Perhaps the most exciting NCAA men’s basketball championship game ever played was also one of the biggest upsets. The 1983 North Carolina State University Wolfpack, despite being heavy underdogs to the University of Houston, managed to sink a last-second basket to win 54-52 in Albuquerque, New Mexico.
The iconic nature of NC State’s victory has played well to audiences in the 41 years since, and the NCAA has used images of the game and its players in publicizing its highly popular tournament. That a heavy underdog NC State team made this year’s basketball Final Four only added to the 1983 team’s legend.
Rules governing athletes gave the NCAA rights to whatever players did.For many years, no one gave much thought to the NCAA’s use of State’s triumph, as the strict rules governing member teams and athletes gave the NCAA the rights to whatever players under its jurisdiction did. With a single lawsuit filed this past June, however, all that has changed.
As ESPN reported:
Ten players from NC State’s 1983 national champion basketball team have sued the NCAA and the Collegiate Licensing Company seeking compensation for unauthorized use of their name, image and likeness.
According to the lawsuit:
For more than 40 years, the NCAA and its co-conspirators have systematically and intentionally misappropriated the Cardiac Pack’s publicity rights—including their names, images, and likenesses—associated with that game and that [game-ending] play, reaping scores of millions of dollars from the Cardiac Pack’s legendary victory.
This is not something that will go away. Indeed, a similar lawsuit was filed by 16 other former players, led by Kansas’s Mario Chalmers, last month. If these former athletes are successful, it is not hard to imagine what will follow given that the NCAA has long used photographs and videos of athletes to promote its events. There will be the possibility of a near-endless stream of lawsuits tying up the courts for years.
For those of us who were in NCAA Division-I competitions before Name, Image, and Likeness (NIL) became part of the collegiate-sports landscape, the fast-moving events of the past few years are head-spinning. As I noted in a previous Martin Center article, we can liken what we are seeing to what happened in industries such as passenger airlines and telecommunications when Congress deregulated them four decades ago.
One way to make sense of the changes now underway is to model the NCAA as an industry that is transitioning from being heavily regulated to one where competition is leading to new changes in the rules of operation. For example, students could not have sponsorships in the past or be paid for anything tied to their sports accomplishments, as the NCAA adhered to a strict amateur code. Of course, that code applied only to athletes, not the NCAA and its officials. The prohibition on athletes receiving compensation other than approved scholarships was not only due to an alleged love of amateur sports but existed so that the huge financial gains NCAA events enjoyed could be directed to the universities and the NCAA itself.
The prohibition on athlete compensation existed so that huge financial gains could be directed to universities and the NCAA itself.For example, the NCAA earns revenue for the men’s Division-I basketball tournament each March in excess of $1 billion. Furthermore, individual athletic departments in colleges and universities have earned large sums and enjoyed the donations of wealthy boosters, while NCAA rules have kept athletes from benefiting from this largess.
However, under pressure from the courts, the NCAA in 2021 changed its policy on compensation for athletes, permitting NIL earnings for the first time. Furthermore, the NCAA is looking at a $2.8 billion settlement to college athletes (from as far back as 2016) who, allegedly, were harmed by the old no-compensation rules.
The NC State lawsuit, however, presents a special problem, and a favorable result for these former players would likely threaten the very financial health of the NCAA. Furthermore, the suit raises the question of what is legal and not legal when the rules of the game are changing.
Under the pre-NIL rules, what the NCAA did in using the image of uncompensated athletes was perfectly legal, given the strict non-compensatory rules that governed college sports. One certainly can argue about the morality of such rules, but they were legal. However, the NC State lawsuit essentially argues that the new compensation rules should be applied retroactively. Given the fact that the NCAA’s aforementioned settlement does exactly that regarding compensation for some athletes, it is hard to see the courts not carrying over the legal concept. If they do take retroactive payment as a default position (or arrive there after some discussion), it is hard to imagine the NCAA remaining the same organization it has been since its founding in 1906.
Perhaps the best model we can apply is the telecommunications industry, which was officially deregulated in 1996 (although one can argue that the deregulation process began with the 1982 court-ordered breakup of the AT&T regulated monopoly). Under the old system, AT&T kept local service under subsidiaries whose operations were subsidized by AT&T’s profitable but expensive long-distance service. With the new agreement, the subsidiaries went independent, and long-distance service became competitive—and cheap.
A side note: I remember the caterwauling in the media when the agreement ended the subsidies, as journalists predicted that grandma would not be able to pay her phone bills and would have her line disconnected. Like all other media predictions of doom following the deregulation process, grandma got better service at a lower price.
The former Wolfpack players’ lawsuit, if successful, will further alter the collegiate-sports landscape.Likewise, under NCAA rules, colleges and universities have used revenues from men’s football and basketball (and, at some places, women’s basketball) to subsidize “non-revenue” sports such as soccer, golf, and track and field. The NCAA had strict scholarship limits in all sports to help “even the playing field.” Under the new rules, however, those limits are out, and a new-but-unfinished system will be hammered out that will allow for more scholarships or other compensation arrangements for athletes. How this will play out for athletic programs at colleges that are not part of the power conferences (e.g., the SEC and the Big Ten) is an unanswered question. So is the potential impact on the “non-revenue” sports. As following the AT&T breakup, there are predictions of doom, but the results could well be different than what is predicted.
The NC State lawsuit must be seen in the context of everything else going on with the NCAA. Not long ago, the NCAA ruled college sports with an iron fist, but, as the rules change, college-sports revenue will be directed away from the NCAA itself and toward athletes, coaches, and administrators. I should emphasize that, while we can make some predictions, nonetheless what we see is a work in progress. One assumes that the former Wolfpack players’ lawsuit, if successful, will further alter the collegiate-sports landscape.
Probably the most lasting image of NC State’s improbable victory is that of the late Coach Jim Valvano running around the court in Albuquerque, looking for someone to hug. With the legal assaults on the NCAA having no end in sight, one can imagine the top officials there looking for someone—anyone—to give them a reassuring embrace. For now, however, there is little love being directed toward the NCAA headquarters in Indianapolis.
William L. Anderson is professor emeritus of economics at Frostburg State University and a senior editor for the Mises Institute. He has published in Public Choice, American Journal of Economics and Sociology, The Independent Review, Quarterly Journal of Austrian Economics, and many other journals.