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Court Panel Rules Against NCAA Restrictions on Athlete Pay

May 19, 2020
 
 

A California federal appeals court has concluded that rules set by the National Collegiate Athletic Association to limit education-related compensation for athletes violate antitrust law.

The opinion issued May 18 by a three-judge panel in the United States Court of Appeals for the Ninth Circuit upheld a district court’s decision that the NCAA cannot restrict colleges from granting “non-cash education-related benefits” to athletes in Division I of the Football Bowl Subdivision, which encompass the nation’s most successful football, men’s basketball and women’s basketball programs.

Institutions are permitted to give money to athletes to pay for computers, musical instruments and other products and services used for academic pursuits, beyond the cost of attendance, or COA, which includes tuition, room and board, meals, and textbooks, the panel said. The NCAA also may not bar scholarships to athletes for study abroad programs or financial aid given after athletes have exhausted their eligibility to compete, according to the ruling.

The case, Alston v. NCAA, was originally ruled on by the U.S. District Court for the Northern District of California in March 2019 and was partly favorable to the NCAA, which argued that allowing certain types of athlete pay would eliminate distinctions between professional and college athletics. The panel agreed that the NCAA’s restrictions on athlete pay unrelated to education, and a requirement that athletic scholarships not exceed COA, were essential for “preserving amateurism and thus improving consumer choice by maintaining a distinction between college and professional sports,” according to the Ninth Circuit ruling.

The panel also addressed the enactment of the Fair Pay for Play Act in California last October. The law goes into effect in January 2023 and will allow college athletes in the state to be paid for use of their name, image and likeness, or NIL. Athletes who brought the Alston case to court argued that the NCAA’s creation of a working group to explore allowing NIL benefits nullifies the association’s argument that such benefits would diminish the amateurism model. But the Ninth Circuit panel said this argument is “premature” and “the NCAA has not endorsed cash compensation untethered to education.”

Judge Milan Smith concurred with the panel’s decision to focus on education-related expenses rather than payments unrelated to academics because of precedent set during a previous case in the Ninth Circuit, O’Bannon v. NCAA, but Smith also expressed concern that the court’s interpretation of antitrust law is damaging to athletes. He said the court relies on the NCAA’s argument that the compensation differences between college and professional sports are what “drive consumer demand” and strengthen the sports entertainment market, however, the same considerations aren’t made for the higher education market, where athletes could benefit from having greater choice over where they compete and the compensation they receive for their athletic success.

“The treatment of Student-Athletes is not the result of free market competition,” Smith wrote. “To the contrary, it is the result of a cartel of buyers acting in concert to artificially depress the price that sellers could otherwise receive for their services. Our antitrust laws were originally meant to prohibit exactly this sort of distortion.”

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