[co-author: Frank Lavery, II]*
On June 21, 2021, the United States Supreme Court issued its opinion on the hotly contested issue of compensation allowed to Division I student-athletes for their athletic participation. In NCAA v. Alston, the Supreme Court affirmed the NCAA’s prohibition on student-athlete compensation unrelated to education (think pay for play), while its cap on “education-related” compensation was invalidated.
The plaintiffs—current and former Division I football and basketball players—filed suit against the National Collegiate Athletic Association under the Sherman Antitrust Act, which prohibits contracts, combinations, or conspiracies that restrain trade or commerce. Generally, the Act prohibits monopolies, unless an exception applies. For example, certain restraints are viewed as necessary to ensure that the spirit of certain undertakings—like collegiate sports. The plaintiffs argued that the NCAA’s restrictions on student-athlete compensation constituted an undue restraint on trade.
Utilizing the traditional “rule of reason analysis,” which requires courts to employ a fact-specific consideration of market power and market structure, the trial court held that the NCAA’s caps on education-related benefits, such as rules that limit scholarships for graduate or vocational school, payments for academic tutoring, or paid post-eligibility internships violated the Act. However, the Court also found that none of the NCAA’s prohibitions on compensation unrelated to education were precluded by the Act.
The Ninth Circuit affirmed the trial court’s ruling and found that it “struck the right balance in crafting a remedy that both prevents anticompetitive harm to [s]tudent-[a]thletes while serving the procompetitive purpose of preserving the popularity of college sports.” The plaintiffs did not petition the Supreme Court for Certiorari, but the NCAA did, hoping for a finding that all of its restrictions were valid under the Act.
First, the High Court found that most Sherman Act challenges are subject to rule of reason analysis, and the NCAA’s restrictions did not fall within the slim subset of restraints that require only a “quick look.” The NCAA’s objection to the rule of reason analysis based on the allegation that it was not a commercial enterprise was also dismissed with relative ease. The Supreme Court found that that the Sherman Act has been applied to nonprofit organizations in the past, and the fact that the NCAA’s restrictions “fall at the intersections of higher education, sports, and money” is of no consequence. The Court was unwilling to grant a blanket exemption to the NCAA from otherwise applicable Sherman Act requirements.
Despite the intricate analysis and legalese, the holding in Alston is actually a fairly simple one. The NCAA’s rules limiting athletic scholarships to the full cost of attendance at a college or university remain intact. In other words, student-athletes still cannot receive an outright salary for their participation in athletic programs. Conversely, the Supreme Court expressly prohibited the NCAA from limiting the amount of education-related compensation and benefits that schools may provide to student-athletes. Thus, NCAA v. Alston should stand as a milestone for student-athletes who hope to get the most benefit for their education out of their participation in Division I athletics, while preserving the amateurism that has made collegiate sports so popular for centuries.
*law clerk
