Last week, the U.S. Supreme Court has signaled the dawn of a new era of compensating college athletes. Despite its momentous future impact, the court’s unanimous decision in NCAA v. Alston purported to be quite narrow. Alston merely affirmed two lower-courts’ holdings that restrictions on education-related payments (laptops, scholarships, tutoring, internships, etc.) violated the Sherman Act because the National Collegiate Athletic Association (NCAA) operates as a monopolist.
The payments at issue in Alston represent only a small share of the potential compensation for NCAA athletes. There is much more money to be earned by college athletes, for example, through endorsement deals and name-image-likeness (NIL) payments. With its unanimous holding—including a particularly withering concurrence from Justice Brett Kavanaugh—the court sent a strong signal that the NCAA will lose future court challenges to the array of other restrictions on compensation to student-athletes.
The NCAA failed in Alston to obtain a blanket antitrust immunity that would protect those other rules—and, as a result, those rules could begin to crumble even before the next football season. Presently, the NCAA vigorously prohibits NIL or other payments to student-athletes under its “amateurism” rules. Schools and athletes that violate these rules at the risk of sanctions such as forfeited wins, loss of scholarships, recruiting restrictions, and loss of eligibility to compete.
The NCAA’s position is that such payments would diminish fan interest in college sports if the public knew that athletes were being compensated, rather than playing solely for the love of their sport.
Kavanaugh showed no mercy in ridiculing this litigating position, writing:
“The NCAA’s business model would be flatly illegal in almost any other industry in America. All of the restaurants in a region cannot come together to cut cooks’ wages on the theory that ‘customers prefer’ to eat food from low-paid cooks. Law firms cannot conspire to cabin lawyers’ salaries in the name of providing legal services out of a ‘love of the law.’ Hospitals cannot agree to cap nurses’ income in order to create a ‘purer’ form of helping the sick. News organizations cannot join forces to curtail pay to reporters to preserve a ‘tradition’ of public-minded journalism. Movie studios cannot collude to slash benefits to camera crews to kindle a ‘spirit of amateurism’ in Hollywood.
Price-fixing labor is price-fixing labor. And 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.”
States Are Taking Action on ‘NIL’ Payments
The Alston case ended the NCAA’s efforts to stall reform of its amateurism model. Now, that reform will happen with or without NCAA cooperation. In fact, it has already begun.
Several state legislatures became impatient with the NCAA’s glacial pace in addressing the unfairness of its ban on NIL payments to athletes. On Sept. 30, 2019, California enacted legislation that would permit student-athletes at California colleges and universities to benefit financially from their NIL. More recently, on April 20, Alabama enacted a NIL bill (effective July 1) allowing student-athletes at Alabama colleges and universities to receive compensation for their NIL at market value and to hire agents or attorneys to represent them for the purposes of receiving NIL compensation. Arizona, Colorado, Florida, Michigan, Mississippi, Nebraska, New Jersey, and New Mexico have all enacted similar legislation, and there are 14 other states with legislation pending. Last week, Kentucky’s governor issued an executive order permitting NIL payments because the Commonwealth’s legislature would not be able to introduce legislation before July 1. These states are ordering their schools not to follow the NCAA regulations prohibiting these payments.
The NCAA’s passivity forfeited any opportunity to govern in this area. The NCAA resisted reform—including through court challenges like Alston—instead of re-examining or relaxing its amateurism rules to align with basic fairness. A “Hail Mary” attempt to convince Congress to intervene with superseding federal NIL standards also seems to have failed. As a result, the decision has been taken away from the NCAA.
In this environment, with several states requiring their colleges to permit NIL payments, it will be impossible for the NCAA to penalize those schools for complying with their governing state law or to create an uneven playing field by selectively enforcing the NIL restrictions.
The next shoe could drop soon. The NCAA Council met recently and it could decide to recommend a temporary halt to enforcement of NIL restrictions pending further developments. It could decide, in other words, that the area is ungovernable without a single, uniform policy that the NCAA is unprepared to implement. If so, the NCAA’s Board of Governors—which meets today—could approve this sweeping (albeit grudging) change to the NCAA’s amateurism rules.
If the NCAA cannot even execute this temporary surrender, it will raise broader questions about the organization’s ability to govern. The Supreme Court has announced, strongly, that the NCAA will lose in court if it tries to enforce its amateurism restrictions limiting compensation to student-athletes. State legislatures are pushing the NCAA aside in legislating a more equitable landscape for college sports. If the NCAA again chooses inaction, it is fair to wonder whether the NCAA will (or should!) continue to exist.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Stephen A. Miller is a co-chair of Cozen O’Connor’s White Collar Defense & Investigations practice group, a former federal prosecutor, and a former clerk to the Hon. Antonin Scalia, the Supreme Court of the United States.
Calli Jo Padilla is a partner at Cozen O’Connor and a member of the firm’s White Collar Defense & Investigations practice group.