Over the past few months, the push towards compensating college athletes has taken on greater momentum. The backbone of this push is the “name, image and likeness” (NIL) rights discussion, which focuses on whether college athletes can make money by selling their “name, image and likeness” while playing collegiate athletics. A number of states — including Alabama, Florida, Georgia, Mississippi, New Mexico and Texas — have passed laws that will allow college athletes in those states to accept endorsement deals, and those laws are scheduled to go into effect on the first of July.
However, another prong to this discussion was a case pending before the United States Supreme Court. In National Collegiate Athletic Association v. Alston and American Athletic Conference v.Alston, the United States Supreme Court (SCOTUS) was asked to review a decision from the 9th Circuit which found in favor of college athletes. In these consolidated cases, the 9th Circuit found that the NCAA could not limit benefits to student-athletes, such as laptops or paid post-graduate internships, that were educational in nature. The 9th Circuit found that the NCAA could restrict benefits unrelated to education — such as paying a direct salary to players — but any educational benefits could not be limited. Doing so, according to the 9th Circuit, violated Federal antitrust laws.
After hearing oral arguments in March, SCOTUS released their opinion on Monday morning. In a unanimous decision, the justices agreed that the decision by the 9th Circuit was correct, and the NCAA’s rules limiting education-related benefits was indeed in violation of established antitrust laws and principles.
Justice Neil Gorsuch delivered the opinion of the court. His opinion begins with a reference to a boat race at Lake Winnipesaukee in New Hampshire between students from Harvard and Yale back in 1852, an event often considered the beginning of collegiate athletics. But as Justice Gorsuch points out, “[f]rom the start, American colleges and universities have had a complicated relationship with sports and money.” Because, as Justice describes, the event was sponsored by a railroad executive to promote travel to the area, and participants were not only given an all-expenses-paid vacation to participate, they were offered “lavish” prizes, including unlimited alcohol.
The more things change, the more they stay the same.
Justice Gorsuch then turned to the heart of the matter:
Unsatisfied with this result, the NCAA asks us to reverse
to the extent the lower courts sided with the student-athletes. For their part, the student-athletes do not renew
their across-the-board challenge to the NCAA’s compensation restrictions. Accordingly, we do not pass on the rules
that remain in place or the district court’s judgment upholding them. Our review is confined to those restrictions now
enjoined.
Before us, as through much of the litigation below, some
of the issues most frequently debated in antitrust litigation
are uncontested. The parties do not challenge the district
court’s definition of the relevant market. They do not contest that the NCAA enjoys monopoly (or, as it’s called on the
buyer side, monopsony) control in that labor market—such
that it is capable of depressing wages below competitive levels and restricting the quantity of student-athlete labor.
Nor does the NCAA dispute that its member schools compete fiercely for student-athletes but remain subject to
NCAA-issued-and-enforced limits on what compensation
they can offer. Put simply, this suit involves admitted horizontal price fixing in a market where the defendants exercise monopoly control. (Emphasis added).
The bolded part at the end tells you were the court is going with this.
The bulk of Justice Gorsuch’s ruling outlines how the 9th Circuit did nothing wrong in their analysis of the case, and the Justice walks readers through the various tests applied during judicial review, and the standards the lower court met when analyzing this case. Justice Gorsuch is clear to illustrate on multiple occasions that the decision in this case is rather narrow, and limited to the issues presented and not the bigger picture issues, such as whether college athletes can be paid. After all, this case involved education-related compensation. Justice Gorsuch concluded with the following:
Some will think the district court did not go far enough.
By permitting colleges and universities to offer enhanced
education-related benefits, its decision may encourage
scholastic achievement and allow student-athletes a measure of compensation more consistent with the value they
bring to their schools. Still, some will see this as a poor
substitute for fuller relief. At the same time, others will
think the district court went too far by undervaluing the
social benefits associated with amateur athletics. For our
part, though, we can only agree with the Ninth Circuit:
“‘The national debate about amateurism in college sports is
important. But our task as appellate judges is not to resolve
it. Nor could we. Our task is simply to review the district
court judgment through the appropriate lens of antitrust
law.’” 958 F. 3d, at 1265. That review persuades us the
district court acted within the law’s bounds.
However, those looking for what might happen next, and perhaps an expansion of compensation for student-athletes, might have found what they are looking for in the concurring opinion authored by Justice Brett Kavanaugh. Justice Kavanaugh authored his own opinion, concurring with the decision from the other eight justices but outlining his own view of the issues. He begins his concurrence by again illustrating that the decision from SCOTUS in this case is a narrowly-tailored result to the facts of the underlying case decided by the 9th Circuit:
The NCAA has long restricted the compensation and benefits that student athletes may receive. And with surprising success, the NCAA has long shielded its compensation rules from ordinary antitrust scrutiny. Today, however, the Court holds that the NCAA has violated the antitrust laws. The Court’s decision marks an important and overdue course correction, and I join the Court’s excellent opinion in full.
But this case involves only a narrow subset of the NCAA’s
compensation rules—namely, the rules restricting the
education-related benefits that student athletes may receive, such as post-eligibility scholarships at graduate or vocational schools. The rest of the NCAA’s compensation rules are not at issue here and therefore remain on the books. Those remaining compensation rules generally restrict student athletes from receiving compensation or benefits from their colleges for playing sports. And those rules have also historically restricted student athletes from receiving money from endorsement deals and the like.
But Justice Kavanaugh continues to state that “I add this concurring opinion to underscore that the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws.” (Emphasis added) The Justice emphasizes three points. First, the decision of SCOTUS does not address the rest of the NCAA’s compensation rules. Second, any future examination of the remaining NCAA compensation rules must be analyzed under what the Supreme Court terms “rule of reason” scrutiny under the antitrust laws. This requires courts to examine whether rules such as the NCAA’s compensation rules impose an unreasonable restraint on competition.
Finally, Justice Kavanaugh provides future litigants — or more precisely future student-athletes — who might want to challenge the NCAA’s competition rules a roadmap: “Third, there are serious questions whether the NCAA’s remaining compensation rules can pass muster under ordinary rule of reason scrutiny. Under the rule of reason, the NCAA must supply a legally valid procompetitive justification for its remaining compensation rules. As I see it, however, the NCAA may lack such a justification.”
In Justice Kavanaugh’s reading, what the NCAA has built would be considered “flatly illegal” in any other industry:
The NCAA acknowledges that it controls the market for
college athletes. The NCAA concedes that its compensation
rules set the price of student athlete labor at a below-market rate. And the NCAA recognizes that student athletes currently have no meaningful ability to negotiate with the NCAA over the compensation rules.
The NCAA nonetheless asserts that its compensation
rules are procompetitive because those rules help define the
product of college sports. Specifically, the NCAA says that
colleges may decline to pay student athletes because the defining feature of college sports, according to the NCAA, is
that the student athletes are not paid.
In my view, that argument is circular and unpersuasive.
The NCAA couches its arguments for not paying student
athletes in innocuous labels. But the labels cannot disguise
the reality: The NCAA’s business model would be flatly illegal in almost any other industry in America. All of the
restaurants in a region cannot come together to cut cooks’
wages on the theory that “customers prefer” to eat food from
low-paid cooks. Law firms cannot conspire to cabin lawyers’
salaries in the name of providing legal services out of a “love
of the law.” Hospitals cannot agree to cap nurses’ income
in order to create a “purer” form of helping the sick. News
organizations cannot join forces to curtail pay to reporters
to preserve a “tradition” of public-minded journalism.
Movie studios cannot collude to slash benefits to camera
crews to kindle a “spirit of amateurism” in Hollywood.
Justice Kavanaugh continues:
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. Those enormous sums of money flow to seemingly everyone except the student athletes. College presidents, athletic directors, coaches, conference commissioners, and NCAA executives take in six- and seven-figure salaries. Colleges build lavish new facilities. But the student athletes who generate the revenues, many of whom
are African American and from lower-income backgrounds,
end up with little or nothing.
Everyone agrees that the NCAA can require student athletes to be enrolled students in good standing. But the NCAA’s business model of using unpaid student athletes to generate billions of dollars in revenue for the colleges raises serious questions under the antitrust laws. In particular, it is highly questionable whether the NCAA and its member colleges can justify not paying student athletes a fair share of the revenues on the circular theory that the defining characteristic of college sports is that the colleges do not pay student athletes. And if that asserted justification is unavailing, it is not clear how the NCAA can legally defend its
remaining compensation rules.
Justice Kavanaugh outlines how these issues can be resolved outside the realm of litigation. Legislation is one avenue, and we might see his concurring opinion used to justify further NIL laws like those set to go into effect in a few weeks. Justice Kavanaugh also outlines how colleges and student-athletes could collectively bargain over these issues, much like unions do in traditional employer-employee situations.
Justice Kavanaugh closes with both some flowery language, and a direct warning to the NCAA:
To be sure, the NCAA and its member colleges maintain
important traditions that have become part of the fabric of
America—game days in Tuscaloosa and South Bend; the
packed gyms in Storrs and Durham; the women’s and men’s
lacrosse championships on Memorial Day weekend; track
and field meets in Eugene; the spring softball and baseball
World Series in Oklahoma City and Omaha; the list goes
on. But those traditions alone cannot justify the NCAA’s
decision to build a massive money-raising enterprise on the
backs of student athletes who are not fairly compensated.
Nowhere else in America can businesses get away with
agreeing not to pay their workers a fair market rate on the
theory that their product is defined by not paying their
workers a fair market rate. And under ordinary principles
of antitrust law, it is not evident why college sports should
be any different. The NCAA is not above the law.
The NCAA is not above the law.
So where do we go from here? Again, the decision in Alston involves education-related expenses, and the Supreme Court did not entertain other means of compensation are, or are not, permissible. But at least one Supreme Court Justice, Justice Kavanaugh, seems highly skeptical that other means of restricting compensation to student-athletes is valid under Federal Antitrust law. And as Justice Gorsuch stated in the opinion of the Court — and Justice Kavanaugh then examined in part — the NCAA’s compensation rules might not satisfy the “rule of reason” standard. This likely opens the door to future challenges, and Justice Kavanaugh’s concurring opinion is the roadmap that will be used going forward.
The next thing to watch in the ongoing debate over student-athlete compensation? Whether the NCAA tries to stop any of the NIL legislation from going into effect on July 1st. They may very well try to enjoin those states from putting those laws into effect, but you can bet that if they do try such an action, This opinion — and in particular Justice Kavanaugh’s concurring opinion — will be used against them.
