Division I Transfers are Still “Basically Screwed” after Seventh Circuit’s Decision

I’m going to guess you’ve never heard of Peter Deppe before. He was a preferred walk-on punter at Northern Illinois who would have been promoted to a scholarship player until his special teams coach–the guy who promised him the scholarship–left NIU. Deppe’s new special teams coach refused to honor his previous coach’s offer, and Deppe was left in limbo. He had a scholarship offer waiting at the University of Iowa IF he could waive the NCAA’s Year in Residence rule and be eligible to compete immediately. Peter was in good academic standing, had just completed his first semester at Northern, and was a wanted student-athlete at Iowa. But the NCAA refused to grant his waiver, he lost out on a scholarship opportunity, and, probably after much deliberation, he brought an antitrust lawsuit against the NCAA alleging that the Year in Residence Rule is an illegal restraint on trade under the Sherman Antitrust Act.

Yesterday, the Seventh Circuit heard Deppe’s case on appeal and held the NCAA’s Year in Residence Rule to be presumptively procomptetitive on its face under the Sherman Act based on thirty-year old precedent set forth by the Supreme Court in NCAA v. Board of Regents of the University of Oklahoma. Although unsurprising, the decision is disappointing. The Year in Residence Rule challenges in the Seventh Circuit were the first real threat to the NCAA in the wake of O’Bannon v. NCAA, and a chance to do right by so many student-athletes like Peter Deppe, who have had their careers put on hold due to legislation aimed at preventing student-athletes from transferring for the purpose of upping their draft stock.

The Year in Residence Rule: Warts & All

The Rule

Bylaw 14.5.5.1, the “Year in Residence Rule.” The text of Bylaw 14.5.5.1, the rule for four-year college to four-year college (i.e. four-four) transfers, states: “[a] transfer student from a four-year institution shall not be eligible for intercollegiate competition at a member institution until the student has fulfilled a residence requirement of one full academic year (two full semesters or three full quarters) at the certifying institution.” The NCAA’s rationale behind the rule is that it “encourages [student-athletes] to make decisions motivated by academics as well as athletics. Most student-athletes who are not eligible to compete immediately benefit from a year to adjust to their new school and focus on their classes.”

The Exception

However, this rule does not receive strict, across-the-board application in Division I. Instead, all sports except baseball, men’s and women’s basketball, football, and men’s ice hockey are allowed one free pass under Bylaw 14.5.5.2.10, the “One Time Transfer Exception.” So, as long as you don’t play in one of the five aforementioned sports, you are free to waive the Year in Residence Rule on your first transfer.

The Real Rationale:

The One Time Transfer Exception reveals the true rationale behind the Year in Residence Rule–the NCAA doesn’t want free agency in its most popular college sports.  It would be a public relations nightmare to see a player on one football team in September and another in November, within the same academic semester. The Seventh Circuit relied heavily on the dangers of this extreme example in its decision yesterday:

Indeed, the complaint alleges that Division I football student-athletes would transfer more often if not for the year-in-residence rule. Without it student-athletes could be “traded” from year to year like professional athletes. A college player could begin the season playing for one school and end the season playing for its rival. Uninhibited transfers with immediate eligibility to play would risk severing the athletic and academic aspects of college sports, threatening the character of intercollegiate athletics. The year-in-residence rule guards against that risk.

 

Who it really affects

While much of the NCAA’s defense in its pleadings and at oral argument centers around this extreme example, not once does the organization speak about the unintended consequences of the rule. For instance, if a student-athlete transfers to a new school to pursue a major her previous school did not offer, she must sit out one year. If a student-athlete transfers due to a coaching change, where the new head coach chooses not to renew his scholarship, he will also be held from competition for one year. Finally, if a student-athlete transfers because he has been verbally or physically abused by a coach, he will also be forced to sit out a year.

Most often, the Year in Residence affects cases more like the latter than the former because there are so many more student-athletes not trying to jockey for position to increase their draft stock, but who just want to go to a school where they can play. That was the basis of all three Year in Residence challenges filed in the Seventh Circuit between 2015-16.

The Bad Legal Language Keeping it Afloat

Nevertheless, the Seventh Circuit doubled down on the same dicta (for non-lawyers, Black’s Law Dictionary defines dicta as “an observation or remark made by a judge in pronouncing an opinion upon a cause, concerning some rule, principle, or application of law, or the solution of a Question suggested by the case at bar, but not necessarily involved in the case or essential to its determination”) that has been keeping the NCAA afloat for over thirty years:

The NCAA plays a crucial role in the maintenance of a revered tradition of amateurism in college sports” and ‘needs ample latitude’ to play that role, and that ‘the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act.’

NCAA v. Board of Regents, at 120.

The Criticism

Unsurprisingly, the rule has drawn criticism. In 2015, Gary Parrish of CBS Sports wrote:

‘here’s a pretty terrible unintended consequence to the NCAA no longer allowing waivers for transfers to play immediately . . . [which] is this: [p]layers who are run off by their coaches are now basically screwed.

Parrish’s article goes on to quote one Power Five basketball coach, who chose to remain anonymous: “It’s wrong . . . . You’re telling me I can sign a kid, keep him for a year or two, decide I misevaluated him and pull his scholarship, and then that kid has to sit a year no matter what? That’s [expletive] up, man. That’s just [expletive] up.”

Both of these quotes were included in Deppe’s complaint.

 

The New Vulnerability of the NCAA

After the Seventh Circuit heard oral arguments last fall, the NCAA anti-trust vulnerability became glaringly apparent as it failed to punish UNC for a nearly two-decade-long academic fraud scandal, its Committee on Infractions stripped Rick Pitino of all wins from 2012-15 for gross misdeeds with program funds including purchasing the sale of prostitutes and strippers for recruits, and finally, the biggest beast of them all, the FBI investigation and subsequent indictments by the United States Attorneys’ Office, which outed the pay-for-play underbelly funded by the shoe companies in Division I college basketball.

Prior to the issuance of the Seventh Circuit’s decision, I published a law review article on this case arguing that the Board of Regents dicta could no longer support the weight of NCAA recent history.  How can the NCAA write into pleadings that it plays a “crucial role” in maintaining the “revered tradition of amateurism in college sports” if some of its most high-profile student-athletes clearly aren’t amateurs? Furthermore, how can the organization tout the academic justifications behind the bylaw, and then penalize those student-athletes who want to transfer for academic reasons, or because a coach has run them off the team and there is a better school, not necessarily a better team, that will fit their desires to study and compete in college athletics?

Conclusion

So, NCAA, take your victory, but consider this. The beauty of your organization is the access to education it provides students who might otherwise not be able to access it. After the District Court’s decision in this case, the NCAA’s Chief Legal Officer commented, “[it] is unfortunate that plaintiffs’ lawyers continue to file meritless lawsuits while ignoring multiple court decisions that uphold [the] NCAA transfer rule.” But in this quote lies the NCAA’s largest issue: its unwillingness to alter its approach to its athletes. For so many of its student-athletes, competing in Division I athletics was everything they had ever worked for, but a tough relationship with a coach or a bad academic fit now puts these students’ degrees, scholarships and athletic careers in jeopardy.

Continuing to view NCAA Bylaw 14.5.5.1 as presumptively procompetitive via the Board of Regents dicta is turning a blind eye to the evolution of amateur athletics in the United States and also to the personal needs of student-athletes. The NCAA is earning money hand-over-fist, but it depends upon its student-athletes to drive its lucrative business model. The FBI investigation and indictments in Fall 2017 and February 2018 showed the inherent inconsistencies of today’s NCAA, and constitute a step in the right direction to reclaim student-athletes’ rights. O’Bannon was another step in making this model a little fairer for the young men and women who allow it to thrive. Future cases should follow their lead by no longer granting NCAA bylaws the antitrust deference they have been given historically. Even the NCAA has realized that its transfer rules are archaic, and it is reported that it will vote to change them as early as Summer 2018. Regardless of the outcome of this vote, the NCAA must work to understand that its student-athletes are not commodities. In the end, where the Year in Residence Rule may be black and white, the transfer cases for the student-athletes subject to it are not.

Photo Credit: Sports Illustrated

 

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