages of the Vassar Complaint detailing the relevant market.

Assuming the NCAA cannot pull out a procedural victory, the Court will likely apply the Rule of Reason analysis similar to O’Bannon. The Rule of Reason is a three-step framework. First, the plaintiff bears the initial burden of showing that the restraint produces significant anticompetitive effects within a relevant market. Second, if the plaintiff meets this burden, the defendant must come forward with evidence of the restraint’s pro-competitive effects. Finally, the plaintiff must then show that any legitimate objectives can be achieved in a substantially less restrictive manner.

There is no question that restricting transfers on athletes while allowing coaches to transfer freely is hypocritical, but Plaintiff’s challenge is showing that the NCAA’s “educational” objectives can be achieved in a less restrictive manner. This could take the form of an offseason transfer window, adopting minimum GPA requirements for immediate eligibility, or a simple free market like all other students enjoy.

No matter the outcome, this is the future of change. Congress has repeatedly shown that it will not touch the NCAA, and the organization’s members have no real incentive to change. Hate them or not, it is only through strategic lawyers that athletes will gain some freedom from the NCAA’s shackles. O’Bannon led to funding the full cost of attendance, Agnew helped speed up the adoption of multi-year scholarships, and Oliver v. NCAA played a key role in toppling the no-agent rule in baseball. Waiting in the wings is Jenkins v. NCAA – a class action filed on behalf of FBS football and Division I men’s basketball players by renowned sports-antitrust attorney Jeffrey Kessler seeking to overturn the NCAA rules that place “a ceiling on the compensation that may be paid to [college] athletes for their services.”

The NCAA’s castle is crumbling. It can no longer maintain its charade that academics and amateurism come first. Vassar’s nightmare at Northwestern is just one example of a system that has lost sight of its core values. Hopefully his lawsuit and the ones still to come can lead to change the NCAA dreads, but desperately needs.

(Full complaint available on the next page…)


Steve Silver is a former sports reporter for the Las Vegas Sun and is now a lawyer in Philadelphia. He is also graduate of Northwestern’s Medill School of Journalism. You can reach him at steve@thelegalblitz.com or on Twitter @thelegalblitz.