A review of the U.S. Supreme Court’s oral arguments in NCAA v. Alston
As student-athletes are using the summer to prepare for fall competition, universities may have to prepare for the implications of potentially new regulations surrounding student-athletes’ rights. At the end of March 2021, the Supreme Court heard oral arguments in an antitrust case brought by college athletes against the National Collegiate Athletic Association (“NCAA”). The issue focuses on the NCAA’s restrictions on student athletes’ eligibility and compensation.
The NCAA is a non-profit, member-led organization that regulates approximately 1,100 colleges and universities with nearly half a million college athletes. The rules and regulations of the NCAA are developed in collaboration with its members. Essentially, they outline eligibility requirements to compete. These regulations include, among others, recruiting guidelines, hours of participation, ethical policies, amateurism, financial aid, and academic standards.
I. The Ninth Circuit Court of Appeals affirmed the district court’s holding that the NCAA could not restrict “non-cash education-related benefits.”
The case began as a class action filed in the United States District Court for the Northern District of California in 2014. The plaintiffs argued that the NCAA’s restrictions on eligibility and compensation violated federal antitrust laws by barring the student-athletes from receiving fair-market compensation for their labor. District Court Judge Wilken ruled that the NCAA’s restrictions on “non-cash education-related benefits” violated antitrust law under the Sherman Act and required the NCAA to allow for certain types of academic benefits beyond the previously established full scholarships. However, Judge Wilken’s ruling also held that the NCAA may still limit cash or cash-equivalent awards for academic purposes. In addition, the decision established that the conferences within the NCAA may set other allowances.
The U.S. Court of Appeals for the Ninth Circuit upheld that decision. The three-judge panel held that the NCAA’s regulations violate antitrust law but agreed that the NCAA had a necessary interest in “preserving amateurism and thus improving consumer choice by maintaining a distinction between college and professional sports.”
II. The NCAA argues that “amateurism” is what makes collegiate athletics a unique product and the regulations are procompetitive.
The NCAA argued in front of the Justices of the Supreme Court that, for over 100 years, the “distinct character” of college sports is that it has been played by students who are not “paid for their play.” The amateur aspect is the unique product distinction between college sports and professional sports. The athletes claimed that “amateurism” is a veil to protect the NCAA’s dominant market share in college sports – not a way to protect the actual athletes. In turn, the NCAA believes that their restrictions are “reasonably designed to preserve amateurism.” Accordingly, the NCAA argued that the Ninth Circuit incorrectly defined amateurism by allowing for athletes to be paid “anything except unlimited amounts unrelated to education.”
The Justices questioned the notion of the NCAA’s “amateurism.” Justice Kavanaugh stated that antitrust laws “should not be a cover for exploitation of the student-athletes.” On the other hand, the Justices were concerned that if the district court’s ruling was allowed to stand, the definition of “education-related benefits” would be “stretched,” turning “very quickly, into just an automatic payment” to college athletes. The NCAA argued that unlimited educational benefits is actually a “thinly disguised vehicle for funneling student-athletes quintessentially professional salaries” and it would be an incentive to spend more time on their sports and less time on academics.
The NCAA is essentially looking for an exemption from federal antitrust law. Generally, the structure of sports leagues is in conflict with the purpose of antitrust laws because some degree of cooperation among teams is necessary for its operation. For example, regulating broadcast deals, restricting player’s salaries, and controlling trading all limit the ability of teams and players to compete within the market – exactly what antitrust laws are designed to prohibit. However, due to the nature of the industry and the common interest of the members, courts have made exemptions or exclusions for sports organization against antitrust litigation. See Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 208, 42 S.Ct. 465, 66 L.Ed. 898 (1922).
The Justices were cautious of the appropriateness of the judiciary role of “getting into the business of deciding how amateur sports should be run.” As such, many believe that now is a good time for Congress to step in. Congress has the ability to come out with legislation to limit the NCAA’s restrictions on athletes’ rights. In the meantime, states across the country are taking their own steps towards allowing student-athletes to use their name, image, and likeness. For example, taking effect in July, Florida will be the first state to make it illegal for schools to restrict athletes’ rights. Also, New Mexico passed legislation that makes it illegal for any school to punish athletes for making money from endorsements when in college. Legislation will also allow student-athletes to hire agents to help them procure endorsement deals. Other states, like Georgia, Mississippi and Maryland, are joining the movement and have bills waiting on their governor’s approval.
Crabbe, Brown and James’s managing partner, Larry James, represented several members of the Ohio State football team during the 2010 and 2011 events known as “tattoogate.” Mr. James represented Terrelle Pryor, DeVier Posey, Boom Herron, Mike Adams, and other Ohio State players in the NCAA’s investigation into allegations that the college athletes had received improper benefits, including allegations that a number of players had traded football memorabilia for tattoos. CBJ and Mr. James continue to work with Ohio State as special counsel in various matters. For example, in 2019, Mr. James was asked to speak to the football team as part of its “Real Life Wednesday” program. Mr. James covered a wide array of topics—ranging from the legal systems to the political systems—that impact society and culture.