The Supreme Court on Monday issued a conditional victory for elite college athletes. The immediate effect of the unanimous decision of the court in the National Collegiate Athletic Association v Alston case is that many elite student athletes receive additional education-related compensation, such as an additional scholarship. However, the case could have wider implications and eventually lead to these athletes receiving salaries.
The court's decision marks the final chapter in a lengthy legal battle that began in 2014. Several athletes from the highest levels of college sports – men's and women's Division I basketball and soccer players from the NCAA's elite Football Bowl Subdivision – filed this lawsuit seven years ago. They questioned the rules enforced by the NCAA and various other governing bodies in college sports that place fairly strict limits on the compensation of athletes.
To be clear, these athletes weren't uncompensated. Many top athletes received scholarships that covered their tuition fees, room and board. Some players could also receive small cash scholarships to cover living expenses, as well as perks like meals and medical care for sports injuries. But they weren't getting anywhere near the stratospheric salaries available to the best professional athletes – or none at all.
The top student athletes also receive a rather meager salary, although they are enormous profit centers for their universities – and a number of retailers and broadcasters who benefit from university sports. For example, in the 2015-16 academic year, Division I Basketball and Division I-A Football had sales of $ 4.3 billion. The NCAA's current transfer agreement for their annual March Madness basketball tournament is worth over $ 1 billion annually.
In the course of the Alston lawsuit, two lower courts ruled that some – but not all – of the NCAA restrictions on athletes' compensation must be lifted. As Judge Neil Gorsuch summarized these lower court rulings in his Supreme Court opinion, the lower courts repealed "rules that limit graduate or professional school scholarships, payments for academic tuition or paid post-graduate internships" while leaving them with "targeted rules" to ensure that & # 39; athletic students do not receive unlimited unrelated payments & # 39 ;. "
The opinion of Gorsuch leaves these decisions of the lower courts.
In essence, this means that athletes can receive additional education-related payments, such as: B. Graduate School Scholarships, but the Supreme Court decision still allows the NCAA to prevent student athletes from getting paid like professional athletes. However, in a separate advisory opinion, a member of the court argued that student athletes should receive much more extensive relief when filing a new lawsuit to challenge any NCAA compensation limits.
The NCAA hoped to avoid that outcome by arguing that it should effectively be exempted from antitrust rules that prevent companies from working with their competitors to set employee compensation. The result of Gorsuch's opinion is that in at least one instance like this the NCAA must obey the same antitrust rules as everyone else – although this may not apply in every future case that claims a sports league is in violation of federal antitrust law.
The NCAA claimed it was beyond the reach of antitrust law because it was a "joint venture".
The NCAA's rules for limiting player compensation are, in the parlance of antitrust law, a “horizontal agreement”. That said, they're an agreement to set prices between multiple companies that compete on the same level within the college sports industry.
As the Supreme Court in NCAA v. As explained by the Board of Regents of the University of Oklahoma (1984), "horizontal pricing and production limits under an" inherently illegal "approach are usually condemned because the likelihood of these practices being anti-competitive is so high." When competitors collapse to depress wages, the courts usually hit these employers with a hammer.
However, the regent's decision also suggests that federal antitrust law does not always apply to sports leagues with full force.
Such leagues are called "joint ventures" by antitrust lawyers. The nature of team sport is that several teams have to agree to compete together according to a common set of rules. You need to agree when games will be scheduled and where those games will take place. For these reasons, the courts usually allow sports teams to participate in agreements to a certain extent – and to form umbrella organizations like the NCAA, which lays down rules for many teams – because competitive sport cannot exist without a certain amount of mutual agreement.
The result of the Alston court ruling, however, is that the special diligence that antitrust law typically accords sporting leagues does not extend to attempts by the NCAA to limit player compensation.
The fact that a certain amount of collusion between competitors "is necessary in order to create or maintain a league sport," writes Gorsuch, "does not mean all aspects of a sophisticated cooperation between the leagues." a shared schedule: “Nobody questions that Division I basketball and FBS Football can (and are) continue without the District Court's educational compensation restrictions. the games go on. "
Thus, the NCAA cannot evade compliance with federal antitrust law.
In addition, the NCAA argued that paying more to their athletes would fundamentally change the product that the NCAA offers to consumers. This product is "amateur" athletics, according to the NCAA, and is offered by low-paid student athletes, not professionals who pay a market salary. But the court treated this argument rather negatively.
In his statement, Gorsuch stated, among other things, that "the NCAA's view of amateurism has changed steadily over the years". A former commissioner for the Southeastern Conference of College Sports even testified that he "was never clear what was really meant by amateurism".
Therefore, it is difficult for the NCAA to claim that they offer a unique product based on "amateurism" when they cannot even adhere to a single definition of what it means to be an "amateur" athlete.
The NCAA may suffer an even greater loss in a future event
The lower courts lifted the NCAA's limits on education-related compensation for athletes, but left different compensation limits – and the Supreme Court upheld that baby-splitting result in Alston.
But, as Gorsuch notes in his statement, a major reason the Supreme Court failed to move forward is because plaintiffs did not ask them to do so. As he writes, "again the student athletes did not have their blanket challenge to the NCAA's compensation restrictions" when their case reached the Supreme Court.
Although the entire court has failed to consider whether elite student athletes should be eligible for more compensation than the Alston statement requires, Judge Brett Kavanaugh wrote a separate consensus statement arguing that “the remaining NCAA compensation rules are also serious issues under the antitrust law. "
As Kavanaugh writes, "the NCAA's business model would be absolutely illegal in almost any other industry in America." Among other things, the NCAA controls "the market for college athletes"; it "acknowledges that its compensation rules set the price for student athletic work below the market price"; and it "recognizes that there is currently no meaningful way for student athletes to negotiate compensation rules with the NCAA."
This is exactly the kind of iron grip on pricing that antitrust laws are designed to prevent.
It remains to be seen whether Kavanaugh's opinion will one day become law, but it will likely signal student athletes to consider filing a new lawsuit to challenge the NCAA's remaining compensation restrictions.