Let the Bidding Wars Commence
NCAA vs Athletes
On June 21, the US Supreme Court ruled in favor of athletes in NCAA vs Alston.
Current and former student-athletes brought this antitrust lawsuit challenging the NCAA’s restrictions on compensation. Specifically, they alleged that the NCAA’s rules violate §1 of the Sherman Act, which prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.” 15 U. S. C. §1. Key facts were undisputed: The NCAA and its members have agreed to compensation limits for student-athletes; the NCAA enforces these limits on its member-schools; and these compensation limits affect interstate commerce.
Justice Gorsuch delivered the opinion of the Court. The document and opinion is lengthy but well worth a read. It goes back to the start of it all in 1852 when students from Harvard and Yale participated in what many regard as the Nation’s first intercollegiate competition—a boat race at Lake Winnipesaukee, New Hampshire.
Gorsuch says “this was no pickup match. A railroad executive sponsored the event to promote train travel to the picturesque lake.”
Gorsuch Snips
Over the decades, the NCAA has become a sprawling enterprise. Its membership comprises about 1,100 colleges and universities, organized into three divisions.
At the center of this thicket of associations and rules sits a massive business. The NCAA’s current broadcast contract for the March Madness basketball tournament is worth $1.1 billion annually.
Those who run this enterprise profit in a different way than the student-athletes whose activities they oversee. The president of the NCAA earns nearly $4 million per year. Commissioners of the top conferences take home between $2 to $5 million. Ibid. College athletic directors average more than $1 million annually. Ibid. And annual salaries for top Division I college football coaches approach $11 million, with some of their assistants making more than $2.5 million.
The plaintiffs are current and former student-athletes in men’s Division I FBS football and men’s and women’s Division I basketball. They filed a class action against the NCAA and 11 Division I conferences (for simplicity’s sake, we refer to the defendants collectively as the NCAA). The student-athletes challenged the “current, interconnected set of NCAA rules that limit the compensation they may receive in exchange for their athletic services.” D. Ct. Op., at 1062, 1065, n. 5. Specifically, they alleged that the NCAA’s rules violate §1 of the Sherman Act, which prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.” 15 U. S. C. §1.
The NCAA did not “contest evidence showing” that it and its members have agreed to compensation limits on student-athletes; the NCAA and its conferences enforce these limits by punishing violations; and these limits “affect interstate commerce.”
No one disputes that the NCAA’s restrictions in fact decrease the compensation that student-athletes receive compared to what a competitive market would yield. No one questions either that decreases in compensation also depress participation by student-athletes in the relevant labor market— so that price and quantity are both suppressed.
It is unclear exactly what the NCAA seeks. To the extent it means to propose a sort of judicially ordained immunity from the terms of the Sherman Act for its restraints of trade—that we should overlook its restrictions because they happen to fall at the intersection of higher education, sports, and money—we cannot agree.
While the NCAA asks us to defer to its conception of amateurism, the district court found that the NCAA had not adopted any consistent definition. Id., at 1070. Instead, the court found, the NCAA’s rules and restrictions on compensation have shifted markedly over time.
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.
The judgment is Affirmed.
What Was Decided and What Wasn’t
I bolded the key point, the emphasis on “affirmed” was the Court’s.
The WSJ discusses Supreme Court Rejects NCAA’s Tight Limits on Athlete Benefits, Compensation
The court decision on Monday, written by Justice Neil Gorsuch, upheld lower court rulings that said the National Collegiate Athletic Association unlawfully limited schools from competing for player talent by offering better benefits, to the detriment of college athletes.
The decision doesn’t open up a world of direct, unlimited pay for college athletes, an issue that wasn’t before the court. Instead, the justices said the NCAA must allow colleges to recruit athletes by offering them additional compensation and benefits, as long as they are tied to education.
Justice Brett Kavanaugh, one of the court’s biggest sports fans, wrote a separate concurrence warning that the NCAA’s remaining rules limiting compensation “also raise serious questions under the antitrust laws. 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,” Justice Kavanaugh wrote.
“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.”
Warning Shot to the NCAA
The Court only ruled on the case before it, purposely, to give the NCAA a bit of time. Regardless, the opinion of Kavaugh above is the future.
Constraint of trade is constraint of trade.
The unanimous ruling is a big warning shot for the NCAA to get its act together. This is the effective end of Collegiate amateur sports, and long overdue too.
Mish
Definitely long overdue. I think it is a bit like opening the barn door after the horses have left, as the recent moves from the PAC 12 to let student-athletes monetize their image and likeness would have ended up with a race to provide value to the athletes throughout the NCAA. But still good to see this decision.