The Student-Athlete Compensation Saga: NCAA v. Alston heard before U.S. Supreme Court

The height of college basketball’s “March Madness” provided a fitting backdrop as on 31 March the U.S. Supreme Court heard arguments over whether current limits on the compensation of college athletes are consistent with U.S. antitrust law.

College sports in the U.S. generated approximately $18.9 billion in 2019. The National Collegiate Athletic Association (the NCAA) is the governing body responsible for regulating student-athletes and organising athletic programs at colleges and universities across the U.S. Under NCAA rules, student-athletes are considered “amateurs” and schools may offer scholarships for student-athletes up to the full value of the cost of attendance. However, the NCAA does not allow for any type of additional compensation to be paid to these athletes.

U.S. Antitrust Law Tests the Limits of “Amateurism”

Under U.S. antitrust law, businesses cannot unreasonably restrain trade. This includes a prohibition on fixing wages for a labour market. Shawne Alston, a former college football player, brought suit against the NCAA and the “Big Ten” (one of the most prominent athletic conferences in the NCAA), arguing that the NCAA and member schools were violating federal antitrust law by agreeing to limit compensation to student-athletes to the cost of attendance. The NCAA responded with a familiar defence: college athletics are a distinct product from professional sports, differentiated by virtue of its amateurism (i.e. lack of professional compensation). The NCAA further argued that competition in college sports would be at risk if schools were able to wage bidding wars over student-athletes and that administering a compensation system would be untenable, giving rise to endless litigation over wages that courts would ultimately have to resolve.

This case came to the Supreme Court from the Ninth Circuit Court of Appeals (an intermediate federal appellate court based in California). The Ninth Circuit ruled in favour of Alston but limited its holding to the NCCA rules that restrict academic-related compensation not included in the cost of attendance calculation, such as computers, study abroad expenses, and post-eligibility internship opportunities. The NCAA appealed to the Supreme Court, arguing that the new allowances could be “akin to professional salaries”.

The Oral Argument

For much of the hearing, the NCAA was put on defence, with both conservative and liberal justices seemingly sympathetic to the idea that the NCAA limiting academic-related compensation to student-athletes violates antitrust law.

In its arguments, the NCAA emphasized that it is an institution that, for over 100 years, has enabled amateur athletes to compete in college sports. The NCAA views its limit on academic-related compensation as necessary to uphold the principle of amateurism inherent in college sports. Otherwise, according to the NCAA, rulings such as the Ninth Circuit’s would lead to “play-for-pay,” thereby nullifying the key difference between amateur and pro sports. The NCAA stressed that it offers a procompetitive and differentiated product from professional athletics—one defined by the amateur status of its players and which can only exist through agreement among schools regarding compensation. The NCAA claimed that fans will be less interested in college athletics if they view the participants as minor league professionals instead of student-athletes representing their school.

The refs, however, appeared to call foul on these arguments left and right: Chief Justice Roberts asked how the NCAA’s view of amateurism can coincide with the fact that colleges pay up to $50,000 for $10 million insurance coverage to protect college athletes’ future earnings, while Justice Thomas highlighted the irony that some of the top coaches of these “amateur” sports teams earn salaries reaching in the millions (the Head Coach of Clemson University’s ‘Tigers’ Football program, Dabo Swinney, was reportedly the top paid college coach last year, raking in $9.3 million). Justice Alito asked the NCAA how it defends its argument of amateurism when powerhouse programs often “cast aside” their athletes once their four years of eligibility are up, reiterating evidence produced in the lower courts showing the incredible pressure student-athletes face to fully devote themselves to their sports, often at the expense of academics.

Justice Kagan continued the “full-court press,” explicitly asking the NCAA if it fixes wages, noting that competing schools have combined to form the NCAA which has “undisputed market power” and which appears to restrict compensation to its athletes at levels lower than would exist in the free market. Justice Gorsuch followed, declaring that the NCAA has monopsony control over the labour market, while Justice Kavanaugh opined that “schools are conspiring with competitors to pay no salaries to the workers who are making the schools billions of dollars, on the theory that consumers want the schools to pay the workers nothing”, a scenario Kavanaugh considered “entirely circular and even somewhat disturbing.”

There were tough questions for the Respondents as well, though they were not quite as aggressive and certainly less sweeping than the questions for the NCAA. A number of justices noted their concern over the consequences that could arise if the Court upheld the Ninth Circuit’s limitations on NCAA compensation rules, including the potential slippery slope of increased litigation over wages and the possibility that the goal of college sports could be undermined by the decision, frustrating consumer preferences. In addition, Justice Breyer voiced his apprehension over courts getting into the “business” of college sports by virtue of deciding how amateur sports should be run. To support his reasoning, Breyer explained that what the NCAA was offering “is not an ordinary product. This is an effort to bring into the world something that has brought joy and all kinds of things to millions and millions of people, and it’s only partly economic.”

Comment

Despite challenging questions for both sides, the justices certainly appeared to be tougher on the NCAA. Lines of questioning, however, do not always indicate where the Court’s eventual opinion will fall. The forthcoming opinion may be a monumental one, as this case raises important practical and policy questions. Here’s what to watch for from the sidelines:

• If the Court rules in favor of Alston, will college athletics slide down the slippery slope? This case potentially opens the door to ongoing legal battles over the compensation paid to student-athletes. The courts could ultimately become responsible for setting compensation and, as Justice Breyer fears, play an ever-increasing role in deciding how amateur sports are run.
• How will the Court’s opinion affect the future of college athletics? This opinion could have serious implications for the future of non-revenue sports, college recruiting, and the inherent inequity between various conferences within the NCAA. In addition, this decision could potentially deepen the current gender divide in a number of NCAA sports (an issue that has been highlighted in recent weeks following the disparities brought to light between the hospitalities provided in the Men’s and Women’s March Madness tournaments).
• What are the implications for U.S. antitrust law? Some of the justices appeared sceptical of the NCAA’s argument concerning the differentiated and procompetitive product offered by amateur athletics. Could the court issue a broad ruling that rejects this core justification for the NCAA’s restraints on compensation (among others)? The case also raises significant doctrinal questions concerning the appropriate application of the “rule of reason,” particularly as applied to joint ventures in markets with unique characteristics (e.g., the NCAA’s monopsony power in the market for student-athletes). It will be interesting to see what the Court chooses to address in its forthcoming opinion, expected later this year.

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