The NCAA is Not Above the Law: Justice Kavanaugh’s Opinion May Shape the Future of College Athletes
“The NCAA is not above the law.”1National Collegiate Athletic Association v. Alston, 141 S.Ct. 2141, 2168 (2021) (Kavanaugh, J. concurring). Confronted with the NCAA’s demand of immunity from the normal operation of antitrust laws under the Sherman Act, the Supreme Court unanimously sided with college students against the NCAA on June 21st, 2021.2Alston, 141 S.Ct.. at 2166. In siding with student-athletes, the Court affirmed an education-related increase in college athlete compensation.3Nuria Diaz and Roman Bobek, Supreme Court Issues Decision Allowing Compensation for Student-Athletes, GW HATCHET (June 26, 2021), https://www.gwhatchet.com/2021/06/26/supreme-court-issues-decision-allowing-compensation-for-student-athletes/ [https://perma.cc/578G-6F7U].
Prior to Supreme Court review, the district court struck down NCAA rules limiting the education-related benefits schools may offer student-athletes––such as rules prohibiting schools from offering graduate or vocational school scholarships.4Alston, 141 S.Ct. at 2147. Thus, the NCAA can now provide student-athletes unlimited education-related compensation––such as compensation for internships.5Diaz, supra note 3.
There is no dispute that the NCAA maintains important traditions that have become part of the fabric of America––such as the March Madness basketball tournament.6See Alston, 141 S.Ct. at 2168 (Kavanaugh, J., concurring). These traditions, however, “cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student-athletes who are not fairly compensated.”7Id. at 2169.
To understand the Court’s argument, a brief detour explaining the relevant provision of the Sherman Act is warranted. Section 1 of the Sherman Act prohibits contracts, combinations, or conspiracies in restraint of trade or commerce.815 U.S.C. § 1 (“Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal”). The student-athlete plaintiffs alleged the NCAA and member’s compensation limits and enforcement punishments violated this Sherman Act provision.9Alston, 141 S.Ct. at 2151. The NCAA enjoys near complete dominance of, and exercises monopsony power in, the market for athletic services in men’s and women’s Division I basketball and FBS football.10Id. at 2151-52. As such, the NCAA has the power to restrain student-athlete compensation in any way and at any time they wish, which affects interstate commerce.11See id. at 2152.
The athletes––through Shawne Alston as lead plaintiff––argued that the NCAA’s compensation rules restricting the education-related benefits that student-athletes may receive violated this provision of the Sherman Act.12Alston, 141 S.Ct. at 2147; see also Damond Talbot, Shawne Alston is the Real Hero | Former WVU Running Back is the Man Behind the Name, Image and Likeness Lawsuit, DRAFT DIAMONDS (June 22, 2021), https://www.nfldraftdiamonds.com/2021/06/shawne-alston/[https://perma.cc/6NWB-8356] (Shawne Alston is a former running back from West Virginia University who “put a hurt on opposing defenders trying to tackle him”). Not only has Alston put a hurt on opposing defenders, but arguably, his lawsuit has also put a hurt on the NCAA.13See Alston, 141 S.Ct. at 2167.
Specifically, the plaintiffs alleged that the NCCAA is a membership organization of conferences and schools that, among other things, compete for the labor of student-athletes.14Brief for Respondents Shawne Alston, et al., Alston, 141 S.Ct. at 2141 (Nos. 20-512, 20) at 4. Indeed, the NCAA has suppressed competition over the price of labor through rules because the NCAA is controlled by a group of competitors and serves, in essence, as a vehicle for ongoing concerted activity.15See id. at 37 For the plaintiffs, this was “precisely what makes [the NCAA] subject to Section 1 of the Sherman Act–not exempt from it.”16Id. Certainly, the NCAA and its member colleges are suppressing the pay of student-athletes who generate billions of dollars in revenues for colleges every year.17Alston, 141 S.Ct. at 2168 (citing Brief for African American Antitrust Lawyers as Amici Curiae 13-17) (“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”).
The district court reasoned that enjoining the NCAA’s restrictions on educated-related benefits alone would be substantially less restrictive than the NCAA’s current rules and yet fully capable of preserving consumer demand for college sports.18In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig., 375 F.Supp.3d 1058, 1088 (N.D. Cal.2019). The Supreme Court agreed: “[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.”19Alston, 141 S.Ct. at 2159.
Indeed, the Supreme Court rejected the NCAA’s claim that its amateur league status could not be maintained if athletes could receive pay.20Diaz, supra note 3. Specifically, the Court noted that “nor…does anyone contest that status of the NCAA’s members as schools and the status of student-athletes as students may be relevant in assessing consumer demand.”21Alston, 141 S.Ct. at 2159.
The Court also rejected the NCAA’s argument that the Court’s decision in National Collegiate Athletic Ass’n v. Board of Regents of University of Oklahoma expressly approved the NCAA’s limits on student-athlete compensation.22Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 120 (1984); see Alston, 141 S.Ct. at 2157. In Board of Regents, the Supreme Court, in considering the league’s rules restricting the ability of its member schools to televise football games, declined to declare the NCAA’s restraints per se unlawful.23See Bd. of Regents, 468 U.S., at 100. However, this was only because they arose in an industry in which some “horizontal restraints on competition are essential if the product is to be available at all.”24Id. at 101.. Undeniably, Board of Regents did not even analyze the lawfulness of the NCAA’s restrictions on student-athlete compensation.25Alston, 141 S.Ct. at 2158. To the contrary, Board of Regents involved an antitrust challenge to the NCAA’s restraints on televising games and student-athlete compensation rules were not even at issue.26Id. at 2157-58.
Regardless, according to the Court, Board of Regents invoked abbreviated antitrust review as a path to “condemnation, not salvation.”27Id. at 2157. Indeed, the Court highlights its own comment in Board of Regents about the NCAA’s role in maintaining a tradition of amateurism in college sports being “entirely consistent with the goals of the Sherman Act” was in passing and therefore not binding, nor dipositive in the Alston case.28Id. at 2144.
What’s more, the Court explained that if market realities change, so may the legal analysis.29Id. at 2158. Irrefutably, the market realities have changed significantly since 1984––the year in which the Court decided Board of Regents. 30Id. Notably, the NCAA increased the size of permissible benefits incidental to athletics participation, developed the Student Assistance Fund and the Academic Enhancement Fund, among other things.31See id. (explaining while millions of dollars were raised by Division I football and basketball in 1985, billions were raised in 2016).
Although this decision is a win for student-athletes, the NCAA and its members are free to agree on rules regulating how conferences and schools go about providing these education-related benefits, which gives them considerable leeway.32Id. at 2165 For example, the NCAA is free to forbid in-kind benefits[unrelated to a student’s actual education.33See id. (“This relief focuses on allowing schools to offer scholarships for ‘graduate degrees’ or ‘vocational school’ and to pay for things like ‘computers’ and ‘tutoring.’”) So unfortunately for now, nothing is stopping the NCAA from enforcing a “no Lamborghini” rule.34Id.
However, this may not be the case for long! So, for all the student-athletes out there reading this, pay close attention. Although the decision is limited to education-related benefits, a separate concurring opinion by Justice Brett Kavanaugh gives the indication that the Supreme Court may be open to a head-on challenge to the ban by the NCAA on paying athletes for their participation in sports.35Adam Liptak and Alan Blinder, Supreme Court Backs Payments to Student-Athletes in N.C.A.A. Case, N.Y. TIMES (June 21, 2021), https://www.nytimes.com/2021/06/21/us/supreme-court-ncaa-student-athletes.html [https://perma.cc/UAK2-KAXS]. According to Justice Kavanaugh, “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.”36Alston, 141 S.Ct. at 2169 (Kavanaugh, J. concurring). For Kavanaugh at least, “under ordinary principles of antitrust law, it is not evident why college sports should be any different.”37Id..
As Kavanaugh artfully explained, “the NCAA’s decision to build a massive money-raising enterprise on the backs of student-athletes who are not fairly compensated,” cannot be justified by traditions alone.38Id. at 2169 (Kavanaugh, J. concurring); see also Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litigation, supra note 28, at 1064.
To put more bluntly, “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.” 39Id. at 1267. (emphasis added). Thus, Kavanaugh’s opinion suggests NCAA rules restricting any type of compensation may no longer hold up against future antitrust challenges.40Id. at 2168 (“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…it is not clear how the NCAA can legally defend its remaining compensation rules”).
One solution to this problem, according to Kavanaugh, is for Congress to pass legislation or for colleges and student-athletes to engage in collective bargaining to provide a fairer share of the revenues that student-athletes generate.41Id. At the end of the day, price-fixing labor is price-fixing labor.42Id. at 2167–68 (“Price-fixing labor is ordinarily a textbook antitrust problem because it extinguishes the free market in which individuals can otherwise obtain fair compensation for their work”). Whether the NCAA’s ban on paying student-athletes for their participation in sports fits traditional price fixing may very well be subject to future litigation.
For now, while it is unclear whether the NCAA can legally defend its remaining compensation rules and continue to avoid paying athletes for their participation in sports, one thing remains clear. “The NCAA is not above the law”.43Id. at 2169.
