The NCAA lost the biggest antitrust case it has ever faced on Friday, when Judge Claudia Wilken issued an injunction in the O’Bannon v. NCAA antitrust case, stating that the college sports cartel has unreasonably restricted trade by placing limits on how much compensation schools are allowed to offer athletes.

The ruling has two major effects:

1. The NCAA cannot force schools to offer scholarships that cover less than the full cost of attending the university.
2. The NCAA cannot stop schools from offering recruits up to $5,000 per year in a trust fund for after their eligibility has expired.

Currently, NCAA rules prohibit schools from offering anything above a scholarship for tuition, room and board. This ruling will force the organization to allow schools more latitude to determine compensation packages than they’ve ever had — with competition between programs all-but-certain to drive up the amount of money top talent can command. However, while a win over the NCAA in an antitrust suit is certainly historic in its own right, the NCAA actually fared pretty well all things considered. Here’s a look at what this does to college sports, and what’s next.

What rules changed and what didn't

The most obvious rule change stemming from the injunction is that athletes can now get paid in some form. The NCAA has strived to keep a level playing field and keep labor costs low by forcing all schools to offer the same financial benefits to athletes.

The payment will be from part of the money that schools get for licensing athletes’ name, image and likeness (NIL) rights. The NCAA had argued that athletes don’t have NIL rights for live broadcasts, and that they need to sign away their NIL rights for promotional materials in order to keep from being corrupted by the money and to maintain a level playing field throughout the sport.

Wilken rejected that and said it’s unreasonable for the NCAA to force every school to offer the same compensation package. She essentially implemented a $5,000-per-year scale in which schools have the ability to unilaterally choose what they want to offer recruits. However, there are restrictions that the NCAA can, and likely will, put in place: the money has to be part of a trust fund, payable after athletes have completed their eligibility, and athletes on the same team in the same class must all be offered the same amount of money.

The NCAA also cannot force schools to offer scholarships with stipends that cover the full cost of attending school. Right now, schools are only allowed to offer tuition, room and board, and they cannot help out with other cost of living expenses that athletes may be responsible for. The organization briefly supported a blanket, $2,000 stipend but then reversed itself. Under the ruling, these stipends will return, but that was already likely to happen very soon under the NCAA’s new governance model.

However, there were many restrictions on player compensation that could have changed, but didn’t. In somewhat of a surprise decision,Wilken wrote that NCAA rules limiting athletes’ ability to receive endorsement money while they’re in school is a legitimate means of improving competition. The removal of these limits could have severely limited the NCAA’s control and brought more outside influence into the recruiting process, but the organization remained relatively unscathed.

How the NCAA won, despite losing

On the surface, the fact that the NCAA has to allow athletes to make money makes this seem like a really big loss. But looking at just the injunction itself, not much is going to change.

The bigger schools were already going to get the ability to give full-cost scholarships under the new governance structure. Even the payment of NIL money to athletes probably wasn’t very far off. In fact, Big 12 commissioner Bob Bowlsby and West Virginia athletic director Oliver Luck supported it at a recent forum. All this really did was force the NCAA to move ahead a few years earlier than it would have liked.

Many people thought Wilken would issue broader injunction, saying the NCAA is breaking antitrust law and must stop doing what it’s doing unless it reaches a collective bargaining agreement with athletes.

Wilken did find a less restrictive alternative, but as Dennis Cordell, a former lawyer for the NFL players, said, she essentially just imposed an agreement without the bargaining between the players and the league — and a favorable one for the NCAA at that.

The NCAA still controls most of its rules, and the players still have virtually no say in those rules, or any changes that might happen in the future. Could this be a signal that the NCAA should bargain? Sure. But the injunction itself does not give the perpetually reactionary organization an intense pressure to do so. More likely, we’ll see further NCAA reform come from more lawsuits rather than from a system set up for bargaining over time to create a fair balance.

Why the NCAA could face more trouble

While Wilken’s injunction was favorable to the NCAA, her opinion on the trial should cause reason for the organization to worry. Namely, she spent a lot of time rejecting two of its major defenses:

1. She said that maintaining "amateurism" is not a legitimate rationale for implementing anticompetitive labor rules.
2. She said that people don't just watch college sports because the athletes aren't paid.

Wilken was skeptical of the amateurism defense from the start, and the plaintiffs proved throughout the trial that it is not a sacred principle that justifies itself. The NCAA’s definition of amateurism has changed over time, and thus, Wilken said it is not a legitimate reason to restrict how much athletes make. Simply put: You can’t create your own definition for something — one that changes as you change your own rules, no less — and use that to defend yourself against antitrust law.

Wilken also called the assertion that people will stop watching college sports if athletes are paid “unpersuasive.” The NCAA has often credited its success to collegiate athletics being “amateur” (unpaid), but Wilken ruled that the market is college sports, not amateur sports. People watch Alabama play football because they feel a tie to the university or the team, not because the athletes are unpaid.

But what was odd about Wilken’s ruling is that while she found that the NCAA’s current limits on athlete compensation are unreasonable — i.e. the product will not suffer — she did find that further compensation, such as athletes receiving endorsements, could be reasonable because it might change too much if some athletes are making a lot of money.

While that is certainly a win for the NCAA in this case, the fact that Wilken destroyed the amateurism defense is bad news for the organization. Wilken may have decided that athletes receiving endorsements is unreasonable, but another judge may set a different standard — or just blow up the whole system — and they could base that opinion off of what Wilken wrote about amateurism not being a strong defense.

What's next?

The NCAA announced that it will appeal the ruling, claiming it has not violated any antitrust laws and that its new governance model is more consistent with Wilken’s view of what college sports should be. This always seemed likely, and during the trial, one of the O’Bannon lawyers even suggested that the NCAA knew it was going to lose and was objecting to pretty much everything in order to build a case for appeal.

Another route for the NCAA could be to seek an anti-trust exemption from Congress. Typically organizations need to bargain with a labor union and show some flexibility to be considered for an exemption, so it seems unlikely that Congress would permit the NCAA to stay exactly the same. But this approach does have a backing from some conservative representatives. This was evident during the House hearing on unionization and after Congressional Republicans filed a brief to the National Labor Relations Board opposing the Northwestern football players’ unionization decision.

Looking ahead, the NCAA still has a difficult legal battle looming with famed sports antitrust attorney Jeffrey Kessler, who is looking to end all NCAA restraint on athlete compensation. The O’Bannon case was considered a moderate version of Kessler’s case — the O’Bannon plaintiffs were fine with the trust fund idea, for example, while Kessler is out to blow up the whole system. Even after Friday’s ruling, the NCAA isn’t out of the woods in the repercussions from this case, or in future cases.

The O’Bannon v. NCAA case, which could give college athletes the ability to profit off their likeness, will go to trial on June 9 in Oakland, California, and no matter the outcome, it will be the most important trial in the history of the National Collegiate Athletic Association.

The suit was filed by former UCLA basketball player Ed O’Bannon in July 2009. O’Bannon and the other plaintiffs (including now-retired basketball greats Bill Russell and Oscar Robertson) are suing the NCAA for licensing college athletes’ likeness without their legal consent. The NCAA’s current model — its version of amateurism — does not allow athletes to receive any form of compensation beyond the value of a scholarship, so none of the hundreds of millions of dollars of NCAA television revenue can go to the players.

“I don’t think amateurism is going to be a useful word here.”

The O’Bannon plaintiffs are seeking an injunction, which essentially means that if they win, the NCAA will no longer be allowed to keep players from gaining access to that revenue. The plaintiffs are asking for group licensing for athletes, meaning the athletes would transfer their rights to the school or the conference (or possibly a union), and everyone would get an equal cut, similar to how licensing works in professional leagues.

Initially, the plaintiffs were seeking a class action suit for both billions of dollars in damages, plus an injunction. However, Judge Claudia Wilken opted to certify only the injunction class, meaning that if O’Bannon wins, the NCAA would only be forced to change its rules in the future, not pay back athletes from the past. Still, for an organization that rarely changes how it operates, and for one that believe so strongly in the existence of amateurism, there is a lot at stake.

What are they arguing over?

The suit alleges that the NCAA is illegally profiting off players’ likenesses in television broadcasts without the players validly transferring their broadcast rights.

In 2010, the suit was combined with one filed by former Arizona State and Nebraska quarterback Sam Keller, who sued the NCAA, Electronic Arts (EA) and the Collegiate Licensing Company (CLC) for illegally using players’ likenesses in video games. However, the Keller plaintiffs settled with EA and the CLC for $40 million, and EA announced that it would no longer make college sports video games.

alleges that the NCAA is illegally profiting off players’ likenesses in television broadcasts without the players validly transferring their broadcast rights

EA used to get around the licensing issues by not using player names. However, Keller argued that Arizona State’s “QB #9” was clearly him, and had his same height, weight and hometown. The same goes for most players in the game, and it turns out real player names were actually hidden in the game.

The NCAA did not settle, and in an effort to delay the O’Bannon trial, it had hoped to keep the lawsuits combined, citing its Seventh Amendment right for facts in the two trials to not overlap. However, Judge Wilken disagreed that the Seventh Amendment was applicable, and she announced the O’Bannon trial would go on as scheduled on June 9, with the Keller trial set for March 2015. The NCAA has filed an emergency petition — the latest of several delay attempts — with the 9th U.S. Circuit Court of Appeals, though that court has denied a different delay attempt already.

Now that the video games portion of the suit is essentially out of the way, the main focus for the June 9 trial is television rights. The NCAA makes hundreds of millions of dollars in television revenue each year, while the schools and conferences have their own broadcast deals worth tens of millions per school in the major conferences. The plaintiffs are looking for the athletes to have a cut of that revenue, meaning there’s a chance they could collectively receive a few hundred million dollars to divide up each year.

What are the NCAA's arguments?

The NCAA’s arguments center around its desire to maintain its definition of amateurism. The organization says that the strict price cap placed on players’ value is necessary to maintain competitive balance, and at trial, that’s going to be its main responsibility — prove that keeping all of the television revenue away from its primary generators is necessary for the organization.

Traditionally, the NCAA has simply invoked the term “amateurism” as if that settles all arguments about player compensation. But Judge Wilken has already said that at trial, the NCAA must prove how its current version of amateurism, “actually contributes to the integration of education and athletics,” as the organization claims. They cannot, in other words, just tautologically argue that not paying the players is necessary to preserve the principle that the players are unpaid. Perhaps the NCAA’s biggest reality check came when Wilken said, “I don’t think amateurism is going to be a useful word here.”

The NCAA also had two major arguments dismissed by Wilken. The organization had tried to argue that it has a First Amendment right to negotiate television contracts of live sporting events. Fox and the Big Ten Network — a partnership between Fox and the Big Ten Conference — and a number of other television companies have supported this defense. However, Wilken ruled that the First Amendment does not apply in this situation because the athletes have not validly transferred their likeness to the schools for licensing. The NCAA has also tried to argue that networks pay for rights to the stadiums, not the players, when they broadcast games, and Wilken even “chuckled” at the implication.

The NCAA has long argued that it cannot pay revenue sport athletes (football and men’s basketball) because those sports are used to subsidize other sports. However, Wilken said the NCAA cannot use that argument at trial, because it has not said why it can’t change its revenue-sharing rules to accommodate those needs. Moreover, NCAA critics have rejected that argument, because schools funded those sports long before they received millions in television revenue.

What are the O'Bannon plaintiffs' arguments?

The arguments from the O’Bannon plaintiffs are a bit simpler, and basically, they’re the opposite of all of the NCAA’s arguments. The plaintiffs argue that the NCAA has broken antitrust law by colluding to not allow athletes to receive any compensation from broadcasts. They claim the athletes have not validly transferred their rights to the schools and the NCAA, and that they need to in order for their likeness to be used.

such a big industry cannot be treated like a struggling non-profit with unpaid labor

A lot of the criticism about the plaintiffs’ stance has been focused on how it would be possible. Group licensing provides for a relatively simple solution, since it would be very difficult for athletes to license their likeness on their own. Complexity is part of the reason the damages portion of the suit was thrown out — it would simply be impossible to determine the worth of past players.

Wilken also rejected a portion of the plaintiffs’ argument apart from the damages claim. The plaintiffs argued that players have a right to broadcast revenues because television broadcasts are commercial speech. However, Wilken said that is not a legitimate argument, because advertisements are separate from the games themselves, which are not solely commercial in their own right.

At trial, the O’Bannon plaintiffs are likely to focus on how much money the major conferences and the NCAA bring in, and how such a big industry cannot be treated like a struggling non-profit with unpaid labor.

What will the trial look like, and who could testify?

Because the plaintiffs were still seeking individual damages in addition to the injunction up until right before the filing deadline, the case looked like it would be decided by a jury. However, the individual damages claim was dropped at the last minute, so the case will now proceed as a bench trial decided by Judge Wilken.

While Wilken has been skeptical of both sides’ arguments, this could play in the plaintiffs’ favor, since it might be tough to explain all the complexities of the legal arguments to a jury. Wilken already understands the background of the case and should be able to make a more informed decision either way.

The NCAA was not happy with the plaintiffs’ last-minute decision. According to USA Today, their lawyers wrote that they were, “surprised and troubled by the Plaintiffs’ last minute and abrupt decision to attempt to avoid having a jury decide” the outcome of the case.

A recent court filing revealed the witness lists for both sides. It includes NCAA president Mark Emmert, a number of university athletic directors and commissioners, various economists and professors, the NCAA’s former Director of Corporate Relationships, a current athlete who is the vice-chair of the Student Athlete Advisory Committee and former players.

What will happen to college sports if O'Bannon wins?

Everyone has different opinions on this one. What we know for sure is that the players will get some television revenue — the plaintiffs are asking for up to half — and they will all get an equal cut through group licensing. The implications on college sports are debatable. Some firmly side with the NCAA, despite Judge Wilken’s objection, on the opinion that non-revenue sports will disappear, as schools try to replace lost television revenue with the funding for those sports.

The NCAA has also argued that since many of its top athletic departments lose money, it won’t have enough money to pay out any television money, and thus some people — ncluding Big Ten commissioner Jim Delany and former Northwestern president Henry Bienen — have threatened that schools could go to the NCAA Division III model and not offer athletic scholarships if amateurism is threatened in any way. However, that claim has been discredited by basic economics, and even Delany admitted he was bluffing.

The most likely scenario is that schools will be forced to cut down on excessive facilities spending — no more waterfalls in locker rooms — and skyrocketing coaches pay. Non-revenue sport teams could also play more regional schedules to help balance the budget.

What other legal issues are facing the NCAA?

The NCAA has become a magnet for lawsuits in the past few years, and the others could be just as damaging as the O’Bannon case. A suit filed by notorious antitrust lawyer Jeffrey Kessler is attacking the NCAA and the five major conferences — the ACC, Big 12, Big Ten, Pac-12 and SEC — for colluding to fix athletes’ compensation at the price of a scholarship. Kessler claims that there are no viable alternatives for athletes hoping to play sports after high school, and thus, this price-fixing is illegal.

If he wins, Kessler’s suit could open up the ability for players to market themselves without restriction, meaning they could do ads and get sponsorships. At the very least, it could cause the formation of a players union that would negotiate a collective bargaining agreement with the NCAA.

There are a number of smaller suits, as well. The NCAA is facing a group of consolidated concussion lawsuits, as well as an antitrust suit filed by former Florida football star Sharrif Floyd that includes women’s basketball players and the smaller Football Bowl Subdivision conferences, and argues the NCAA schools have illegally fixed compensation below the full cost of attending universities.

The Northwestern unionization case also looms large over the NCAA. While the organization is not a party to that case, it still threatens the ideal that athletes are students first, and it could create real competitive balance issues if some schools can bargain and others cannot, since bargaining power for athletes at public schools will be decided on a state-by-state basis.

Will this end in Oakland?

There’s almost no chance of that. The NCAA is sure to appeal, as its chief legal officer Donald Remy announced.

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

The NCAA has vowed to change, promising more autonomy for larger schools to provide benefits for athletes. However, the organization still won’t budge on amateurism, and that’s the deal-breaker. The O’Bannon trial will give us the first legal opinion on whether the word really is “useful” beyond the NCAA’s rhetoric.