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EA Sports Settles With College Athletes Over Likeness

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“We have been stuck in the middle of a dispute between the NCAA and student-athletes who seek compensation for playing college football. . .For our part, we are working to settle the lawsuits with the student-athletes.”

This was a statement from Electronic Arts (EA) Sports GM of American football, Cam Weber, regarding EA Sports’ recent decision to postpone the NCAA Football video game for next year. This decision was a result of the NCAA and some of its top conferences (Big Ten, SEC, and PAC-12) deciding to cease licensing and trademark agreements with EA Sports back in August.

Its suspected that the NCAA cut ties with EA Sports because of the current litigation with student-athletes seeking damages for the use of player likenesses in video games for many years. In an attempt to distance itself from the NCAA, EA Sports (along with co-defendant Collegiate Licensing Company (CLC)) settled its lawsuit with college athletes.

Why Did EA Sports Settle?

As Michael McCann, sports law columnist for Sports Illustrated, points out EA Sports most likely will pay less by settling now than in the future for two reasons.

One, if Judge Wilken decided to grant the class certification for this class action lawsuit, Ed O’Bannon and other plaintiffs would have more leverage to demand a higher award for damages. This is because there would be thousands of more plaintiffs added to the lawsuit. In the alternative, if Judge Wilken denied the certification of the class, it would cause the EA Sports to pay more than necessary to settle the lawsuit. The current settlement agreement between EA Sports, CLC and the college athletes is $40 million, which may or may not include attorney fees.

It is still undisclosed what portion of the $40 million settlement that EA Sports will be paying, but settling now is the best overall option for EA Sports for two reasons.

One reason is that the settlement agreement does not require EA Sports to admit any wrongdoing. This agreement allows EA Sports to claim that it follows the rules laid out by NCAA bylaws and only the NCAA is able to enforce those bylaws. This is another tactic by EA Sports to distance itself from the NCAA as well as a tactic by the college athletes to put more pressure on the NCAA to settle and admit wrongdoing.

Another reason why an early settlement is good for EA Sports is that it allows the company to immediately reevaluate the future of college football and basketball video games. Although some college conferences and the NCAA have dissolved its relationship with EA Sports, EA Sports still has license and trademark agreements with the other conferences. Having these agreements still in place allows EA Sports the opportunity to rebrand the college football video game and properly establish a system to pay student-athletes (after participating in collegiate athletics) for their likeness.

The Effect on Student-Athletes

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The current settlement agreement is projected to impact between 100,000 – 200,000 current and former student-athletes within the last decade. Depending on the final number of college athletes the settlement applies to, each student-athlete would receive a couple hundred dollars.

However, per NCAA bylaws, a student-athlete cannot receive any additional benefits without forfeiting their amateur status. It is likely EA Sports will hold funds for student-athletes in a trust fund until the student-athlete has exhausted his eligibility, or any other form of payment that would not violate NCAA bylaws. Although the compensation may not seem like a large benefit for the student-athletes, the real benefit comes from student-athletes being one step closer to receiving compensation for their efforts in making the NCAA a billion dollar company.

A minor issue that comes from this settlement is the fact that there will not be a college football video game in the near future.

Not only will the fans of college football miss out on the video game, but so will the players. It is always a dream for a young athlete to be in a video game and play as themselves, but with the ongoing litigation, those dreams are put on hold until EA Sports reevaluates the future for the college football series.

The NCAA’s Position

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With EA Sports and CLC settling out as defendants in the class action lawsuit, the NCAA stands alone in this David vs. Goliath battle. There are two ways the NCAA can approach this lawsuit after the recent settlement by EA Sports: settle as well or continue to litigate.

Since EA Sports and CLC have settled with the college players, it is conceivable that O’Bannon’s lawyers will demand any and all information against the NCAA to gain more leverage against the organization. Before the plaintiff’s lawyers can retrieve this information, the NCAA may settle to keep any and all confidential information between EA Sports and the NCAA off the record. However, the NCAA’s general counsel and vice president of legal affairs, Donald Remy, has stated that the NCAA is prepared to litigate this class action all the way to the Supreme Court of the United States.

Given this strong stance, it seems that the NCAA wants to stick to its bylaws and not allow student-athletes to gain additional benefits with forfeiting amateur status and eligibility.

Going forward, it would be interesting to see if Donald Remy and the NCAA stick with this aggressive plan to defend this class action lawsuit or if the they will try to work with the college athletes to settle the class action and implement a system for the athletes so they can be compensated for their likeness.

 

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