NCAA v. Alston-The Wait Is Over..What’s Next for the NCAA
From the last line of Justice Kavanaugh’s concurring opinion, one thing is clear from the U.S. Supreme Court’s unanimous ruling against the NCAA in NCAA v. Alston,
“The NCAA is not above the law.”
The Supreme Court, in a unanimous opinion authored by Justice Neil Gorsuch and supported by all nine justices, and Justice Kavanaugh’s concurring opinion which advocated further rejection of many of the NCAA’s current interpretations of amateurism, decided that the NCAA’s restraints were subject to the ordinary antitrust rule of reason fact-specific assessment and the restraints effect on competition. Justice Gorsuch’s opinion affirmed a 2020 ruling by the U.S. Court of Appeals for the Ninth Circuit that the NCAA and its more than 1,200 member schools and conferences restraints are in violation of Section I of the Sherman Antitrust Act.
The antitrust law violation arises from NCAA members agreeing to limit how much each school can compensate athletes for academic-related costs. At issue are limitations on how schools and conferences reimburse or pay athletes for computer costs, study abroad programs, internship opportunities, scholarships to attend vocational schools and other academic-related expenses. The Supreme Court’s decision was technically limited to the question raised and considered by U.S. District Court Judge Claudia Wilken and the Ninth Circuit Court of Appeals of whether the NCAA can restrict these education-related benefits for student-athletes.
In its unanimous decision, the Supreme Court affirmed the Ninth Circuit decision, invalidating “amateurism” rules limiting education-related benefits.
The Ninth Circuit had affirmed a ruling by U.S. District Judge Claudia Wilken, who following a 10-day bench trial in 2018, held in favor of the class of student-athletes, led by former West Virginia running back Shawne Alston. The Alston case had initially attempted to secure far more dramatic compensation changes for student-athletes.
The case initially challenged NCAA existing limitations on athlete financial compensation, alleging that schools act as a cartel in limiting how much each school could pay to a student athlete. The case attempted to analogize rising college student-athletes to professional free agents, which would have allowed colleges to compete for student-athletes in an emerging “professional” free agent type system. While ruling in favor of Alston, Judge Wilken rejected that extreme position asserted by Plaintiffs when she ruled and the Ninth Circuit affirmed that while the NCAA can lawfully restrict athletics-related expenses, the NCAA violates the law by restricting expenses that are “tethered” to academics.
The majority opinion highlights that the NCAA relies on “amateur” student athletes who compete under restraints, issued and enforced by the NCAA, that limit how schools may compensate student athletes and that the rules limit compensation for athletes at an artificial level below what a competitive market would allow. The Alston plaintiffs argued that the NCAA’s rules violated the Sherman Act, which prohibits contracts, combinations, or conspiracies in restraint of trade or commerce. Judge Wilken, in her district court decision, agreed with the Alston plaintiffs but she limited the discussion and her opinion to education-related benefits and the athletes did not, in front of the Supreme Court, renew their broad based efforts to eliminate other restrictions on compensation that had initially be asserted in their federal district court action. The ultimate holding was that the district court’s injunction on the NCAA’s cap of education-related benefits was proper and consistent with established antitrust principles. The NCAA must permit colleges and universities to recruit athletes by offering additional benefits, as long as the additional benefits are related to education.
However, it is important to understand that the Alston decision is not a mandate or obligation that schools spend more on student-athletes in the context of academic-related expenses.
Rather, the ruling provides schools with the discretion and ability to do so. To that end, schools will be able to use academically related offerings to compete for athletes to attend their institutions. If a college doesn’t wish to reimburse a student-athlete for a higher dollar amount for academic-related expenses, it will not be required to participate.
The ruling further eliminates a long-standing NCAA argument that it should be granted favorable treatment under federal antitrust law as the decision clarified the impact of the Supreme Court’s prior decision in the case of National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 104, n. 27 (1984). The Alston decision eliminates the precedential value which the NCAA has long held as a basis to support its amateur policies, indicating that a comment made by Justice John Paul Stevens nearly forty years ago in his majority opinion that the NCAA enjoys “ample latitude” under antitrust law when setting amateurism rules that pertain to college athletes was dicta and a passing comment, neither binding nor dispositive in the Alston case.
On the heels of this landmark Supreme Court decision, the NCAA will be meeting over the next two weeks to discuss potential rule and bylaw changes that would formally allow student-athletes to monetize their name, image and likeness rights (NIL). While Alston and student athlete NIL rights have frequently been discussed in tandem, each presents separate and distinct areas of law. The ultimate decision in Alston does not impact the state law driven publicity rights associated with NIL and the NCAA’s potential reforms to their rules and bylaws to address these student athlete rights.
However, as the NCAA meets over the next two weeks to consider these NIL rules changes, the words of Justice Kavanaugh’s concurring opinion will certainly be on the minds of the NCAA leadership. In addition to his acknowledgment of the Supreme Court’s “important and overdue course correction” in its opinion, Justice Kavanaugh confirms the decision’s “narrow focus” and cautions that the NCAA’s remaining compensation rules also “raise serious questions under antirust laws.” He continued, ‘the remaining compensation rules should be subject to ordinary rule of reason scrutiny” and questioned whether those rules could pass muster under such scrutiny.
Justice Kavanaugh continued that the
“bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year.”
He questioned the ability of the NCAA and its member schools to continue to justify not paying student athletes on the “circular theory” that colleges do not pay student athletes.
Despite no basis or mention for the modification and amendment to the National Labor Relations Act regarding the establishment of student-athlete employee status and their resulting right to unionize or collectively bargain in either Justice Gorsuch’s majority opinion or Justice Kavanaugh’s concurring opinion, Justice Kavanaugh’s opinion interestingly went a step further. He alluded that the solution to the NCAA’s potential antitrust issues may be found in legislation or as an alternative, colleges and student athletes engaging in collective bargaining to provide a “fairer share of the revenues they generate…akin to how professional football and basketball players have negotiated for a share of league revenues.”
Justice Kavanaugh did not explain how this collective bargaining process would be legally possible without a significant amendment to the National Labor Relations Act and student-athletes being recognized and considered as employees of their institution.
In response to the Court’s decision, NCAA President Mark Emmert confirmed the NCAA’s commitment to supporting NIL benefits for student-athletes and his organizations commitment to working with Congress to chart a path forward.