The Supreme Court ruled unanimously this morning that the National Collegiate Athletic Association’s (NCAA) regulations that restrict benefits that may be given to student-athletes violate federal antitrust law.
The NCAA had argued that policing student-athlete pay helps to preserve the long-standing amateur status of college athletics. The high court was unmoved, rejecting the NCAA’s argument that it should enjoy antitrust immunity and affirmed a lower court’s order that will allow member schools to offer more education-related benefits to student-athletes.
The June 21 ruling, which opens the door for student-athletes to receive greater compensation, could reshape college sports throughout the country.
It’s a big industry. According to an NCAA report, more than $18.8 billion was spent on athletics in 2019 at the 1,100-plus NCAA schools across all three divisions. Of that total, $3.6 billion went toward financial aid for student-athletes, and $3.7 billion was spent on coaches’ compensation.
The case is actually two cases that were heard together: NCAA v. Alston, court file 20-512, and American Athletic Conference (AAC) v. Alston, court file 20-520. Former football player Shawne Alston, one of a group of football and basketball athletes challenging the NCAA, was a running back for the West Virginia University Mountaineers from 2009 to 2012.
The Biden administration sided with the student-athletes during telephonic oral arguments March 31.
Justice Neil Gorsuch wrote the court’s opinion in the case. Justice Brett Kavanaugh filed a concurring opinion.
Gorsuch recounted that the trial court “issued a 50-page opinion that cuts both ways” after “amassing a vast record and conducting an exhaustive trial.”
The trial court carefully reviewed the NCAA’s arguments but was not convinced the organization deserved to be exempted from antitrust laws, he wrote.
Although U.S. District Judge Claudia Wilken of California “refused to disturb the NCAA’s rules limiting undergraduate athletic scholarships and other compensation related to athletic performance,” she struck down “NCAA rules limiting the education-related benefits schools may offer student-athletes—such as rules that prohibit schools from offering graduate or vocational school scholarships.”
Wilken found that the NCAA and its member schools have the “power to restrain student-athlete compensation in any way and at any time they wish, without any meaningful risk of diminishing their market dominance.” These compensation limits “produce significant anticompetitive effects in the relevant market.”
Even though member schools “compete fiercely in recruiting student-athletes, the NCAA uses its monopsony power to ‘cap artificially the compensation offered to recruits,’” Gorsuch wrote, quoting Wilken. (A monopsony is a market situation in which there is only one buyer.)
If the NCAA’s restraints were removed, competition among schools would increase and student-athletes “would receive offers that would more closely match the value of their athletic services,” Wilken wrote.
Gorsuch commended the trial court for a job well done.
“Courts reviewing complex business arrangements should, in other words, be wary about invitations to ‘set sail on a sea of doubt,’” the justice wrote citing a legal precedent from 1898.
“But we do not believe the district court fell prey to that temptation. Its judgment does not float on a sea of doubt but stands on firm ground—an exhaustive factual record, a thoughtful legal analysis consistent with established antitrust principles, and a healthy dose of judicial humility.”
Justice Kavanaugh noted that the NCAA “has long restricted the compensation and benefits that student athletes may receive” and “has long shielded its compensation rules from ordinary antitrust scrutiny” with “surprising success.”
“The Court’s decision marks an important and overdue course correction,” he wrote.