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Last Monday, the Supreme Court handed down a very interesting victory for elite college athletes. The immediate effect of the court’s unanimous decision in National Collegiate Athletic Association v. Alston is that many elite student-athletes will receive additional education-related compensation, such as additional scholarship money. But the case may have wider repercussions and may eventually lead to payouts for these athletes.
The court’s decision is the latest chapter in a protracted legal battle that began in 2014. Several athletes from the highest levels of college sports — the men’s and women’s basketball divisions, as well as football players in the NCAA “subdivision soccer” have filed this suit since Seven years. They have defied rules imposed by the NCAA and many other governing bodies within college sports, which place fairly strict limits on compensation for athletes.
To be clear, these athletes weren’t without compensation. Many elite athletes have received scholarships that cover tuition, room, and board. Some players can also receive a small cash stipend to cover living expenses, as well as perks such as meals and medical care for sports-related injuries. But they’ve received nowhere near the kind of stratospheric salary available to top professional athletes – or any salary at all.
On top of that, elite student athletes receive fairly meager compensation, despite the fact that they are huge profit centers for their universities – and the group of dealers and broadcasters who profit from college sports. In the 2015-16 school year, for example, Division I basketball and Division IA generated $4.3 billion in revenue. The current NCAA broadcast agreement for the annual March Madness Basketball Tournament is worth more than $1 billion annually.
Over the course of the Allston litigation, two lower courts have decided that some — but not all — of the NCAA’s restrictions on athlete compensation should be overturned. As Justice Neil Gorsuch summarizes these lower court decisions in his opinion of the Supreme Court, lower courts have struck down “rules limiting graduate or vocational school scholarships, academic teaching payments, or post-eligibility training”, while leaving “targeted rules” in ensuring “Student-athletes do not receive unlimited payments not related to education”.
Gorsuch’s opinion leaves these lower court decisions in place.
Basically, this means that athletes may receive additional education-related payments, such as grad school scholarships, but the Supreme Court ruling still allows the NCAA to prevent student athletes from paying their salaries like professional athletes. However, one member of the court argues in a separate opinion that student-athletes should get much more relief if they file a new lawsuit that challenges all NCAA restrictions on compensation.
The NCAA had hoped to avoid this outcome by arguing that it should effectively be exempt from antitrust rules that prevent companies from colluding with their competitors to determine workers’ compensation. The result of Gorsuch’s opinion is that, at least in a case like this, the NCAA must follow the same antitrust rules as everyone else—although this may not be true in every future case alleging that the sports league is in violation of federal antitrust law.
The NCAA claimed it was outside the scope of antitrust law because it was a “joint venture.”
The NCAA rules limiting player compensation are, in antitrust law parlance, a “horizontal agreement.” That is, it is a price-setting agreement between several companies that compete at the same level within the college sports industry.
As the Supreme Court explained in NCAA v. University of Oklahoma Board of Governors (1984), “Horizontal price fixation and production limitation are usually condemned as a matter of law under an approach that is ‘unlawful per se’ because the potential for such practices to be an anticompetitive is very high. “. When competitors collude with each other to cut wages, the courts usually go after those employers with a hammer.
But the board’s ruling also indicates that federal antitrust law does not always apply in full force to sports leagues.
These associations are known as “joint ventures” by antitrust attorneys. The nature of team sports is that multiple teams must agree to compete together under a common set of rules. They must be complicit in when and where the games are scheduled. For these reasons, courts typically allow sports teams to engage in some degree of complicity with each other—and form umbrella organizations such as the NCAA, which sets rules for many teams—because competitive sports cannot exist without some degree of mutual agreement.
However, the end result of the court ruling in Alston is that the special care that antitrust law normally gives to sports leagues does not extend to the NCAA’s attempts to limit player compensation.
Gorsuch writes that the fact that a certain degree of complicity between competitors is “necessary to create or maintain a league sport,” “does not imply all aspects of the detailed cooperation between competitors.” Although league sports cannot exist without common rules and a common schedule, “No one disputes that Division I basketball and FBS football can go (and go forward) without the education-related compensation restrictions imposed by the District Court; Games continue.”
Thus, the NCAA cannot avoid complying with federal antitrust law.
Additionally, the NCAA argued that paying athletes more money would fundamentally change the product the NCAA makes available to consumers. This product, according to the NCAA, is “amateur” sports offered by underpaid student athletes, not by market-paying professionals. But the court treated this argument somewhat dismissively.
Among other things, Gorsuch noted in his opinion, “The concept of the NCAA amateur has steadily changed over the years.” Even a former commissioner at the Southeastern Collegiate Athletic Conference testified that “it has never been clear… what is really meant by amateurs.”
So it’s hard for the NCAA to claim that it offers a unique, “amateur”-centric product, when it can’t even stick to a single definition of what it means to be an “amateur” athlete.
The NCAA may suffer a greater loss in a future event
Lower courts overturned NCAA limits on education-related compensation for athletes, but left other limits on compensation—and the Supreme Court upheld that finding in Alston.
But, as Gorsh notes in his opinion, one of the main reasons the Supreme Court did not go any further is that the plaintiffs did not ask them to do so. As he writes “Student-athletes [did] Failure to renew the blanket appeal of the compensation restrictions imposed by the NCAA “when their case reached the Supreme Court.
Although the full court did not consider whether elite student-athletes should deserve more compensation than the Alston opinion required, Judge Brett Kavanaugh wrote a separate concurring opinion arguing that “the NCAA’s remaining compensation rules also raise serious questions under Antitrust laws.
As Kavanaugh wrote, “The NCAA business model would be categorically illegal in almost any other industry in America.” Among other things, the NCAA “dominates the college athlete market”; “It acknowledges that its compensation rules set the price of student sports labor at an below-market rate”; It “recognizes that student-athletes do not currently have a meaningful ability to negotiate with the NCAA about compensation rules.”
This is exactly the kind of iron fist on prices that antitrust laws are supposed to prevent.
It remains to be seen if Kavanaugh’s opinion will one day become law, but it will likely signal to student-athletes that they should consider filing a new lawsuit that challenges the NCAA’s remaining limits on compensation.
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