SCOTUS Holds That NCAA’s Business Model Violates Antitrust Laws

The Supreme Court only announced three decisions on Monday, leaving 12 cases yet to be decided.

One decision, while decided only on the narrow issue before the court, carries with it a concurring opinion by Justice Kavanaugh which is a roadmap to future litigation by college student athletes to challenge the NCAA under antitrust laws. College student athletes may very soon be paid to play (they generate millions of dollars in revenue for their universities and the NCAA).

Amy Howe at SCOTUSblog reports, In unanimous ruling, Court agrees with athletes that NCAA violated antitrust laws:

The Supreme Court on Monday upheld a major shift in the relationship between universities and the athletes who play sports for those schools. In an opinion by Justice Neil Gorsuch, the justices unanimously affirmed a lower-court decision holding that the NCAA, the umbrella group that regulates college sports, cannot restrict benefits related to education, such as free laptops or paid post-graduate internships.

Monday’s decision in NCAA v. Alston ended a dispute that began seven years ago as a class action filed against the NCAA and the major athletic conferences by the athletes who play Division I football and basketball. The athletes contended in their complaint that the NCAA’s restrictions on eligibility and compensation violate federal antitrust laws by barring the athletes from receiving fair-market compensation for their labor. A federal district court in California agreed in part: It ruled that the NCAA could restrict benefits that are unrelated to education (such as cash salaries), but it barred the NCAA from limiting education-related benefits. After the U.S. Court of Appeals for the 9th Circuit upheld that decision, the NCAA and the athletic conferences went to the Supreme Court, which late last year agreed to take up the case.

In a 35-page decision, Gorsuch rejected the NCAA’s argument that the trial court’s ruling would “micromanage” the organization’s business. The district court, Gorsuch explained, only barred the NCAA from imposing restraints on benefits related to education. And it did so, Gorsuch added, only after concluding that “relaxing these restrictions would not blur the distinction between college and professional sports and thus impair demand for college sports” – a cornerstone of the NCAA’s argument. Moreover, Gorsuch noted, the district court gave the NCAA “considerable leeway” in deciding how to define what constitutes an education-related benefit.

In his final paragraph, Gorsuch outlined the dilemma facing the court. Some people may think that the district court should have gone further, he suggested, while “others will think the district court went too far by undervaluing the social benefits associated with amateur athletics.” But in the end, Gorsuch emphasized, the Supreme Court agreed with the 9th Circuit that although “[t]he national debate about amateurism in college sports is important,” it is not the Supreme Court’s job to resolve it. Instead, Gorsuch observed, the court’s job is to determine whether the district court properly applied principles of antitrust law to this dispute – which, Gorsuch concluded, it did.

Justice Brett Kavanaugh joined the court’s opinion in full, but he also wrote a separate concurring opinion in which he questioned the legality of the remaining restrictions on benefits for college athletes. He made clear that although those restrictions were not before the court in this case, Monday’s ruling established a framework for future challenges to the restrictions – and, he wrote, there are “serious questions” about whether those rules “can pass muster” under that framework. Kavanaugh, an avid sports fan who coaches his daughters’ basketball teams and unsuccessfully tried out for the varsity basketball team while an undergraduate at Yale, acknowledged that college athletics includes “important traditions that have become part of the fabric of America.” But, he warned, the “NCAA is not above the law.”

Earlier this year, Gov. Gavin Newsom (D-CA) signed a bill to allow college athletes to hire agents and make money from endorsements. The measure, the first of its kind, threatens the business model of college sports. N.C.A.A. Athletes Could Be Paid Under New California Law:

It has been a bedrock principle behind college sports: Student-athletes should not be paid beyond the costs of attending a university. California threatened that standard on Monday after Gov. Gavin Newsom signed a bill to allow players to strike endorsement deals and hire agents.

Under the California measure, thousands of student-athletes in America’s most populous state will be allowed to promote products and companies, trading on their sports renown for the first time. And although the law applies only to California, it sets up the possibility that leaders in college sports will eventually have to choose between changing the rules for athletes nationwide or barring some of America’s sports powerhouses from competition.

The N.C.A.A., which has been studying the possibility of rewriting its rules on endorsements, has called the measure “unconstitutional” and said without elaboration on Monday that it would “consider next steps in California.”

Last month, Georgia Governor Brian Kemp signed a bill that would allow college athletes in his state to receive payment for the use of their name, image and likeness. The governors of Alabama, Florida, New Mexico, Mississippi and Arizona were among those doing the same. With New Law Allowing NCAA Athletes To Be Paid, Georgia Shows Dangers Of System Of Haves And Have-Nots:

In addition, NCAA president Mark Emmert told the New York Times that he wants to enact name, image and likeness (NIL) guidelines for member institutions “before, or as close to, July 1.”

More: NCAA Division I Council plans to hash out athlete pay rules in June.

That was telling—translated: The NCAA is trying to avoid legal consequences from as high as the Supreme Court—but not as much as what transpired last week surrounding the new Georgia legislation. That was a microcosm of what the pursuit and the execution of these NIL laws will do to college football: (1) The rich programs will go from rich to ridiculous; (2) the gifted recruits will sign only with schools that will help them get paid the most now through NIL guidelines and later through the NFL; (3) the head shaking will become an epidemic over the sight of quarterbacks making a bundle while defensive standouts get much less and right guards join punters and everybody else in receiving nothing at all.

As for the health of college football beyond a Notre Dame here and a Texas there, well, such a thought is going the way of the relevancy of bowl games not associated with the College Football Playoff.

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In the past, NCAA officials and others at least pretended they wanted equality throughout their athletics world.

So much for the 20th century.

It’s all about the “haves” these days.

According to the financial reports sent to the NCAA by member schools and released in February, the Georgia Athletic Association had one of the biggest surpluses in the country at more than $40 million for the fiscal year that ended June 2020.

As for other surpluses in those financial reports, Ohio State was at $23.3 million, Auburn was at $17.9 million, and Alabama was at $16.1 million.

Then there were the “have nots” and the “have almosts,” and they represented the overwhelming majority of the Division I athletic programs in the NCAA. Their deficits ranged from Virginia’s $1.5 million and Arizona State’s $10.9 million to Connecticut’s $43.5 million and UCLA’s $21.7 million.

The NCAA regulates Division I, Division II, and Division III sports. Division I are the “big money” universities, and as the report above indicates, there is a wide disparity of wealth even among the Division 1 universities.

If Brett Kavanaugh gets his way in the future, and college athletes can be paid to play college sports, this is going to create even wider disparities. The best athletes will only want to play for the wealthiest Division 1 universities who can pay them the most for their services (unless the NCAA can establish a “salary cap” to prevent a bidding war for amateur athletes). This kind of cash recruiting will inevitably lead to bribery to athletes and their high school coaches (some of this goes on now).

And does anyone really want to see Alabama and Ohio State playing in the NCAA football championship game every year?

Division II and Division III schools will have the only true student athletes, because they cannot afford to compete to pay for the elite athletes.

And how does this affect the revenue sharing among college sports programs? Revenue from men’s football and basketball programs essentially pays for most other sports programs, in particular, women’s sports programs.

A number of colleges dropped sports programs during the coronavirus pandemic due the loss of revenue. This will likely accelerate for Division II and Division III colleges, which will reduce opportunities for student athletes to attend college.