Ok, not the actual tank used in World War II, but to the NCAA in the year 2019, it felt like they had been run over by a tank. The tank had a name, which was the Sherman Anti-Trust Act, which was passed all the way back in 1890. This law still acts as a major underpinning of the United States economy. More on this later.

Based on a review of the news media content, the forces behind the many of the recent changes in college sports are not well understood. In a world of debates conducted in one liners on social media, blaming everything on NIL works great. But like most weighty issues, there is a deeper substance at play.

This post is an attempt to provide a layman’s brief of the legal cases which are driving change and the core legal issues which remain. If you do not have an interest in exploring these issues and simply want to conjecture about the future, simply skip to the next post. I wouldn’t blame you. But, if you want to try to impress your spouse, win the bar argument, or clear some prerequisites in preparation for a new law degree, read on.

Some blame the NCAA for the recent changes in college athletics, which include payments to athletes, while others blame the conferences, the booster, the athletes or some combination. In the NCAA’s defense, the primary forces of change were thrown at them by the courts. The NCAA was previously happy living in their ideals of amateurism, but these court cases are now forcing the NCAA to change.

The NCAA has been struggling on how to deal with the court injunctions. The resulting NCAA efforts have been largely misguided and characterized by paralysis and inaction. As a result, the NCAA has been rightly criticized for delays and lack of leadership and a lack of new frameworks for addressing the issues, including NIL.

A Little Background 

There are two prominent legal cases which were brought against the NCAA which are driving the current events. We will briefly explore both of them.

1. O’Bannon v. NCAA (US Appellate Court ruling in Sep 2015)
2. NCAA v. Alston, (US Supreme Court ruling in 2021)

Both of these cases had to do with NCAA restrictions on payments and other benefits to athletes. The NCAA has long-held that amateur athleticism was good for all parties involved, and it became a moral ideology all its own. To facilitate amateur athleticism, the NCAA passed a series of bylaws over many years, which restricted college athletes from receiving many benefits, such as cash or benefits beyond a scholarship for education from the university or cash or gifts from college boosters.

The first lawsuit:  O’Bannon v. NCAA

O’Bannon was a college basketball player at UCLA from 1991 to their national championship year in 1995. During this era, certain universities made deals with EA Sports for use of school images including certain athletes’ likeness, including O’Bannon’s likeness. At the same time, the NCAA bylaws restricted athletes from receiving a share of these funds from schools. O’Bannon’s lawsuit alleged “that NCAA members conspired to fix the price of former student-athletes’ images [NIL] at zero.”

For over 100 years, the Sherman Anti-Trust made it illegal for businesses to use monopoly control in the US economy. In short, the Sherman Act encouraged the free markets by restricting those with monopoly (or monopsy) power from using this power to unnecessarily influence free markets.  In this case, the NCAA had virtually complete power in setting the rules for college athletics and free markets would refer to the athletes ability to receive a fair market value for their services.  For many years the NCAA also believed, based on another very old court ruling, that it was immune to restrictions of the Sherman Act, and thus were not concerned with the law and its restrictions.

In restricting athletes from participating in deals that included their name-image-likeness, the Appellate Court ruled that these NCAA bylaws violated the Sherman Anti-Trust Act. The court struck down NCAA restrictions on sharing NIL funds received by the universities with athletes (but importantly did not comment on restrictions on athletes making NIL deals themselves). Since universities had years prior ceased these licensing deals, this limitation had little practical affect; however this was a big indication that the courts would ultimately hold the NCAA accountable to the provisions of the Sherman Anti-Trust Act.

However, the remedy of the above ruling was not as significant as the athletes had hoped.  Rather than instructing the NCAA to share directly in the prior proceeds of the EA Sports agreement, the courts provided only that the NCAA could not limit scholarships to athletes for less than the full cost of attendance (as opposed to prior NCAA limitations on the lower dollar amount of “Grant-in-aid” or “GIA” which did not include certain living and other ancillary expenses). As a result, in January 2015, the power five conferences each voted to allow their member universities to allow member schools provide up to the higher scholarship figure to athletes.

While slightly expanding the amount of scholarship money that universities could elect to grant, it had little other effect, except one very important thing… the courts recognition that the NCAA was not exempt from the Sherman Act.  It ultimately left the questions surrounding amateur athletics to be decided by a later case, which leads us to …

The second lawsuit:  NCAA v. Alston 

The plaintiffs were originally Shawne Alston, a former football player at West Virginia University, and Justine Hartman, a women’s basketball player at Cal.  Ultimately the plaintiffs were certified as a class and added a large group football and mens and women’s basketball players who played college sports over a number of years.

This case challenged the NCAA restrictions on benefits to student athletes for academic purposes differently than benefits for athletic purposes, and thus academic versus athletic scholarships.

Historical NCAA rationale for the bylaws restricting academic benefits to student athletes was that you couldn’t be sure these academic benefits would truly be for academic reasons and not actually for the underlying purpose of recruiting athletes. Of course, they were quite right to be suspicious, as surely the football power schools would have offered “academic scholarships” to include cars and expensive housing and other expensive contributions in order to lure top players. 

This case was ultimately heard by the US Supreme court which ruled again in the plaintiffs favor, and determined that NCAA restrictions on academic scholarships were in violation of the Sherman Act. The NCAA would no longer be able to restrict universities from limiting academic scholarships to athletes. To elaborate, academic or education related benefits could include scholarships for graduate or vocational school, payments for academic tutoring, or paid post eligibility internships.

Although this ruling was highly problematic for the NCAA, the bigger issue was probably not actually the majority opinion, but rather a concurring opinion written by Justice Kavanaugh. Although the Alston case was related to restrictions on education related benefits, justice, Kavanaugh commented that the courts decision raised serious questions about the legality of the remaining NCAA restraints on athletic compensation. (more specifically, he commented that athletic related compensation would be evaluated using the same rule a reason test prescribed by the Sherman Act).

Conclusion:

This concurring opinion effectively invited others to sue the NCAA as well, giving them an indication that the courts may likely invalidate NCAA scholarship restrictions, which would end the idea of amateur athletics.

There were many questions which resulted from this court case, and the NCAA has struggled mightily since this case, to figure out what rules should replace amateur athleticism.  A major theme of this blog is to explore the many ramifications and predict the evolution of major college sports. 

Want to read more?

Search up the “rule of reason” – a judicial doctrine of antitrust law (Sherman Act) and how it was applied in these cases. Consider burden shifting.

Search up the difference between a monopoly and a monopsy and how it applies here in the definition of the market. (Hint, the issue here was a monopsy)

The courts actually agreed there were aspects of “pro-competitive benefits” to the idea of amateur athletics. Ultimately didn’t matter.

Questions:

How will these latest Supreme Court rulings impact title nine regarding compensation between male and female athletes?

If the Alston case made it impossible to limit academic compensation to athletes … (1) why haven’t we seen excessive “academic” benefits to star athletes following the court case? (2) why haven’t we seen cash payments (not just scholarships and other benefits) to star athletes for “academic” reasons? (3) why haven’t there been additional court cases to challenge athletic compensation limits in additton tonthe academic, especially given Kavanaugh’s opinion?