The Supreme Court handed down a heavily caveated victory for elite college athletes on Monday. The immediate impact of the Court’s unanimous decision in National Collegiate Athletic Association v. Alston is that many elite student-athletes will receive additional education-related compensations, such as additional scholarship money. But the case could have broader implications and could eventually lead to these athletes being paid salaries.
The Court’s decision is the final chapter in a lengthy legal fight that began in 2014. Several athletes from the highest levels of college sports — men’s and women’s Division I basketball, plus football players in the NCAA’s elite “Football Bowl Subdivision” — filed this suit seven years ago. They challenged rules enforced by the NCAA and various other governing bodies within college sports, which place fairly strict limits on athlete compensation.
To be clear, these athletes weren’t uncompensated. Many elite athletes received scholarships that covered their tuition, room, and board. Some players could also receive small cash stipends to cover living expenses, plus perks such as meals and medical care for sports-related injuries. But they did not receive anywhere near the sort of stratospheric salaries that are available to the best professional athletes — or any salary at all.
Elite student-athletes receive fairly meager compensation, moreover, despite the fact that they are enormous profit centers for their universities — and an array of merchants and broadcasters that profit off of college sports. In the 2015-16 academic year, for example, Division I basketball and Division I-A football generated $4.3 billion in revenue. The NCAA’s current broadcast agreement for its annual March Madness basketball tournament is worth over a billion dollars annually.
Over the course of the Alston litigation, two lower courts held that some — but not all — of the NCAA’s restrictions on athlete compensation must be struck down. As Justice Neil Gorsuch summarizes these lower court decisions in his opinion for the Supreme Court, the lower courts lifted “rules that limit scholarships for graduate or vocational school, payments for academic tutoring, or paid posteligibility internships,” while leaving in place “rules aimed at ensuring ‘student athletes do not receive unlimited payments unrelated to education.’”
Gorsuch’s opinion leaves in place these lower court decisions.
In essence, that means that athletes may receive additional education-related payments, such as scholarships for graduate school, but the Supreme Court’s decision still allows the NCAA to prevent student-athletes from being paid like professional athletes. That said, one member of the Court argues in a separate opinion that student-athletes should receive much broader relief if they file a new lawsuit challenging all of the NCAA’s limits on compensation.
The NCAA hoped to avoid this outcome by arguing that it should effectively be exempted from antitrust rules that prevent businesses from colluding with their competitors to set workers’ compensation. The upshot of Gorsuch’s opinion is that, at least in a case like this one, the NCAA has to follow the same antitrust rules as everyone else — though that may not be true in every future case alleging that a sports league violates federal antitrust law.
The NCAA claimed it was beyond the reach of antitrust law because it is a “joint venture”
The NCAA’s rules limiting player compensation are, in the parlance of antitrust law, a “horizontal agreement.” That is, they are an agreement to set prices among multiple businesses that compete at the same level within the college sports industry.
As the Supreme Court explained in NCAA v. Board of Regents of the University of Oklahoma (1984), “horizontal price fixing and output limitation are ordinarily condemned as a matter of law under an ‘illegal per se’ approach because the probability that these practices are anticompetitive is so high.” When competitors collude with each other to depress wages, the courts typically come down upon those employers with a hammer.
But the Board of Regents decision also suggests that federal antitrust law does not always apply with its full force toward sports leagues.
Such leagues are known as “joint ventures” by antitrust lawyers. The very nature of team sports is that multiple teams must agree to compete together under a common set of rules. They must agree on when to schedule games and where those games will take place. For these reasons, the courts typically allow sports teams to engage in some degree of collusion with each other — and to form umbrella organizations such as the NCAA, which set rules for many teams — because competitive sports cannot exist without some amount of mutual agreement.
The upshot of the Court’s decision in Alston, however, is that the special solicitude that antitrust law typically gives to sports leagues does not extend to the NCAA’s attempts to limit player compensation.
The fact that some degree of collusion among competitors is “necessary to create or maintain a league sport,” Gorsuch writes, “does not mean all ‘aspects of elaborate interleague cooperation are.’” Though league sports cannot exist without common rules and a common schedule, “nobody questions that Division I basketball and FBS football can proceed (and have proceeded) without the education-related compensation restrictions the district court enjoined; the games go on.”
Thus, the NCAA cannot dodge compliance with federal antitrust law.
Additionally, the NCAA argued that paying their athletes more would fundamentally alter the product that the NCAA provides to consumers. That product, according to the NCAA, is “amateur” athletics offered by poorly compensated student-athletes, not by professionals paid a market salary. But the Court treated this argument fairly dismissively.
Among other things, Gorsuch noted in his opinion, “the NCAA’s conception of amateurism has changed steadily over the years.” A former commissioner of college sports’ Southeastern Conference even testified that he’s “never been clear on ... what is really meant by amateurism.”
So it’s hard for the NCAA to claim that it offers some unique product, grounded in “amateurism,” when it can’t even stick to a single definition of what it means to be an “amateur” athlete.
The NCAA may suffer an even more significant loss in a future case
The lower courts struck down the NCAA’s limits on education-related compensation for athletes, but left in place other limits on compensation — and the Supreme Court upheld this baby-splitting result in Alston.
But, as Gorsuch notes in his opinion, a major reason why the Supreme Court did not go further is that the plaintiffs did not ask them to do so. As he writes, “the student athletes [did] not renew their across-the-board challenge to the NCAA’s compensation restrictions” when their case reached the Supreme Court.
Although the full Court did not weigh in on whether elite student-athletes should be entitled to more compensation than the Alston opinion requires, Justice Brett Kavanaugh wrote a separate concurring opinion where he argues that “the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws.”
As Kavanaugh writes, “the NCAA’s business model would be flatly illegal in almost any other industry in America.” Among other things, the NCAA “controls the market for college athletes;” it “concedes that its compensation rules set the price of student athlete labor at a below-market rate”; and it “recognizes that student athletes currently have no meaningful ability to negotiate with the NCAA over the compensation rules.”
That’s exactly the sort of iron grip over pricing that antitrust laws are supposed to prevent.
It remains to be seen whether Kavanaugh’s opinion will someday become the law, but it will likely signal to student-athletes that they should consider filing a new lawsuit challenging the NCAA’s remaining restrictions on compensation.