On June 21, 2021, the United States Supreme Court unanimously ruled that college athletes are eligible to receive unrestricted education-related payments – a landmark decision that could act as the catalyst for change with respect to college athletes' rights.
The case involved National Collegiate Athletic Association (the "NCAA") rules that place limits on educational benefits for college athletes, such as post-eligibility scholarships, graduate or vocational school scholarships, and academic tutoring. The plaintiffs, present and former student-athletes in men's Division 1 Football Bowl Subdivision and men's and women's Division 1 basketball, brought an antitrust lawsuit challenging the NCAA's rules that limit the compensation they may receive in exchange for their athletic services. The plaintiffs alleged that the NCAA's rules violated §1 of the Sherman Act, which prohibits contracts, combinations, or conspiracies in restraint of trade or commerce. 15 U. S. C. § 1. The NCAA argued, in essence, that its rules preserve amateurism, which widens consumer choice by providing amateur college sports as distinct from professional sports. The Supreme Court noted that the key facts in the case were undisputed – the NCAA has rules regarding compensation limits for student-athletes; the NCAA enforces these limits on schools; and the compensation limits affect interstate commerce.
Following a bench trial, the United States District Court for the Northern District of California rejected the challenge to the NCAA rules that limit undergraduate athletic scholarships to the cost of full attendance and that restrict other compensation and benefits unrelated to education; however, the district court enjoined certain NCAA rules which limit the education-related benefits that college athletes may be eligible to receive based on violation of antitrust laws. The district court found that easing the restrictions on education-related benefits would not blur the distinction between college and professional sports and impair demand, as argued by the NCAA. After both sides appealed, the Ninth Circuit Court of Appeals affirmed the district court's ruling. Thereafter, the case made its way to the Supreme Court, where the NCAA hoped to obtain a ruling that all of its restraints on athlete compensation survive antitrust scrutiny. The Supreme Court considered only the NCAA rules that limit education-related benefits that schools may make available to college athletes.
In the majority opinion, written by Justice Neil Gorsuch, the Supreme Court detailed the history and evolution of rules regarding college athlete compensation and the scope of the NCAA. Over time, the NCAA expanded the scope of college athlete compensation to include tuition, room, board, books, fees, and cash for incidental expenses, such as laundry. The decision notes that in 1974, the NCAA began allowing paid professionals in one sport to compete on an amateur basis in another, and in 2014, the NCAA permitted member schools to increase scholarships to the full cost of attendance. College athlete compensation continues to develop and change, including the creation of the "Student Assistance Fund" to "assist student-athletes with special financial needs," and the "Academic Enhancement Fund" which "enhances academic-support programs at Division 1 member institutions." These funds commonly cover educational needs, including tutorial services, equipment, and school supplies, as well as other needs not related to education, such as clothing and travel expenses.
In a unanimous decision, the Supreme Court affirmed the district court's injunction, finding it was consistent with established antitrust principles. The court noted that by permitting colleges to offer education-related benefits, the district court's decision may encourage academic achievement and allow college athletes to receive compensation more consistent with the value they bring to their schools. Nevertheless, the court pointed out that this could be seen as a poor substitute for more complete relief. The court also suggested that others may believe the district court went too far by undervaluing the social benefits associated with amateur sports. At the end of the day, the court's task is simply to review the district court ruling through antitrust law.
However, Justice Brett Kavanaugh's concurring opinion suggests that the court recognizes that there are serious questions related to the NCAA's remaining compensation rules and restrictions on payments to college athletes. The concurring opinion points out that no other businesses can get away with agreeing not to pay their workers a fair market rate based on the theory that their product is defined by not paying their workers a fair market rate, and it is not clear why college sports should be any different.
The Supreme Court's ruling raises legal and policy questions, which will realistically be resolved and addressed through both litigation and legislation. The language of the opinion issued by the court leaves the door open to potential challenges to other NCAA compensation rules for college athletes. In light of this fact, one would anticipate an increase in claims and/or lawsuits made by college athletes to contest other NCAA compensation rules and the NCAA's amateur versus professional distinction as a whole.
In addition to litigation, various bills have been introduced in Congress to address college athlete monetary compensation, as well as health and safety standards and name, image, and likeness rights. One such bill is the College Athletes' Bill of Rights, introduced by Senators Corey Booker (D-NJ), Richard Blumenthal (D-CT), Kirsten Gillibrand (D-NY), and Brian Schatz (D-HI), in December 2020. Given the Supreme Court's decision, the door is open for Congress to take action to further the progress made for college athletes nationally and to continue the conversation regarding legislative efforts to protect student-athletes' rights, including possible further expansion of monetary compensation. In fact, in the recent wake of the Supreme Court decision, on June 30, 2021, the NCAA board of directors, including governance bodies in all three divisions, adopted a uniform interim policy suspending NCAA name, image, and likeness ("NIL") rules and restrictions for student-athletes. This means that college athletes will – for the first time – be able to be paid for the use of their names, images, and likenesses on licensed apparel, video games, etc. As an example, Wisconsin quarterback, Graham Merz, has already released his own trademarked personal logo built around his initials that will be used on various apparel. Auburn quarterback, Bo Nix, has already announced a sponsorship deal with Milo's sweet tea. Nebraska volleyball player, Lexi Sun, has already announced a new business related to the sport of volleyball.
According to the NCAA, the new interim policy will remain in place until federal legislation or new NCAA rules regarding the same are implemented. Some states have already codified name, image, and likeness laws, but for states without them, student-athletes are able to participate in such activities, and colleges could adopt their own policies regarding engagement. The interim policy shows yet another shift in college athletes' rights, and it has the potential to promote additional work in Congress to develop legislation and an enduring solution that would apply nationwide.
The Supreme Court decision is a leap for college athletes as it expands their access to unrestricted education-related payments. It represents another step toward expanded rights, protections, and opportunities for student-athletes. However, the NCAA continues to have authority to promulgate rules and to define what truly constitutes educational benefits.
References
National Collegiate Athletic Association v. Shawne Alston, et al., 594 U.S. ___ (2021), available at https://www.supremecourt.gov/opinions/20pdf/20-512_gfbh.pdf.
Distributions, NCAA.org, https://www.ncaa.org/about/resources/finances/distributions (last visited July 1, 2021).
Michelle Brutlag Hosick, NCAA adopts interim name, image and likeness policy, NCAA.org (June 30, 2021), https://www.ncaa.org/about/resources/media-center/news/ncaa-adopts-interim-name-image-and-likeness-policy.
NIL era likely to offer big money for top athletes, something for everyone, Sports Bus. J. (July 1, 2021), https://www.sportsbusinessjournal.com/Daily/Issues/2021/07/01/Colleges/NIL-athletes.aspx.
Charles F. Gfeller is a Partner and Olivia C. Tawa is an Associate with the law firm of Gfeller Laurie LLP. Their legal practices focus largely on the representation of sports and recreational operators, including colleges and universities with respect to their sports and recreational operations, providing both risk management and litigation services. They may be reached at [email protected] and [email protected].
The views above are the author's own.