What the NCAA’s 9-0 loss means for college sports

The Ruling

The core issue in NCAA v. Alston was narrow: Whether NCAA-level restrictions on student-athlete education-related benefits violate the Sherman Antitrust Act. More broadly, the case carries short- and long-run implications for college sports: Short-run…What will implementation of the injunction mean?; Long-run…Has the Court cut the legs out from under the amateurism framework altogether?

The actual ruling in Alston is straightforward. The Supreme Court affirmed a lower court injunction that prohibits the NCAA from imposing any limits on the “education-related” benefits colleges and universities may offer student-athletes in exchange for their participation. The Court rejected the NCAA’s request that federal antitrust courts approve NCAA amateurism rules on a quick look (twinkling of an eye) review. It rejected the NCAA’s argument that the injunction redefined the NCAA’s product or would dampen consumer demand. It also rejected the NCAA’s argument that the injunction would result in judicial micromanagement of NCAA eligibility rules or open the door to unlimited compensation. On this last point, the Court pointed out that the injunction left the NCAA free to promulgate rules to define “education-related benefits” and that “[b]efore conjuring hypothetical concerns in this Court,” the NCAA should present “any practically important question” to the district court.

Bottom line: the Court unanimously ruled that the NCAA’s amateurism rules amount to an unlawful limit on the “compensation” colleges and universities may offer student-athletes in the college sports “labor market.” Any such limitations must survive full rule of reason analysis under the Sherman Act and correlate to a sufficient pro-competitive benefit. The Court did not question the district court’s approach to assessing the lawfulness of such restrictions or using consumer preferences (whether college sports fans continue to watch) as the litmus test. The Court refused to give consideration to the NCAA’s arguments about the unique features of college sports or their educational benefits. According to the Justices, such arguments are for Congress, not for the courts.

Policy changes

As a result of Alston, the NCAA may no longer prohibit, among other things: (1) post-eligibility internships, (2) payments for academic achievement (which cannot be lower than cash awards for athletic achievement—currently US$5,980), and (3) in-kind educational benefits (i.e., postgraduate scholarships, study abroad, etc.). The district court’s injunction will take effect later this summer, following a meeting between the parties to clarify the injunction’s scope. NCAA President, Mark Emmert, announced that schools can plan to implement Alston once those remaining legal issues are resolved.

While the Alston decision does not address name, image, and likeness (NIL) directly, institutions should also be cognizant that the decision likely provides a roadmap for potential changes to the NIL regulatory landscape. Namely, that the court is unlikely to find persuasive historical defenses used by the NCAA. Complicating matters further is the thicket of state laws (including at least 12 taking effect July 1), several introduced bills in Congress, and pending NIL-related lawsuits, including one before the same district court judge as in Alston, brought by one of the Alston plaintiffs’ attorneys. Regardless, the NCAA Division I Board of Directors recently adopted a “hands-off” NIL policy. This new policy allows members to either engage in NIL activities consistent with state law or develop their own in states without NIL laws.¹ There remain, however, broad prohibitions on athletic performance-based compensation and improper inducements for attending a particular school. It remains to be seen if the NCAA will adopt a similar approach to implementing Alston.

What does this all mean?

Although the post-Alston future is unclear, a few things are certain.

More regulation

Expect the NCAA to quickly draft and implement a definition of what constitutes an “educational-related” benefit. This is echoed by Mark Emmert’s statement, framing the decision as an affirmation of the NCAA’s discretion to define what is and is not an educational-related benefit. Failing that (or regardless of NCAA efforts), expect conferences — which may develop such restrictions, provided they do not act in concert with one another — to consider building out their own regulatory frameworks for educational benefits, NIL, and other financial issues.

More litigation

The Court’s designation of key language related to the validity of amateurism in NCAA v. Board of Regents of University of Oklahoma as dicta ensures future lawsuits. The Court also declined to discuss any issues outside the purview of the preliminary injunction (i.e., any issues unrelated to education-related benefits). Given the volume of currently-pending lawsuits, and Justice Kavanaugh’s essential open invitation for future challenges in his concurrence, any NCAA-level restrictions likely will result in further challenges to limits on student-athlete “compensation.” 

More compliance

If the NCAA proceeds with defining what is or is not an education-related benefit, it will then need to enforce the rules, which likely will require more nuanced interpretations than the prior blanket prohibitions. Conferences, which have previously been deferential for compliance issues to the NCAA, may have to expand their compliance staffs. All of this will increase budgets, without necessarily an accompanying increase in revenue. 

More stratification

Well-heeled schools are better suited to offer enhanced education-related benefits. Will education-related consumer goods (e.g., computers, tablets, phones) become a point of differentiation between schools, similar to apparel? Will study abroad trips, particularly with schools with existing overseas satellite campuses? Similarly, post-graduate tuition and internships offer a competitive advantage for schools with desirable graduate programs, which may increase traffic in an already-clogged transfer portal. To the extent conferences develop their own regulations with varying levels of benefits, the conferences with more permissive policies may see an influx in talent at the expense of those attempting to limit their members’ already-stretched budgets from breaking entirely.

Going forward, we recommend that colleges and universities closely follow developments in this area and continuously review and update compliance policies as needed. We invite college administrators interested in learning about Alston’s implications as well as other legal issues across collegiate sports to attend our upcoming webinar series beginning on July 15, 2021. Please contact Jessica Bott at [email protected] to register.

Authored by Stephanie Gold, Joel Buckman, Steve Argeris, and Will Crawford.

References

1. Ironically, this policy arguably disadvantages schools located in states with NIL laws, because many of those laws may be more restrictive than policies crafted by schools in states without NIL laws.