Written By: Kord Wilkerson
In NCAA v. Alston, the United States Supreme Court sought to even the playing field between college athlete compensation and the National College Athletic Association’s (NCAA) regulatory power. College sports are a long-standing tradition dating back to the mid-nineteenth century, and student-athletes have become an integral part of American universities’ culture, identity, and economy. Not only do these athletes create revenue for universities through ticket sales and endorsements, but the NCAA brings in over one billion dollars annually through revenue from its television segments and marketing fees. Unfortunately, the NCAA generates this income while at the same time strict rules regulating athletes’ amateur status, prevent the athletes from being compensated.
However, in the past decade, current and former student-athletes started challenging the NCAA’s regulating stronghold in O’Bannon v. NCAA. For example, in 2014, student-athletes filed a class-action lawsuit in California, asserting that the NCAA and its colleges profited from student-athletes’ names and likeness through video games without athlete compensation. The Ninth Circuit’s decision in O’Bannon forced the NCAA to end its practice of barring universities from offering full cost-of-attendance scholarships and cost-of-living expenses to athletes previously disallowed by scholarship rules.
After O’Bannon, multiple other class-action lawsuits were filed against the NCAA, which ultimately led the Supreme Court to consolidate these cases. They granted certiorari to NCAA v. Alston in December of 2020.
Getting to the Supreme Court: How did we get here?
In 2014, West Virginia running back Shawn Alston and University of California’s center Justine Hartman filed an action against the NCAA alleging a violation of the Sherman Act. The Sherman Act prohibits unreasonable restrictions on competition. For sports law cases, courts use a three-part “rule of reason” test to determine if the restraint is unreasonable. In applying the “rule of reason” test, the district court found that the NCAA’s eligibility rules violated antitrust regulation. The court noted that the NCAA has “near-complete dominance of, and exercises monopoly in, the relevant market.” With this monopoly on college athletics as well as the lack of “viable substitutes,” the district court found that the NCAA’s compensations limits “produce significant anticompetitive effects in the relevant market.” Because of this finding, the district court instituted an injunction that took effect in August of 2020.
Dissatisfied, student-athletes argued that the district court did not go far enough. In their eyes, all of NCAA’s compensation limits, even those not related to education, should have been included in the court’s injunction. On the other hand, the NCAA argued that the district court went too far by weakening its education-related benefits and compensation restrictions. However, the Ninth Circuit affirmed in full, explaining that “the district court struck the right balance in crafting a remedy that both prevents anticompetitive harm to Student-Athletes while serving the procompetitive purpose of preserving the popularity of college sports.”
The Supreme Court
In the June 2021 case NCAA v. Alston, the Supreme Court reached a unanimous decision regarding college athletes’ compensation within the NCAA. Authored by Justice Gorsuch, the Supreme Court affirmed the U.S. Court of Appeals for the Ninth Circuit’s opinion that the NCAA and its 1,200 member schools and conferences violated Section I of the Sherman Antitrust Act.
This decision, however, was limited to the question raised and considered by the U.S. District Court and the Ninth Circuit Court of Appeals of whether the NCAA can restrict these education-related benefits for student-athletes.
To that end, the NCAA maintained that the lower courts should have analyzed its rules regarding compensation under an “extremely deferential standard” because college sports are a unique product and require collaboration between members as a joint venture to function properly. However, the Supreme Court found that the district court’s injunction on NCAA’s compensation cap of education-related benefits to be “consistent with established antitrust principles.” Moreover, the Court found the district court’s injunction to preserve leeway for the NCAA and allow its members, the individual conferences, to remain free to impose any rules they choose. Therefore, colleges and universities are permitted to recruit athletes with additional benefits, provided that the benefits are related to educational expenses.
In his concurring opinion, Justice Kavanaugh highlighted the uncertain future of the NCAA’s other compensation restrictions. For example, he noted that the NCAA’s broader rules against pay-for-play are likely to be subject to, and may not stand against, the same “rule of reason” analysis, leaving the future open to further litigation.
The Future of College Athletics
Although Alston dealt explicitly with the narrow question of academic-related expenses, it opened the door for future cases involving NCAA’s compensation restrictions for non-academic costs. Specifically, Justice Kavanaugh’s concurring opinion noted that this decision was of “narrow focus” and stated that “the remaining compensation rules should be subject to the ordinary rule of reason scrutiny.” Essentially, Kavanaugh laid the groundwork and notified the NCAA that the rules regarding student-athletes’ name, image, and likeness might not pass under such scrutiny.
Because of this, college athletes have begun taking their name, image, and likeness into their own hands. For example, Alabama’s potential starting quarterback, Bryce Young, has allegedly signed deals worth more than $800,000. With this new aspect of athlete compensation, the Supreme Court’s Alston decision creates an uncertain future for college athletics.