Supreme Court rejects NCAA limits on education-related compensation to student athletes
Student athletes bound by the NCAA’s rules can accept education-related compensation for their participation in college sports, the U.S. Supreme Court unanimously ruled Monday.
The court's decision in the case, National Collegiate Athletic Association v. Alston, settles disagreement among lower courts over “amateurism” rules and whether the NCAA and organizations like it can legally prohibit student athletes from accepting compensation, in the form of complimentary laptops or other educational resources, for their labor.
"[NCAA] rules depress compensation for at least some student-athletes below what a competitive market would yield," Justice Neil Gorsuch wrote for the court in its unanimous opinion.
In October 2020, the NCAA joined other collegiate athletic conferences in petitioning the court to settle the matter that arose as a class action in 2014.
According to the NCAA, the U.S. Court of Appeals for the 9th Circuit Court got it wrong when it issued an injunction holding that the organization's requirement for student-athletes to agree to broad non-compensation provisions, violates antitrust law, specifically Section 1 of the Sherman Act that prohibits restraints on trade.
In issuing its ruling, the 9th Circuit said the athletic organization could restrict certain forms of compensation, such as salaries, but must allow education-related compensation, such as free computers.
'Cost-cutting measures, plain and simple'
According to the student athletes, agreements between schools to limit athlete compensation are akin to illegal agreements among industry competitors that limit how much they will have to expend to compete for talent and labor. The requirements for athletes to play by their rules, they alleged, are “cost-cutting measures, plain and simple, and not reasonably necessary to maintain consumer demand for college sports.”
The student-athletes further argued that the amateurism provisions amount to unlawful restraints in violation of antitrust law, and emphasized the outsized financial gains now generated by college sports, compared to decades ago.
“The NCAA and its member conferences and schools receive billions of dollars every year through the hard work, sweat, and sometimes broken bodies of student-athletes,” the student athletes wrote in their opposition brief. “Coaches, assistant coaches, and athletic directors take millions in salaries. Yet the schools have agreed among themselves to limit what student-athletes may receive for their work in generating these extraordinary revenues.”
In agreeing with the students and the 9th Circuit, Gorsuch wrote that, "The district court’s injunction is consistent with established antitrust principles." He also emphasized that, across the country, colleges and universities had profited by leveraging sports "to bring in revenue, attract attention, boost enrollment, and raise money from alumni."
Despite the potential impact of the court’s ruling on the fate of college athletes, legal scholars have pointed out that the case has much broader repercussions for other joint ventures and collaborations.
In an amicus brief, a group of law professors said the 9th Circuit incorrectly applied antitrust law by shifting an essential burden of proof to the NCAA. The holding, they said, risks imposing a chilling effect on pro-competitive arrangements, because antitrust enforcers could “call into question collaborations and joint ventures across a host of industries including healthcare, pharmaceutical development, information technology, consumer electronics, and manufacturing.”
In rejecting the idea that their non-compensation provision imposed on student-athletes violate antitrust law, the NCAA argued that joint ventures and collaborations have been held lawful when their underlying agreements are necessary to market their products. The NCAA said it should be treated similarly to those joint ventures and collaborations.
The very condition of amateurism, they argued, is a hallmark of its product, so much so that doing away with the terms would strip the organization of its essential character and quality.
“[W]hat ‘differentiates’ NCAA sports from professional ones—has long been that participants in NCAA sports are both amateurs and students at the schools for which they play,” the NCAA wrote, citing from the court’s holding in the 1984 Supreme Court case NCAA v. Board of Regents of University of Oklahoma.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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