Supreme Court Affirms that College Sports are Subject to Federal Antitrust Laws
In March 2019, Bay area U.S. Senior (and former Chief) District Judge Claudia Wilkin blocked the NCAA (National Collegiate Athletic Association) from enforcing limits on valuable “educational benefits” given to top college football and basketball athletes. Yesterday, the U.S. Supreme Court unanimously affirmed Judge Wilkin’s careful and nuanced injunction, entered after an “exhaustive trial [and] decision” encompassing a “vast record” compiled over six years of litigation. The bottom line is that college sports associations, no different than any other groups that have monopoly control over a “market” (here, “amateur” college athletes) cannot act unreasonably to restrain competition for the services of their “laborers.” Top college athletes, and the colleges that recruit them, will now be able to “compete” for, and receive or provide, more monetary benefits — at least (for now) if they are “education related.”
Does yesterday’s decision in NCAA v. Alston mean that all limits on college athletes are off, and that the top competitors will soon be paid salaries and receive lucrative product endorsement contracts, rivaling what they could earn in the NFL or NBA? Such monetary boons are currently forbidden by the NCAA for its members athletes. And for now, the answers to such questions remains unsettled; yesterday’s ruling was limited to “education-related” benefits. But Justice Kavanaugh, a well-known sports fan and youth sports coach, wrote separately while joining Justice Gorsuch’s 36-page “excellent” opinion for the Court “in full.” Her concurred to “underscore that the remaining [NCAA] compensation rules also raise serious questions under the antitrust laws.” No one on the Court expressed disagreement with Justice Kavanaugh’s assessment; only the parties’ concessions in this particular case prevented the Court from addressing the even-larger concerns. Undoubtedly, yesterday’s decision means that the college athletics game (to coin a phrase) is going to change.
The Sherman Antitrust Act was adopted by Congress in 1890 and it directly, if somewhat vaguely, bans “combinations in restraint of trade or commerce.” A vast amount of law has developed over the past 130 years to define and direct judicial supervision of this concept; antitrust lawyers (and economists) on all sides of the diverse and complicated issues remain in high demand (students, take note!). Much of that law was not in dispute in this case; the NCAA argued merely that is rules limiting athlete compensation are “reasonable” and necessary to preserve the unique “amateur” status of college athletics, which consumers want (they argued) to differentiate that market from professional sports. But yesterday’s opinion affirmed that a detailed and specific “rule of reason” approach applies – no “quick look” saves the NCAA — and that the district court’s careful and limited injunction was “significantly less restrictive” on free trade than the NCAA’s limits. Meanwhile, the plaintiff-athletes did not challenge (at the Supreme Court level) the limits on non-educational benefits (that is, prohibiting the payment of straight salaries to college athletes or allowing them to make millions in product endorsements). Undoubtedly, those further limits, left in place for now, will now be tested and challenged. Yesterday’s decision was the beginning, not the end, of transformations still to come.
Justice Gorsuch’s opinion is full of interesting history, as well as eye-opening facts about the financial realities of college sports today. Even in the 19th century, inter-collegiate sports competitions were sponsored by railroad companies and other businesses. “Paid ringers” populated college teams for “cameo appearances” while moving from team to team, and college football because “extremely violent,” with dozens of fatalities – that’s right, deaths — each year. The NCAA was formed as early as 1906 to set standards, and it quickly adopted “amateurism” – that is, student-athletes receiving no “money or financial concession” – as the governing ethic. But this did not stop the influence of money to attract the best athletes, who in turn attracted the most spectators and furthered business interests. A famous University of Washington halfback reportedly said in 1946 that he was being paid so much that “I can’t afford to graduate.”
Increasingly since then, the NCAA has tried to regulate benefits given to athletes without banning them – allowing payment for scholarships, books and supplies and “incidental fees,” travel expenses, and “achievement awards.” Revealingly, the NCAA today allows college to pay even “loss-of-value” insurance premiums, which quietly acknowledges how much money top college athletes could make in some sports if they turned “pro.”
Meanwhile, “the NCAA has become a sprawling [business as well as regulatory] enterprise.” Its broadcast contract for the annual national basketball championship tournament is $1.1 billion. And everyone except the athletes makes big money. The President of the NCAA is paid almost $4 million a year. Top Division 1 football coaches make $11 million per year; even some assistant coaches make over $2.5 million. Division conferences and colleges make millions of dollars every year in broadcast rights.
Yes these athletic revenues help support valuable academic and research programs at many colleges. And yet, as Justice Kavanaugh points out in his concurrence, there is a racialized impact to the imbalance in which the top athletes are paid little by comparison. “[T]he student athletes who generate the revenues, many of whom are African-American and from lower-income backgrounds, end up with little or nothing.” For this obvious, but little-discussed proposition, Justice Kavanaugh cited an Amicus Brief for African-American Antirust Lawyers (again, students take note!). And he warned (as the Court said last June about the U.S. President), “the NCAA is not above the law.”
The last half of Justice Gorsuch’s 36-page opinion for the Court is full of detailed discussion of specific antitrust doctrine, interesting and important for lawyers and judges in the area, but beyond my space or expertise here. I commend it to you in full. But lawyers of a certain age may well recall the Supreme Court’s 1972 opinion in Flood v. Kuhn, which endorsed complete exemption from the antitrust laws for Major League Baseball (an opinion itself based on Justice Oliver Wendell Holmes’s 1922 opinion that found (clearly wrong, today and then) that professional baseball was not “commerce.”) Justice Harry Blackmun rapped rhapsodically on “the national pastime,” quoting baseball poetry and literature and listing 83 “celebrated players.” In 2021, Justice Gorsuch’s tone is much different, reviewing the “complex business relationships” of the NCAA rather than the thrills and joys of college sports. And he endorses the “thoughtful legal analysis” and “healthy dose of judicial humility” exhibited by District Judge Wilkin, and by extension the Ninth Circuit (a Circuit not often affirmed by today’s conservative Court). Future litigation over the NCAA’s remaining rules is unavoidable, and yesterday’s Alston opinion represents the Justices unanimously opening up that complex, lawyering, future. Or as umpires like to say to begin an event: “Play Ball!”