NCAA Victory: Order to Post $42 Million Bond Lifted

On Friday, May 23, 2016, California U.S. District Judge Claudia Wilken ruled in favor of the NCAA’s fee bond appeal, granting the organization’s request to not post bond while it appeals the O’Bannon decision. The NCAA filed the fee bond appeal in the Ninth Circuit Court on May 10, 2016, arguing that it was unnecessary to reserve more than $42 million in attorneys’ fees and costs associated with the O’Bannon case.

The NCAA claimed that the fee bond would place undue detriment on the organization, which uses about “90 cents of every dollar” for student-athlete support. Attorneys for the players in the suit asserted that the NCAA opposed the fee bond in order to invest and profit off the funds, while the NCAA maintained that all organization funds are used to support student-athletes, which is the intended use of NCAA finances. According to the organization, funds will continue to be spent in a manner that maximizes its ability to assist students. The NCAA pointed to the significant cost of taking out the fee bond, about $500,000, as money misspent in light of the organization’s mission. Further, the NCAA offered to provide written assurances, notify the attorneys for the players every 90 days of significant financial changes, and noted that the organization had enough liquid assets to pay the fee, in full, once necessary.

Judge Wilken granted the NCAA’s request to not post bond while the organization appeals the contested $42 million awarded to players in March. The court also ordered the NCAA to place the amount not disputed in the fees appeal, $9.1 million, in an escrow account, as well as to report the organization’s financial status to the court every three months. Additionally, if the U.S. Supreme Court rules that the NCAA is liable for antitrust violations, Judge Wilken made it clear that the amount would need to be immediately paid in full.

Currently, both the NCAA and players have filed petitions in U.S. Supreme Court. The NCAA has appealed O’Bannon’s underlying antitrust case to the Supreme Court. The Ninth Circuit held that the NCAA’s previous athlete compensation rules “unreasonably restrain trade.” The players denied an en banc Ninth Circuit rehearing on the Ninth Circuit’s partial O’Bannon reversal, also filed for the Supreme Court to hear the case. The ruling, delivered by Judge Wilken, found that the NCAA could cap compensation of student-athletes to no less than full cost of attendance.

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