In one of the most significant sports law decisions in U.S. history, the U.S. Supreme Court on Monday ruled unanimously against the NCAA in NCAA v. Alston. Justice Neil Gorsuch authored the opinion, with Justice Brett Kavanaugh authoring a concurring opinion where he advocated for a broader rebuke of NCAA amateurism.
In affirming a 2020 ruling by the U.S. Court of Appeals for the Ninth Circuit, all nine of the justices concluded that the NCAA and its more than 1,200 member schools and conferences are in violation of Section I of the Sherman Antitrust Act by agreeing to limit how much each can compensate athletes for academic-related costs. The Ninth Circuit had affirmed a ruling by U.S. District Judge Claudia Wilken, who, following a 10-day bench trial in 2018, held in favor of the class led by former West Virginia running back Shawne Alston.
At issue are limitations on how schools and conferences reimburse or pay athletes for computer costs, study abroad programs, internship opportunities, scholarships to attend vocational schools and other academic-related expenses. Pursuant to the Supreme Court’s holding, NCAA rules on these topics will require modification or outright excision.
When it began eight years ago, the Alston case threatened far more dramatic changes. The case challenged NCAA caps on compensation of athletes, with the idea that schools act as a cartel in limiting how much each can pay. To illustrate, if major college programs had been able to compete for recruits Zion Williamson or Trevor Lawrence by offering them market value scholarships, the duo would have reaped the benefits of the competition. Perhaps they would have secured scholarships worth hundreds of thousands or even millions of dollars—much like the riches awarded to coveted free agents in pro leagues. That possibility ended when Judge Wilken and the Ninth Circuit held that the NCAA can lawfully restrict athletics-related expenses. However, the courts also held that the NCAA violates the law by restricting expenses that are “tethered” to academics.
Also important: Alston is not about obligating schools to spend more on athletes in the context of academic-related expenses. Rather, the ruling provides schools with the discretion to do so. To that end, schools will soon more freely vie with one another for athletes, just like they compete—and sometimes outbid—for coaches, staff, faculty, fundraising, admissions, media attention and numerous other targets. If a college doesn’t wish to reimburse a higher dollar amount for academic-related expenses, it need not take any action. The school might become less attractive to recruits, especially if comparable schools choose to reimburse. But that’s how competition works.
The most consequential impact of Alston is likely to be felt in the years ahead. The ruling repudiates a long-standing NCAA argument that it is owed favorable treatment under federal antitrust law. Particularly from the lens of precedent, the NCAA likely regrets appealing the Ninth Circuit’s ruling to the Supreme Court. That decision led to this new precedent, which will govern the relationship between antitrust law and college sports for decades ahead.
Attorneys representing the NCAA have consistently invoked the U.S. Supreme Court’s 1984 ruling in NCAA v. Board of Regents, wherein Justice John Paul Stevens opined the NCAA enjoys “ample latitude” under antitrust law when setting amateurism rules that pertain to college athletes. The hurdle for NCAA attorneys in Alston, as stressed by Justice Kavanaugh during the oral argument in March, is that Justice Stevens’ language was “dicta.” This means it was commentary not essential to the holding—the NCAA actually lost the Board of Regents case—and lacks the same degree of precedential impact. To that point, Justice Gorsuch emphasized in the Court’s opinion that, “Student-athlete compensation rules were not even at issue in Board of Regents.”
While it is subject to further proceedings, the Alston ruling will serve as the definitive, precedential commentary for courts to apply in antitrust challenges to NCAA rules. Going forward, other antitrust challenges against NCAA rules will invoke Alston for support. For example, if high school athletes challenged NCAA recruiting restrictions, Alston would likely serve as precedent even though it concerned college athletes. This is because Alston establishes the NCAA is subject to the normal rigors of antitrust scrutiny and, in the context of Alston’s case (as well as Ed O’Bannon’s case), failed to pass such scrutiny.
Expect future litigants to draw from both Justice Gorsuch’s opinion and Justice Kavanaugh’s concurring opinion, the former of which is precedent while the latter is “only” persuasive authority.
Writing for the entire Court, Justice Gorsuch offered deep skepticism about the “amateur label” of college sports. He highlighted the high salaries of those who oversee so-called amateur athletes. “Those who run this enterprise,” Justice Gorsuch stressed, “profit in a different way than the student-athletes whose activities they oversee. The president of the NCAA earns nearly $4 million per year.” He also underscored the million-dollar salaries paid to conference commissioners, college athletic directors, coaches and assistant coaches. Justice Gorsuch further stressed that “amateurism” is not a static idea and has changed considerably over the years. This made him less convinced that “amateurism” is crucial to the appeal of college sports to fans and consumers.
Justice Gorsuch also rejected NCAA worries about schools and conferences obtaining discretion to determine appropriate education-related benefits. He emphasized the NCAA can continue to forbid compensation from sneaker companies, car dealerships and boosters as part of rules that forbid payment for athletic performance (note: such compensation might be available to colleges athletes through name, image and likeness reforms, where athletes could sign endorsement deals with certain categories of third parties). He added that the NCAA can also still block “phony internships” and still ensure that any internships must relate to “legitimate educational activities.” Justice Gorsuch simply didn’t buy the parade of terribles the NCAA was selling.
In addition, Justice Gorsuch didn’t see the basis for NCAA worries about Judge Wilken’s order regarding the financial awards schools may provide for academic (such as GPA) or graduation achievement. She held they cannot be set to an amount not lower than the level for parallel athletic awards (currently, $5,980 and subject to increases in the years ahead). The NCAA had claimed these financial awards are tantamount to pro athlete salaries. However, Justice Gorsuch concluded these awards are clearly not salaries and have nothing to do with consumer demand or other justifications proffered by the NCAA.
Lastly, Justice Gorsuch dismissed NCAA concerns about in-kind educational benefits that might become a means by which to provide athletes with luxury cars and other items that lack any plausible relationship to academics. Gorsuch essentially told the NCAA to not worry. “Nothing,” Gorusch wrote, “stops the NCAA from enforcing a ‘no Lamborghini’ rule.” He added that the NCAA can seek clarification from Judge Wilken (hence, this case is subject to future proceedings).
Meanwhile, Justice Kavanaugh appears to hope that NCAA amateurism is sacked altogether. In his concurring opinion, the devoted fan of Yale athletics blasted the NCAA’s business model as one “that would be flatly illegal in almost any other industry in America.” He asked readers how they would feel if (1) law firms conspired to limit salaries “in the name of providing legal services out of a ‘love of the law’; (2) if hospitals could band together to limit nurses salaries “in order to create a ‘purer’ form of helping the sick; or (3) if media companies curtailed salaries to reporters on grounds that doing so would protect the “tradition” of “public-minded journalism.” Justice Kavanaugh described all of those strategies in the same vein as NCAA amateurism: “price-fixing labor is price-fixing labor” and doing so “extinguishes the free market in which individuals can otherwise obtain fair compensation for their work.”
In a statement, the NCAA tried to put a positive spin. It noted, accurately, that the Supreme Court’s ruling “reaffirms the NCAA’s authority to adopt reasonable rules” and finds “the NCAA remains free to articulate what are and are not truly educational benefits.” Left unsaid in the statement is that the Court rejected the NCAA’s legal arguments and, by clarifying that NCAA rules are subject to ordinary antirust scrutiny, has opened the door to further litigation.
The ruling is not a major surprise. During the oral argument in March, a majority of the justices expressed varying degrees of hostility toward arguments expressed by the NCAA’s attorney, Seth Waxman.
Justice Clarence Thomas, for example, wondered, “Is there a similar focus” about coaches’ salaries “that have ballooned?” Meanwhile, Justice Samuel Alito opined that athletes at top programs often appear to be “used up and cast aside,” and Justice Elena Kagan repeatedly asked why the NCAA and its members engage in price fixing, meaning (in this context) joining hands to limit potential compensation for athletes. The harshest NCAA critic was Justice Kavanaugh, who in blistering remarks demanded answers for “the exploitation of the student athlete.”
The Supreme Court’s ruling arrives at an already tumultuous period for “amateurism,” the NCAA’s system of rules that attempt to distinguish college athletes from pro athletes by denying the former from opportunities for compensation. Nineteen states have adopted name, image and likeness statutes that, as a general matter, will make it illegal under state law for colleges to deny their athletes opportunities to sign endorsement and sponsorship contracts. As of this writing, six of those statutes will go into effect on July 1.
A sometimes overlooked point is that while both Alston and NIL fall under the catch-all label “sports law” they involve very different areas of law. The former is a federal antitrust law controversy, while the latter focuses on mostly state law applications of intellectual property law (more precisely, the right of publicity). Whether the NCAA won or lost, Alston would not change NIL reforms. Alston and NIL are nonetheless linked in that they, and other amateurism topics, are governed by NCAA rules. Alston and NIL laws can, and will, compel changes to those rules.
NIL is also unresolved. As previously explained on Sportico, the NCAA could challenge NIL statutes in court and seek restraining orders—moves that might delay NIL but also increase friction between the NCAA, member schools and athletes. Congress could also pass a federal NIL bill that would preempt state NIL statutes. However, if Congress takes any action on NIL, it would not occur until after July 1.
Monday’s ruling is a decisive victory for Alston’s attorneys, led by Jeffrey Kessler, David Greenspan and David Feher of Winston & Strawn. It also caps the more than dozen-year effort for college sports reforms driven by O’Bannon and college athlete advocate Sonny Vaccaro.
“This is a great day for college athletes,” O’Bannon told Sportico on Monday. “They deserve this and much more.” O’Bannon, who defeated the NCAA in in an antitrust case involving the unauthorized use of college athletes’ likenesses in video games, added, “It also feels good to see the NCAA held accountable by the U.S. Supreme Court.”
If the NCAA seeks the kind of deference from antitrust law it believes it is owed, it could adopt the approach that attorney (and Boston Celtics executive) Mike Zarren wryly suggested as a hypothetical on Twitter: The NCAA could advocate for players to be declared as employees, which would allow them to unionize and, with their schools and conferences, enter into collective bargaining agreements, the terms of which would be exempt from antitrust scrutiny. Of course, the NCAA has been firmly opposed to such an idea.
For now, at least, it’s open season in the courts on NCAA amateurism rules and references to the Alston ruling will appear early and often in future lawsuits.
