Increasingly, college athletes are asserting their rights against their principal regulatory body, the NCAA. Recently, this has been most visible in the debate surrounding student-athlete compensation. But players, the media, and concerned fans have also championed student-athletes’ rights with regard to other important—though less visible—rules, including transfer eligibility and post-season bans.
As student-athletes become more empowered and interested entities take up their cause in 2020, watch out for increased criticism of current NCAA policy in the areas of amateurism standards and eligibility. Whether through modified NCAA policy, federal legislation, or judicial intervention, there will be continued movement in this area in 2020.
Name, Image, and Likeness Compensation to College Athletes
The area of name, image or likeness (NIL) compensation to college athletes was last year’s 800-pound-gorilla, with the NCAA attacked not just by student-athletes, but also by media outlets, federal lawmakers, and California legislators.
In March 2019, the U.S. District Court for the Northern District of California had an opportunity to clarify permissible payments beyond cost of attendance as permitted by current NCAA rules. Asked to invalidate the rules entirely, the court instead ruled narrowly, holding that the NCAA couldn’t limit education-related payments—for tuition, school supplies, or other expenses tied to education—but could still ban other compensation, such as paying salaries or cash bonuses (pay-for-play). See In re NCAA Grant-in-Aid Cap Antitrust Litig.
With the debate still raging and criticism increasing (particularly from external parties, such as professional players and agents), California legislators introduced a law allowing—or, more accurately, forbidding rules that disallow all—athlete compensation. To be clear, the California legislation does not change current legal precedent that college athletes are not employees—instead, it allows the facilitation of third-party payments to student-athletes, irrespective of their lack of employment standing.
When that law passed in September, the NCAA’s initial stance was to ban any California school from competition if they followed it. However, the NCAA amended its stance, and its board of governors instructed each division to evaluate potential new rules for NIL payments, which would be projected to take effect in 2021.
In light of this, other states have been emboldened, with a similar bill since passing the New Jersey state senate, and at least 10 other states considering the same.
Federal lawmakers picked up the torch early this year, and on Feb. 11, the Senate Commerce Committee heard testimony from the NCAA president, Big 12 commissioner, and other high-level figures from across college athletics. The bipartisan committee signaled their skepticism of current NIL rules and the NCAA’s ability to correct them, voicing concerns that college sports are being “exploited,” and that “the NCAA is late to this game.”
This growing animosity could lead to the passing of federal NIL legislation, such as the Student-Athlete Equity Act, which was introduced in March 2019, and now lies in wait with the House Committee on Ways and Means.
This debate will intensify in 2020, as divisions and their constituent schools debate, create, and implement workable bylaws. Not just a matter of tweaking technical details, NCAA membership institutions will face the daunting task of developing a structure that preserves the distinction between amateur and professional athletes.
What’s more, the instructions from the NCAA Board of Governors are limited to payments by third-parties, like Adidas or Nike, for use of an athlete’s name, image, and likeness. So, even under the to-be-developed bylaws, schools still won’t be allowed to compensate students beyond paying for education-related expenses, and third parties still won’t be allowed to pay students for anything beyond endorsements and advertisements.
Eligibility Rules and the Right to Play
Beyond “pay-for-play,” the NCAA has also drawn criticism from students and media over students’ right to play, and to play for the school of their choice. Most directly, the NCAA routinely limits movement across schools by student-athletes with regards to eligibility; for example, transfer students are generally required to have a year of residence before competing, unless a waiver is granted.
The NCAA grants waivers to students in special and somewhat unique situations, including those who can demonstrate “circumstances outside of the student-athlete’s control and directly impact[ing] the health, safety, or well-being of the student-athlete,” or to students who transferred for purposes of starting graduate school.
The transfer rule restrictions and the limitations on waivers have long been subject to public question and scrutiny. Indeed, the NCAA’s waiver policy caught flak in 2019 for being both too strict and too lax: too strict, by not granting several high-profile football players’ outside-the-athlete’s-control waivers, and too lax for allowing numerous, penalty-free transfers for basketball players, under the graduate school exception.
In 2020, particular outrage can be expected over rejected outside-the-athlete’s-control waivers. Based on public information, the NCAA has rejected about one-third of all such requests over the past few years, with some rejections garnering intense scrutiny; one such example was denying a waiver for student-athlete Brock Hoffman’s move to Virginia Tech, requested in part to be closer to home following his mother’s brain surgery.
This rejection rate may even increase following a June 2019 policy amendment, which stated that future waivers will only be granted upon a showing of “extenuating, extraordinary” circumstances.
Even absent an increased rate of rejection, the debate should increase in prominence through 2020, as transfer students—and the waivers that they rely on—are taking on an increasingly high profile: Indeed, three of the four 2019 Heisman Trophy finalists (including Heisman-winner Joe Burrow) transferred from a different school within the past two years.
Post-Season Bans and Fines
Finally, 2020 likely will have continued criticism—and perhaps new legal challenges—to NCAA post-season bans and fines, which many find too harsh and arbitrarily issued. One big outrage this past year came from a post-season ban levied on the University of Missouri’s football, baseball, and softball teams.
The ban stemmed from a single tutor’s misconduct, completing coursework for 12 Mizzou players, but the resulting penalty barred over 150 students from playing in the post-season. Although the university disassociated itself with the tutor, and the 12 affected players were deemed ineligible to play college sports, the other (presumptively compliant and eligible) players on all three teams were also forced to forfeit every win in which any of the ineligible student-athletes played.
With student-athletes increasingly asserting a right to compete, many now wonder why players in compliance lose that right when other people break the rules.
Cases to Watch in 2020
After decades of deference from the courts, the NCAA may now face increased judicial scrutiny under federal antitrust law. Although the Sherman Act prohibits “[e]very contract, combination … or conspiracy in restraint of trade or commerce,” in the past the NCAA’s various contracts, rules, and regulations—which dictate and restrain nearly every aspect of the market for college sports—have, in large part, avoided antitrust challenge.
In 1984 the U.S. Supreme Court ruled that, although it could not restrict member-schools’ television broadcasts, the NCAA is exempt from many antitrust considerations, because the NCAA’s “restrains on competition are essential if [college sports are] to be available at all.” See NCAA v. Bd. of Regents of the University of Oklahoma.
This exemption has recently come under fire, not only in California, but also within the Justice Department. When the NCAA initially held the position that it would forbid the participation of California student-athletes asserting NIL compensation rights, DOJ Antitrust Chief Makan Delrahim made clear that his staff is giving close attention to how the NCAA is handling college-athlete compensation issues.
With the door opening toward NIL athlete compensation, there may be a resurgence in litigation surrounding how that compensation should be administered and reopening arguments for other basis for pay, including claims under state and federal wage laws.
Although the law is clear that student-athletes are not employees, the introduction of compensation may push some courts to further evaluate that precedent. This has import for a recent case in late 2019, involving a former Villanova University football player who filed suit alleging that the NCAA and member schools violated federal minimum wage law. See Johnson v. NCAA, No. 2:19-cv-5230 (E.D. Penn.).
In any event, 2020 will involve a considerable discourse both at the NCAA governance level and with federal and state legislators, to clarify the student-athlete compensation issue.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Tyrone Thomas is a member and co-chair of Mintz’s Sports & Entertainment Practice focused on legal issues pertaining to intercollegiate athletics and professional sports. He has 20 years of experience advising on highly sensitive issues involving college athletics programs, including the NCAA infractions process, conference and head coaching contracts, FERPA, and Title IX participation requirements.
Keith Carroll is a member and co-chair of Mintz’s Sports & Entertainment Practice. He is a nimble and active trial attorney who works strategically with public, private, and closely-held companies, as well as individuals and boards, across many industries, to help them win their most complex, mission-critical business disputes and to resolve other high-profile and high-stakes matters.
Randy K. Jones is a member in Mintz’s Litigation Practice and a go-to counselor for executives and companies who need top-caliber trial counsel. He represents clients in complex business disputes, corporate internal investigations, government contract fraud cases, regulatory compliance, white collar criminal and sports law matters.
Aaron Fenton is an associate in Mintz’s Litigation Practice, serving clients in the financial services and real estate sectors, among others, and has experience working with legal issues involved in professional and collegiate sports.