Protecting YOUR Image

The rights of college athletes versus the NCAA have been a hot topic for a while now, specifically

whether the NCAA should pay them as a part of their role in the money-making machine that is college

sports. While NCAA v. Alston is not a definitive answer, it may be the spark that allows college athletes

to eventually get a piece of the NCAA’s insane revenue pie, but time will tell.

The origins of this Supreme Court case started when student athletes filed a class action suit

against the NCAA for their policies that limited compensation for their “athletic services”, specifically

that those rules violate §1 of the Sherman Act, which prevents “contract[s], combination[s], or

conspirac[ies]” restraining “trade or commerce.” 1 Regarding procedural history, the district court

engaged in “rule of reason” analysis which involves diving into the NCAA’s market power and structure

to evaluate the “restraint’s actual effect on competition.” 2 The district court then acknowledged that the

NCAA has “near complete dominance in Division I basketball and FBS football”, and that they have the

power to restrain compensation any way they want without risking their market. 3 The district court then

said that the NCAA’s compensation limits make an artificial cap to recruits’ compensation and without

them, athletes would get better offers that are a better reflection of their value. 4

The district court rejected the NCAA’s justification that those restrictions “increase output and

increase competitive balance”, and the NCAA did not challenge them in the Supreme Court case. 5 The

NCAA’s other defense was that their restrictions “preserve amateurism” which gives consumers access

to the unique product. 6 Since this affects the consumer market, the district court then looked at the

definition of amateurism and found no real definition of what amateurism actually means. 7 There was

also no evidence that compensation restrictions affect consumer demand, while the student-athletes

presented evidence and testimony showing a big increase in consumer demand despite the new types

of compensation. 8 However, there was evidence that restricting “unlimited payments unrelated to

education” plays a role in differentiating college sports from pro sports. 9 Students then needed to show

that there were “substantially less restrictive alternative rules” that would have the same effect as the

challenged ones. 10 The district court’s standard for the NCAA was that the NCAA must have “ample

latitude” to run its enterprise and that courts “may not use antitrust laws to make marginal adjustments

to broadly reasonable market restraints.” 11 Using these standards, students met some burdens but not

others; regarding the challenge to rules restricting scholarships to the cost of attendance and restricting

compensation benefits unrelated to education, the court found them reasonable due to the possibility

that professional-level pay could blur the line between professional and college sports. 12 None of these

factual findings were overturned by the Supreme Court.

1 NCAA v. Alston, 594 U. S. ____, 8 (2021)

The district court had a different conclusion for education-related benefits because it was clear

that students are the recipients. 13 The district court then issued an injunction stating that nothing

prevents the NCAA from price-fixing benefits not related to education, only from limiting education-

related compensation or benefits that conferences and schools may give to athletes playing Division I

football and basketball. 14 The NCAA could continue to limit cash for academic achievement as long as

those limits are not lower than the cash awards allowed for academic achievement ($5,980 annually). 15

The NCAA was free to come up with a definition for “related to education”, regulate how schools and

conferences provide education-related compensation and benefits. 16 The district court explained that

the injunction only applied to the NCAA and multiconference agreements—which meant individual

schools and conferences could enact tighter restrictions if they want. 17

Both sides appealed this decision: student athletes said the injunction should have enjoined the

compensation limits that were unrelated to education, like restricting scholarships and cash awards,

while NCAA said the lower court went too far. 18 The appellate court affirmed the decision. 19 The NCAA

asked the Supreme Court to find that all the restrictions survive antitrust scrutiny. 20 The Supreme Court

only considered the “rules restricting education-related benefits that the district court enjoined”

because it’s indisputable that the NCAA has “monopsony control in the relevant market” by lowering

wages “below competitive levels for student-athletes and thereby restricting the quantity of student-

athlete labor.” 21

The NCAA argued against “rule of reason” because they say they are a joint venture that needs

collaboration to offer consumers competition, but that did not mean they were entitled to another

standard of review because “most joint venture restrictions are subject to the rule of reason.” 22 The

amount of analysis can vary, but the Court said that a full review was necessary here because the issue

was “whether and to what extent those restrictions in the NCAA’s labor market yield benefits in its

consumer market that can be attained using substantially less restrictive means.” 23 The NCAA went on to

say that the Supreme Court was bound by their decision in Board of Regents where the Supreme Court

approved the rules restricting schools from televising football games. 24 However, the reality of the

market was assessed: as of 2016, the annual television rights brought in closer to 1.1 billion dollars. 25

Since the market has changed and since education-related benefits were never discussed in Board of

Regents, that decision is not binding here.

The NCAA also argued rule of reason analysis is inappropriate because they do not consider

themselves a commercial enterprise” and that their main goal is “’maintain amateurism in college sports

as part of serving [the] societally important non-commercial objective of “higher education’” but they

don’t contest that the restraints are under the Sherman Act. 27 However, the Supreme Court has declined

to excuse entities from the Sherman Act due to social objectives. 28 Even moreso, the NCAA has already

been recognized as being under the Sherman Act. 29 Then the NCAA argued that the district court

misapplied the second step of rule of reason: “whether the NCAA could muster a procompetitive

rationale for its restraints.” 30 Ultimately, the decision turned on the question of whether “student-

athletes could prove that ‘substantially less restrictive alternative rules’ existed to achieve the same

procompetitive benefits the NCAA had proven at the second step.” 31 The district court never required

the NCAA to show its rules made up the “least restrictive means of preserving consumer demand.” 32 The

NCAA only violated the Sherman Act after the district court found that the NCAA’s restrictions to be way

stricter than necessary for no real reason. 33

The NCAA also argues that the district court “redefined” its product by rejecting their views of

what amateurism was and replaced it with their own definition. 34 According to the Supreme Court, firms

should have substantial freedom to craft agreements to serve legitimate interests---but that does not

mean a party can relabel a restraint as a feature and say it is ‘immune from §1 scrutiny.’” 35

Finally, the NCAA disputed that there were “substantially less restrictive alternatives capable of

delivering the same procompetitive benefits as its current rules” and that the district court’s injunction

will “micromanage” their business. 36 However, the Supreme Court noted that anti-trust courts are not in

a good position to enforce a detailed ruling while also dealing with the changing market and a busy

docket. 37 The district court honored this idea by only enjoining education-related benefits after they

decided that loosening these restrictions would not blur the line between professional and college

sports and that loosening restrictions was a “significantly (not marginally) less restrictive means of

achieving the same procompetitive benefits as the NCAA’s current rules.” 38 Even regarding education-

related benefits, the NCAA still has leeway: they can define “education-related benefits”, define rules

about how those benefits are provided, and continue to limit cash awards as long as they are never

lower than the limit for athletic performance awards. 39 Moreover, the injunction only applies to NCAA

and multiconference agreements; individual conferences can still reimpose those restrictions or even

come up with stricter ones.

The NCAA worried that schools and/or boosters will use internships to avoid the payment limits

or offer frivolous rewards. However, the district court only enjoined restrictions on education-based

compensation or benefits” that conferences or schools could offer, and the NCAA could still stop

compensation from shoe companies, car dealerships, boosters, “or anyone else.” 41 Regarding

internships, the district court did not enjoin NCAA rules stopping benefits “unrelated to legitimate

educational activities”, which means they still have room to prohibit fake internships. 42 The NCAA can do

whatever they think is appropriate. They also attacked the restriction on cash awards for academics

being no lower than $5,980 per year, as being a “professional salary” and that the district court’s ruling

means a school could “pay players thousands of dollars each year for minimal achievements like

maintaining a passing GPA.” 43 However, this part of the injunction came from the finding that the awards

cap did not affect consumer demand. 44 The NCAA still has freedom to reduce their awards and/or set the

criteria for earning the awards. 45 Thirdly, the NCAA worried that letting schools give in-kind educational

benefits will enable schools to give gifts only “nominally” related to education, but the NCAA is free to

outlaw in-kind benefits unrelated to education if they want or ask for clarification from the district court

before going to the Supreme Court. 46 The Supreme Court affirmed the decision.

Justice Kavanaugh’s concurrence agreed with the majority on Board of Regents not applying and

that the Court was right to not address the legality of the compensation rules that were not enjoined. 47

Kavanaugh has a much more damning opinion saying the argument that “colleges may decline to pay

student athletes because the defining feature of college sports, according to the NCAA, is that the

student athletes are not paid” is circular. 48 Moreover, he states “the NCAA’s business model would be

flatly illegal in almost any other industry in America” because it is “price-fixing labor” which is a textbook

antitrust issue. 49 There are some big questions, specifically whether the NCAA can justify not paying its

athletes a fair share of the revenue based on the idea that colleges do not pay their athletes. 50

Kavanaugh acknowledges the policy questions too, such as the effect of paying athletes on non-revenue

based sports, compliance with Title IX, the idea of a salary cap, etc., but Kavanaugh says that could be

answered by collective bargaining or through legislation. 51 Ultimately, Kavanaugh states that the NCAA is

“not above the law.” 52

Perhaps this is the beginning of a world where college athletes are not out in the cold when it

comes to getting the piece of revenue they deserve. If Kavanaugh’s concurrence is any indication, that

reality may be coming sooner rather than later. The ball is in the NCAA’s court.

47 Alston, 594 U. S. ____, 2 (2021) (Kavanaugh J. concurring)

48 3, (Kavanaugh J. concurring)

49 3, (Kavanaugh J. concurring)

50 3, (Kavanaugh J. concurring)

51 3, (Kavanaugh J. concurring)

52 5, (Kavanaugh J. concurring)