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Supreme Court cracks NCAA defense of athlete compensation rules

NCAA business model would be 'flatly illegal' in any other industry, Kavanaugh says in concurring opinion

The Supreme Court ruled unanimously Monday that college athletes can get more education-related benefits, such as computers or paid internships, knocking out a narrow slice of the NCAA’s broader “amateurism” rules that fuel ongoing debates in Congress, state legislatures and sports bars.

The justices upheld a lower court ruling that found the restriction on education-related benefits violated federal antitrust laws. And they highlighted that no one in the case questions that the NCAA has a monopoly on college sports and that its restrictions decrease compensation for athletes.

The NCAA brought the challenge and had argued that it needs the freedom to restrict such compensation to distinguish its college sports product from professional sports, and that opening the door to have courts review those rules could threaten to blur amateurs from pros.

But Justice Neil M. Gorsuch, in an opinion for the court that kept a narrow focus on how the lower court applied the law, turned aside those concerns. He wrote that in essence the NCAA “seeks immunity from the normal operation of the antitrust laws.”

Justice Brett M. Kavanaugh, in a more freewheeling solo concurrence, suggested more challenges to the NCAA’s remaining compensation rules could be successful. He wrote that “the NCAA’s business model would be flatly illegal in almost any other industry in America.”

“Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate,” Kavanaugh wrote. “The NCAA is not above the law.”

The ruling comes amid larger questions about student-athlete compensation and points out how the NCAA is a massive business, with a $1.1 billion broadcast contract for the March Madness basketball tournament, $4 million annual income for its president and multimillion-dollar salaries for football coaches.

Kavanaugh wrote that student-athletes currently have no meaningful ability to negotiate with the NCAA over the compensation rules — a topic on which Connecticut Democratic Sen. Christopher S. Murphy and Vermont independent Sen. Bernie Sanders have proposed legislation.

“The NCAA collusion machine, designed to keep college athletes impoverished so the billions in profits can be kept for a small cabal of insiders, is finally starting to crumble to pieces,” Murphy tweeted Monday.

Congress and states also are considering legislation to set rules on the bigger issue of how college athletes may be compensated for use of their name, image and likeness, or NIL for short.

A hearing at the Senate Commerce Committee this month featured state laws that could leave a problematic patchwork for how college athletes can be compensated for endorsement deals, social media and use of their images in video games.

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Chairwoman Maria Cantwell, D-Wash., closed that panel by saying, “My colleagues are ready to dig in.”

In Florida, a state law will allow college athletes to profit from their NIL starting July 1, making it the first state to do so. Other states have made similar changes.

Kansas Republican Sen. Jerry Moran has proposed a bill that would provide standards for NIL compensation for student-athletes, as have Murphy and others.

In a news release, the NCAA said the ruling reaffirms that it has the authority to adopt reasonable rules and articulate “what are and are not truly educational benefits,” but it did not mention that it now faces more antitrust scrutiny.

“Even though the decision does not directly address name, image and likeness, the NCAA remains committed to supporting NIL benefits for student-athletes,” NCAA President Mark Emmert said. “Additionally, we remain committed to working with Congress to chart a path forward, which is a point the Supreme Court expressly stated in its ruling.”

Kavanaugh, in his concurrence, raised a number of “difficult policy and practical questions that would undoubtedly ensue” if the rest of the NCAA’s compensation rules were found to violate antitrust laws — and suggested that legislation might be the answer.

Among those questions: Which athletes in which sports could be compensated; what would happen to sports that don’t raise as much revenues as basketball and football; what about requirements for equal opportunities for women athletes; and would there need to be something like a salary cap to preserve competitive balance, Kavanaugh wrote.

Monday’s ruling highlighted the difficult path the NCAA has to maintain the status quo for its rules against compensation for student-athletes.

The NCAA and its member colleges maintain traditions that “have become part of the fabric of America,” Kavanaugh wrote.

“But those traditions alone cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student athletes who are not fairly compensated,” Kavanaugh said.

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