Supreme Court Permits Some Compensation for NCAA Student-Athletes

Dani Alexis Ryskamp, J.D.

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— Updated on July 20, 2021

Supreme Court Permits Some Compensation for NCAA Student-Athletes

The Supreme Court recently held that the National Collegiate Athletics Associate (NCAA) cannot prohibit student-athletes from receiving certain types or amounts of compensation for their athletic performances. The decision represents a significant challenge to the status quo for college sports.

The Case Regarding Student-Athlete Compensation

In the past, the NCAA has argued student-athletes are amateurs, not professionals. As such, a student-athlete’s compensation has been limited to scholarships, room and board, and other costs of attending college. However now, the NCAA has conceded that student-athletes may rightly receive some compensation for their efforts.

Although many consider college sports big entertainment, student-athletes are not receiving direct compensation for their contributions. Top events, particularly football and basketball, may draw millions of viewers and millions of dollars to the school. In 2019, an average of 10.5 million TV viewers watched the NCAA March Madness basketball tournament. Yet, the athletes don’t get an equitable share. Football and men’s basketball players receive less than 7% of the revenue generated by the NCAA for scholarships and living expenses.

Over the last decade, some student-athletes have begun to fight back. Student-athletes have filed lawsuits arguing in favor of compensation. They have argued that student-athletes deserve some payment for bringing millions of dollars to their respective colleges via their efforts. 

Schools that choose to ignore the NCAA’s rules may find themselves ousted from the NCAA. NCAA-sanctioned competitions may bar those school’s athletes. Consequently, the NCAA’s rules regarding student player compensation currently affect approximately 500,000 college-level student-athletes nationwide

The Supreme Court’s Decision

Following a bench trial in the Northern District of California, the district court allowed the NCAA to continue enforcing its rules regarding compensation of student-athletes for their athletic performance. However, the trial court also held that the NCAA could not limit education-related benefits for student-athletes.

The Ninth Circuit upheld the trial court’s determination. The trial courts held that limits on education-related benefits constitute an unlawful restraint of trade under the Sherman Act. The Ninth Circuit also stated “the record supports the factual findings underlying the injunction and that the district court’s antitrust analysis is faithful to our decision in O’Bannon v. NCAA (O’Bannon II).

The Supreme Court reviewed only the portion of the plaintiffs’ case that focused on education-related benefits. The court noted that “the court does so based on the uncontested premise that the NCAA enjoys monopsony control in the relevant market—such that it is capable of depressing wages below competitive levels for student-athletes and thereby restricting the quantity of student-athlete labor.”

The NCAA argued that the organization should adhere to a more deferential standard. Despite the NCAA’s argument,  the court further held that both lower courts applied the correct standard to the antitrust question.

The court’s ruling was unanimous, with Justice Kavanaugh filing a concurring opinion.

Predictions for Future Litigation on Compensation in Amateur Sports

“From the start, American colleges and universities have had a complicated relationship with sports and money,” the Alston opinion states. The court’s holding represents a victory for student-athletes when it comes to education-related compensation. Be that as it may, Alston also stands to further complicate the playing field for student-athletes and their schools.

The Alston opinion clarifies certain distinctions between student-athlete compensation for athletics versus performance. By doing this, the Alston opinion lays the groundwork for further challenges to the NCAA’s ban on student-athlete compensation. Opinions at the district, appellate, and Supreme Court levels all provide guidance to future plaintiffs and attorneys. These opinions help with creating arguments in favor of student-athlete compensation. Plus, the opinions signal which issues or arguments are best avoided.

Justice Kavanaugh’s concurrence may provide inspiration for future litigation. “The NCAA couches its arguments for not paying student-athletes in innocuous labels,” Kavanaugh wrote. “But the labels cannot disguise the reality. The NCAA’s business model would be flatly illegal in almost any other industry in America.”

Differences at the State Level

Meanwhile, the NCAA faces pushback at the state level as well. In six states, student-athletes will soon be allowed to make endorsement deals and monetize their social media channels. Those six states are Alabama, Florida, Georgia, Mississippi, New Mexico, and Texas.

The NCAA has not agreed to extend the same opportunities to student-athletes nationwide. It remains to be seen to what extent the Supreme Court’s ruling in Alston will change the NCAA’s decision-making on the question.

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