Introduction
In a decision with potentially far-ranging implications for college sports, the US Supreme Court on Monday unanimously upheld a ruling that the NCAA's limits on education-related benefits for college athletes violated federal antitrust law. As a result of the decision in NCAA v. Alston, 1 schools may offer athletes payments and other benefits related to education, such as laptops, study abroad funding, paid internships, and post-eligibility scholarships at graduate school. 2 While schools still may not pay their athletes directly for their labor, the Court signaled a willingness to wade into the "thicket of association and rules" governing college sports to scrutinize remaining NCAA restrictions on benefits to college athletes. 3 In so doing, the Court's decision in Alston may well invite further legal challenges to amateurism in college sports, precipitate federal and state regulations on the issue, and incite legislatures to action. Given the central role college sports plays for many institutions of higher education, Alston will spur potentially significant changes to the traditional norms of athletic amateurism that have predominated for the better part of the last century.
Background
The Court's ruling on Monday marked the culmination of a seven-year dispute between the NCAA and other major athletic conferences and a group of Division I football and basketball players. The athletes filed a class-action lawsuit against the NCAA, arguing that its restrictions on student-athlete eligibility and compensation violated federal antitrust law. 4 Specifically, the students argued, the NCAA's rules ran afoul of the Sherman Act, which prohibits collusion "in restraint of trade or commerce." 5 In return, the NCAA argued that it should be exempt from the Sherman Act, as its rules were necessary to increase competition rather than limit it. The challenged restraints, it contended, were necessary to "'preserve amateurism,' which in turn widens consumer choice by providing a unique product—amateur sports as distinct from professional sports." 6
In 2019, a federal district court partially accepted the NCAA's logic, finding that the NCAA could restrict direct, uncapped benefits to student-athletes unrelated to their educations. 7 At the same time though, the court found that the Association could not limit non-cash, education-related benefits to student athletes. 8 To do so, the court found, would run afoul of the Sherman Act notwithstanding any competitive benefits amateurism provides. Both sides appealed, but the Court of Appeals for the Ninth Circuit affirmed the decision in full, holding that "the district court struck the right balance in crafting a remedy that both prevents anticompetitive harm to student-athletes while serving the procompetitive purpose of preserving the popularity of college sports." 9 Unsatisfied with this outcome, the NCAA appealed to the Supreme Court, which last year agreed to hear the case.
Opinion of the Court
Writing for a unanimous Court, Justice Gorsuch rejected the NCAA's arguments, holding that the Association's restrictions on education-related benefits violated antitrust law. The Court declined to give the NCAA "special dispensation from the Sherman Act on the ground that their restraints serve uniquely important social objectives" like the promotion of amateur sports. 10 And while the Court allowed that "some restraints are necessary to create or maintain a league sport" the restraints on education-related benefits are not among them. 11 Indeed, applying the "rule of reason"—the test to determine whether a market restraint unduly harms competition under the Sherman Act—the Court found that the NCAA's restrictions on education-related benefits could not pass muster, as they bore no direct connection to consumer demand. 12
While the Court unambiguously held that the NCAA cannot bar education-related perks to studentathletes, it left significant leeway to the Association to determine which benefits are related to education. Noting that the Court had no intention of "micromanag[ing]" the NCAA's business, 13 Justice Gorsuch emphasized the discretion still available to the Association. Consistent with the Court's holding, the NCAA may "develop its own definition of benefits that relate to education," 14 regulate criteria for academic and graduation awards, 15 and even "police phony internships." 16 Thus, the exact contours of what schools may and may not provide to their student-athletes under Alston will likely be determined by future NCAA rulemaking.
Finally, though the Court in Alston did not consider the NCAA's ban on paying athletes for their participation in college sports, the Court's opinion may portend future trouble for that ban. Specifically, the Court found that the NCAA is not exempt from federal antitrust law, enjoys monopoly power over the relevant market, and that barring education-related compensation is anti-competitive despite any benefits that amateurism provides. 17 This same logic could easily be extended to the Association's ban on compensation for student athletes more generally.
In a concurring opinion, Justice Kavanaugh demonstrated a particular willingness to further rein in the NCAA's power. "The NCAA's remaining compensation rules," he wrote "raise serious issues under existing antitrust laws." 18 The Court's opinion in Alston, he argued, establishes that such rules should be considered under the same rule-of-reason scrutiny going forward—and that they would likely fail. 19 Under normal antitrust scrutiny, Justice Kavanaugh contended, "the NCAA's business model would be flatly illegal in almost any other industry in America." 20 Given the Court's opinion in Alston, there is reason to believe the Court may eventually get there.
Takeaways:
The Court took pains to issue a narrow ruling, cabining the NCAA's power only as it related to limitation on education-related benefits. Nonetheless, in both recognizing that antitrust law applies to the NCAA as it would any other organization, and also opening the door to further scrutiny of the extent to which consideration should be paid to college athletes for their labors, Alston certainly raises a host of important and complex legal and practical realities that schools will need to confront.
First, the NCAA has already signaled its intention to "articulate what are and are not truly educational benefits." 21 Given the potentially significant economic value that could be conveyed to students, institutions will need to set up programs to ensure they are complying with any new rules and carefully monitoring what benefits are being given to whom. This will be critical both in order to protect institutions from NCAA penalties but also to protect athletes whose college eligibility could be jeopardized should they fall afoul of what will doubtless be a complex and intricate set of regulations. Needless to say, in a highly competitive environment for top high-school talent, schools will want to offer the maximum permitted under the new regulations but the stakes of crossing what may be difficult to discern lines will be high.
Second, there is likely to be intense interest from state and federal regulators in investigating college athletics going forward. As an indication of revived political interest in the subject, California Governor Gavin Newsom quickly sent a tweet hailing the Court's decision in Alston and calling it "one step closer to fixing" the NCAA's "sickening" business model. 22 Governor Newsom's tweet is further indication— were any needed—that state regulators are closely looking into big-time college sports and will use whatever opportunities that are available to increase regulatory and investigatory oversight. Moreover, Alston is likely to spawn new civil litigation as well, and schools and their conferences would do well to decide how active a role they want to play as intervenors or amici in cases that could have a huge impact on the day-to-day operations of one of their most valued components.
Third, as Justice Kavanaugh's concurrence demonstrates, there are a host of other issues surrounding compensation to student athletes that will merit serious attention as the law in this area rapidly evolves. For example, in the last two years alone, nineteen states have passed laws allowing student-athletes in those states to be compensated for use of their names, images and likenesses (NIL). 23 The Senate is currently considering legislation that would create a federal NIL standard across all states. 24 From protecting students from predatory business relationships and sponsorships that may eventually be available to them, to ensuring that all institutional actions comply with Title IX gender equity rules, the need for careful and strategic action in this area will only continue to increase as more money and attention flows into college athletics.
Footnotes
1 Nat'l Collegiate Athletic Ass'n v. Alston, No. 20–512, slip op. (U.S. June 21, 2021).
2 Alston, slip op. at 34.
3 Id. at 7.
4 Id. at 8.
5 Id.
6 Id. at 10.
7 In re Nat'l Collegiate Athletic Ass'n Athletic Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1062 (N.D. Cal. 2019), aff'd, 958 F.3d 1239 (9th Cir. 2020), aff'd sub nom. Nat'l Collegiate Athletic Ass'n v. Alston, No. 20-512, slip op. (U.S. June 21, 2021).
8 Alston, slip op. at 1109.
9 In re Nat'l Collegiate Athletic Ass'n Athletic Grant-in-Aid Cap Antitrust Litig., 958 F.3d 1239, 1263 (9th Cir. 2020), aff'd sub nom. Nat'l Collegiate Athletic Ass'n v. Alston, No. 20-512, slip op. (U.S. June 21, 2021).
10 Alston, slip op. at 22.
11 Id. at 18.
12 Id. at 29.
13 Id.
14 Id. at 31.
15 Id. at 24.
16 Id. at 33
17 Id. at 14
18 Id. at 2 (Kavanaugh, J. concurring).
19 Id. at 3
20 Id.
21 Press Release, NCAA Statement on U.S. Supreme Court Decision (June 21, 2021), https://www.ncaa.org/about/resources/media-center/news/ncaa-statement-us-supreme-court-decision
22 Gavin Newsom (@GavinNewsom), Twitter (June 21, 2021, 10:35 AM), https://twitter.com/GavinNewsom/status/1406984222070370307.
23 Dan Murphy, Everything You Need to Know About the NCAA's NIL Debate, ESPN (June 21, 2021), https://www.espn.com/college-sports/story/_/id/31086019/everything-need-know-ncaa-nil-debate.
24 Id.
Co-authored by Katherine Hamilton
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