In NCAA v. Alston, the U.S. Supreme Court held unanimously that the National Collegiate Athletics Association cannot restrict certain education-related benefits schools may offer student-athletes.
A group of current and former student-athletes sued the NCAA claiming its rules limiting education-related benefits violate the Sherman Act, which prohibits “contract[s], combination[s] or conspiracy[ies] in restraint of trade or commerce.” The NCAA, which regulates student-athlete compensation, limits scholarships for graduate or vocational school, payments for academic tutoring, and paid post-eligibility internships.
In an opinion written by Justice Neil Gorsuch, the high court agreed with the federal district court that these limits violate federal antitrust law. To decide the case, the district court applied the “rule of reason” test, which is intended to “distinguish between restraints with anticompetitive effect that are harmful to the consumer and restraints stimulating competition that are in the consumer’s best interest,” the court wrote.
“Per the rule of reason, the plaintiff (student-athletes in this case) must prove the restraint has a substantial anticompetitive effect. If the defendant (here the NCAA) can make that showing, the burden shifts back to the plaintiff to demonstrate that the procompetitive efficiencies could be reasonably achieved through less anticompetitive means.”
The district court concluded education-related benefits couldn’t be “confused with a professional athlete’s salary.” So, disallowing caps on them “would be substantially less restrictive than the NCAA’s current rules and yet fully capable of preserving consumer demand for college sports.”
The NCAA offered numerous general objections to how the district court reached its conclusion, all of which the Supreme Court rejected. The NCAA argued that the Supreme Court should give the caps a “quick look” rather than applying the more rigorous rule of reason, that the lower court applied the rule of reason analysis incorrectly, and that Supreme Court precedent is in its favor.
The NCAA also offered three specific objections to the district court’s holding the education-related benefits cap violated antitrust law.
First, the NCAA was concerned that schools will use internships “as a way of circumventing limits on payments that student-athletes may receive for athletic performance.” But following the district court opinion, the NCAA adopted a rule only allowing a “conference or institution” (rather than a sneaker company or auto dealership, for example) to fund posteligibility internships.
Second, the NCAA objected to the district court’s ruling that aggregate limits on “academic or graduation” achievement awards must be no lower than aggregate limits on athletic awards (currently $5,980 per year). According to the court, the NCAA “does not believe that the athletic awards it presently allows are tantamount to a professional salary.”
Finally, the NCAA was concerned that allowing schools to offer scholarships for graduate degrees or vocational school and to pay for things like computers and tutoring might lead to schools giving student-athletes “luxury cars” “to get to class” and “other unnecessary or inordinately valuable items” only “nominally” related to education. The court disagreed this would be possible, noting “the NCAA is free to forbid in-kind benefits unrelated to a student’s actual education; nothing stops it from enforcing a ‘no Lamborghini’ rule.”
It is noteworthy that the high court didn’t review the lower court’s additional holding in this case rejecting the student-athletes’ challenge to NCAA rules that limit athletic scholarships to the full cost of attendance and that restrict compensation and benefits unrelated to education. The student-athletes didn’t ask the Supreme Court to review that holding.
Interestingly, Justice Brett Kavanaugh wrote a brief concurring opinion “to underscore that the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws.”
Lisa Soronen is executive director of the State and Local Legal Center and a frequent contributor to State Legislatures News and the NCSL Blog on judicial issues.