Supreme Court Upholds Payments to Athletes

Justices unanimously rule the NCAA cannot bar compensation for education-related benefits. But the narrow ruling may not upend the NCAA amateurism model as much as some had hoped (and feared).

June 22, 2021
 
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The Supreme Court on Monday ruled unanimously that the National Collegiate Athletic Association may not bar modest payments to athletes.

The court upheld a 2019 ruling by a federal district court judge, which in turn was endorsed by the U.S. Court of Appeals for the Ninth Circuit last year. The rulings all concern the Sherman Act, which bars monopolies by organizations in the United States.

As they often do, the justices took a measured approach. They chose not to seize a potential opportunity to challenge the NCAA's overall regulations limiting the value of scholarships and other compensation tied to athletic performance, which could have undermined the entire business model of college athletics.

But a concurring opinion by Associate Justice Brett Kavanaugh suggested that such a reckoning for the NCAA and its financial model is likely ahead -- and that at least he eagerly wants it to be so.

The many rich traditions of college sports "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 wrote. "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. And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law."

Kavanaugh's line of reasoning may suggest where the court might be heading, but it did not prevail Monday. Instead, Associate Justice Neil M. Gorsuch, writing for the unanimous court, focused his analysis largely on reinforcing the district court's ruling in 2019 and the Ninth Circuit decision last year.

"Some will think the district court did not go far enough," Gorsuch wrote. "By permitting colleges and universities to offer enhanced education-related benefits, its decision may encourage scholastic achievement and allow student-athletes a measure of compensation more consistent with the value they bring to their schools. Still, some will see this as a poor substitute for fuller relief.

"At the same time," the decision added, "others will think the district court went too far by undervaluing the social benefits associated with amateur athletics. For our part, though, we can only agree with the Ninth Circuit: 'The national debate about amateurism in college sports is important. But our task as appellate judges is not to resolve it. Nor could we. Our task is simply to review the district court judgment through the appropriate lens of antitrust law.' That review persuades us the district court acted within the law’s bounds."

The Landscape for Athlete Compensation

The Supreme Court's ruling Monday represents the latest step in a long-standing effort by college athletes to challenge what they believe are unconstitutional (and immoral) restrictions on giving players a bigger share of an enterprise that produces many billions of dollars for colleges, conferences, coaches and the NCAA.

The case considered Monday, National Collegiate Athletic Association v. Shayne Alston, differs from (but is a relative to) the highly publicized lawsuits over whether athletes should be compensated for use of their name, image and likeness, an issue that is now playing out in state legislatures and potentially Congress.

The Alston case flows from a 2014 class action challenge by a group of college athletes to the association’s scholarship limits. That case sought to have the courts declare NCAA athletes to be employees whose compensation was being illegally constrained.

As that case and others wended their way through the courts, judges have both given the athletes meaningful victories and reined in their scope and seismic impact.

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The 2019 federal court decision, for instance, ruled that the association could legitimately restrict the sports-related compensation that is part of the typical package allowed by the NCAA, including the scholarship, but deemed it an antitrust violation to limit academic-related expenses such as postgraduate scholarships, scientific or technology equipment, academic awards and internships, or study abroad.

The rulings in the lower courts chipped away at the NCAA’s decades-long history of amateurism without blowing it up, in ways that satisfied neither the NCAA nor many advocates for athletes’ rights.

Yet when the Ninth Circuit upheld the lower court’s ruling, the athletes chose not to appeal it to the Supreme Court, while the association did -- as Gorsuch describes it, “seeking immunity from the normal operations of the antitrust laws.”

Gorsuch writes that the athletes’ decision not to appeal the association’s other compensation rules gave the Supreme Court the option (which it embraced) to review only the limits on educational benefits.

The early part of Gorsuch’s ruling is a college sports history lesson that makes it clear that money has always been a core element of intercollegiate sports and that “those who run this enterprise profit in a different way than the student-athletes whose activities they oversee.”

The bulk of the decision features Gorsuch, one by one, slapping aside the NCAA’s many objections to the lower courts’ rulings as unfounded, and listing the ways in which the lower courts judiciously balanced the parties’ interests.

The NCAA, for instance, argues that it should have leeway to avoid antitrust scrutiny because the association and its members are not “commercial enterprises” and are engaged in the “societally important non-commercial objective” of providing higher education.

Gorsuch writes, “To the extent it means to propose a sort of judicially ordained immunity from the terms of the Sherman Act for its restraints of trade -- that we should overlook its restrictions because they happen to fall at the intersection of higher education, sports, and money -- we cannot agree. This Court has regularly refused materially identical requests from litigants seeking special dispensation from the Sherman Act on the ground that their restraints of trade serve uniquely important social objectives beyond enhancing competition.”

If Gorsuch’s overall message on behalf of the court was that the lower courts had struck a fair balance between the NCAA’s interests and those of the athletes in service of upholding federal antitrust law, Kavanaugh in his concurrence issued more of a threat to the powers that be in big-time college sports.

Kavanaugh notes that while the high court chose in the current case to limit its review to a narrow set of the NCAA’s compensation rules, Monday’s decision tees up a future challenge in which the association would have to “supply a legally valid procompetitive justification for its remaining compensation rules. As I see it, the NCAA may lack such a justification.”

He describes the NCAA’s amateurism argument as “circular and unpersuasive.”

“Specifically, the NCAA says that colleges may decline to pay student athletes because the defining feature of college sports, according to the NCAA, is that the student athletes are not paid,” Kavanaugh writes.

He adds, “Businesses like the NCAA cannot avoid the consequences of price-fixing labor by incorporating price-fixed labor into the definition of the product.”

Those issues may need to wait for another day, Kavanaugh suggests, but that day is coming.

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