THE FINAL WHISTLE FOR AMATEURISM: NCAA AND ANTITRUST
By: Adler Pierce, Volume 106 Staff Member
An amateur, as defined by the National Collegiate Athletic Association (NCAA), “is someone who does not have a written or verbal agreement with an agent, has not profited above his/her actual and necessary expenses or gained a competitive advantage in his/her sport.”[1] The concept of “amateurism” has been on the decline since 1981, when the Olympics dropped the word “amateur” from the Olympic Charter.[2] This allowed the international federation of each sport to determine eligibility rules.[3] In 2016, the final sport, boxing, removed the amateur requirement thus cementing the ideal of amateurism as a thing of the past for the Olympics.[4] Amateurism still remains central to the NCAA,[5] and thus the NCAA acts as the “last great bastion of defense” for amateurism.[6] However, recent judicial opinions and legislation combined with waning public support make it clear that amateurism is not here to stay. This Post argues that legislative action on the state level should continue to erode the concept of amateurism thereby allowing student-athletes to obtain the fair compensation that they deserve.
I. BACKGROUND
The NCAA acts as the rule-making body for athletic competition between its member schools, which includes the ability to regulate compensation and benefits that can be given to student-athletes.[7] The NCAA has utilized this authority multiple times throughout the last seventy years to severely limit the compensation that student-athletes have received.[8] More recently, the NCAA has backed away from this strict stance and created the Student Assistance Fund (SAF) and the Academic Enhancement Fund (AEF), both of which can provide cash compensation to student-athletes[9] and allowed student-athletes to benefit from their name, image, and likeness (NIL).[10] Despite these positive changes, the NCAA’s ability to regulate compensation is especially troubling due to the large market share enjoyed by the NCAA and their reluctance to compensate student-athletes at a competitive level. In the view of the Supreme Court, it is 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.”[11]
Under this scheme, the NCAA has prospered. NCAA and Division I universities make billions of dollars from the labor of student-athletes, and head football coaches can earn million-dollar salaries.[12] This serves in stark contrast to the reality of student-athletes who work an average of thirty-five to forty hours a week on athletic duties along with an average of forty hours a week on classwork.[13] Additionally, this extensive time commitment prevents student-athletes from obtaining internships or part-time positions, leaving them without income and work experience.[14] Jay Williams, a student-athlete from Duke, wrote a senior thesis on how his jersey alone garnered one million in profits, all of which went to private companies and the university, while he was living on $600 a month.[15] Accordingly, the ability of the NCAA to create such compensation rules has come upon severe attack by antitrust lawsuits and state legislation.
II. ANALYSIS
A. Antitrust Lawsuits: NCAA v. Alston
The most recent attack on amateurism has come from NCAA v. Alston where a group of current and former student-athletes alleged that the NCAA’s compensation limiting rules violated § 1 of the Sherman Act.[16] Section 1 of the Sherman Act prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.”[17] The district court, under the antitrust rule of reason, found that the NCAA did violate this section of the Sherman Act and did produce significant anticompetitive effects.[18] Borrowing from another antitrust case, the district court defined the relevant market as “comprising national markets for Plaintiffs’ labor in the form of athletic services in men’s and women’s Division I Basketball and FBS football, wherein each class member participates in his or her sport-specific market.”[19] Finding no viable substitutes for Division I, the district court concluded that the NCAA held monopsony power and utilized that power to artificially cap compensation offered to student-athletes.[20]
After making these findings, the burden shifted to the NCAA to show that the challenged anticompetitive rules bring about some procompetitive effect.[21] The NCAA argued as a procompetitive justification that the rules promoted amateurism which enhanced consumer demand.[22] However, the district court found this justification unpersuasive. First, the NCAA offered an insufficient definition of the Principle of Amateurism. The NCAA offered no definition of amateur, and the Principle of Amateurism, described in the Division I constitution, does not address compensation.[23] Despite this, the NCAA insisted that amateurism is not “pay for play,” but the district court found this contrary to the record.[24] Student-athletes were paid in a variety of ways: (1) grants-in-aid up to the cost of attendance, (2) awards for their performance in a sport, (3) per diem payments during travel, (4) SAF and AEF funds, (5) family members’ travel expenses, (6) payments from outside organizations, such as the Olympics, and (7) post-eligibility graduate school scholarships.[25] Each student-athlete could receive all of this compensation without losing their status—which could be tens of thousands of dollars above a full-cost-of-attendance grant.[26] Therefore, the “amateur” student-athletes were receiving pay in some form which struck against the NCAA’s argument.
Importantly, the district court found that the increase in compensation did not lead to a reduction in consumer demand for the product and concluded that “[t]he challenged compensation limits do not appear to be set by the NCAA based on considerations of consumer demand.”[27] On the factual record, the district court found nonexistent and inconsistent definitions of amateurism along with research that showed the lack of impact on consumer demand.[28] All of these findings by the district court were subsequently affirmed by the Ninth Circuit and the Supreme Court.[29]However, the district court found some procompetitive effects in the rules that prevent unlimited payments, unrelated to education, because allowing unlimited cash payments would blur the line between amateur and professional sports.[30] Based on this singular finding, barely supported by the factual record, the district court only found that NCAA’s rules limiting education-related benefits, such as those limiting scholarships for graduate school and payments for tutoring, violated § 1 of the Sherman Act.[31] The NCAA was free to continue to create rules that limited grant-in-aid at not less than the cost of attendance and compensation unrelated to education.[32]
While the ultimate holding of the Alston litigation was uninspired, the harsh dismissal of the procompetitive justification of amateurism by the district court and the steady erosion of the NCAA’s control over student-athlete compensation is likely to further the trend away from amateurism. Moving forward, the next Section argues that the best way for student-athletes to receive the compensation that they deserve is through the only governmental body who has put them first, state legislatures.
B. Moving Forward
The decay of amateurism is clear when looking at past court cases. The Supreme Court, in 1984, stated that “[t]o preserve the character and quality of the ‘product,’ athletes must not be paid.”[33] As recently as 2015, the Ninth Circuit called amateurism “integral” to the NCAA’s market.[34] These pro-amateurism sentiments conflict with the current Court’s view on the matter.
The concurring opinions of Justice Kavanaugh and Judge Smith in the Alston litigation aptly illustrate the illogical leaps made by previous courts in order to line the pockets of everyone in the industry besides the players. Justice Kavanaugh wrote a scathing review of the remaining NCAA rules arguing that it was incorrect to allow the NCAA to define the features of its players, in that they are not paid, and use that definition as a procompetitive justification to not pay them.[35] Kavanaugh further elaborated that “[n]owhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate.”[36]
Judge Smith’s opinion from the Ninth Circuit also focused on the illogical nature of the rule of reason as applied in this litigation. He wrote that the district court was mistaken to allow the NCAA to put forth a procompetitive argument regarding the separation between amateur football and professional football.[37] The market was defined as the competition between internal NCAA schools in recruiting players, yet the NCAA was allowed to put forth a procompetitive effect in a collateral market, professional football.[38] This cross-market analysis required that jurists make value judgments, and this is not what antitrust law is meant to do.[39] The decision “to sacrifice competition in one portion of the economy for greater competition in another portion . . . is a decision that must be made by Congress . . . .”[40] These cases, therefore, can aptly be described as putting all other parties who benefit from the status quo—the NCAA, the Divisions, the schools, and the coaches—ahead of the student-athletes themselves.
Fortunately, state legislatures have been more sympathetic towards the student-athletes’ cause. California was the first state to enact legislation that allowed college athletes to earn compensation for their NIL.[41] Florida and Colorado soon followed.[42] This initial push in legislation helped to create a domino effect, and now 28 states have NIL laws in place—with multiple others pursuing similar legislation.[43] This pressured the NCAA to make internal changes to their compensation rules, which now allow student-athletes the ability to benefit from their NIL.[44] Therefore, state legislatures seem to be the government body most sympathetic and motivated to act on behalf of student-athletes and should be the focus of future change.
Amateurism is on its last legs. While the courts have traditionally been receptive to the procompetitive justifications behind amateurism, the recent Alston litigation changes that course. This reflects the modern trend of realizing and accepting the predatory effect of amateurism on student-athletes. Continued action by state legislatures, spurred by public opinion, is likely the fastest avenue to end amateurism once and for all and allow student-athletes to appropriately benefit from their labor.
[1] See, e.g., What is Amateurism?, NCAA, https://ncaa.egain.cloud/kb/EligibilityHelp/content/KB-2219/What-is-amateurism (last visited Feb. 27, 2022).
[2] Kelly Charles Crabb, The Amateurism Myth: A Case for a New Tradition, 28 Stan. L. Pol’y Rev. 181, 187 (2017).
[3] Id.
[4] Id.
[5] See, e.g., Nat’l Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141, 2152 (2021) (arguing that amateurism widens consumer choice); What is Amateurism?, supra note 1.
[6] Crabb, supra note 2, at 188.
[7] In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1063 (N.D. Cal. 2019), aff’d, 958 F.3d 1239 (9th Cir. 2020), aff’d sub nom. Nat’l Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141 (2021).
[8] See, e.g., Alston, 141 S. Ct. at 2149 (explaining how in 1948, the NCAA opposed payment in any form, but by 1956, student-athletes were allowed to received compensation for room, board, books, fees, and incidental expenses).
[9] Id. at 2150.
[10] Michelle Brutlag Hosick, NCAA Adopts Interim Name, Image and Likeness Policy, NCAA (June 30, 2021), https://www.ncaa.org/news/2021/6/30/ncaa-adopts-interim-name-image-and-likeness-policy.aspx [https://perma.cc/M4VL-RRSC].
[11] Alston, 141 S. Ct. at 2144.
[12] In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig., 958 F.3d 1239, 1266 (9th Cir. 2020) (Smith, J., concurring).
[13] Id.
[14] Id.
[15] Kathryn Young, Deconstructing the Façade of Amateurism: Antitrust and Intellectual Property Arguments in Favor of Compensating Athletes, 12 Va. Sports & Ent. L.J. 338, 345 (2013).
[16] Alston, 141 S. Ct. at 2144.
[17] 15 U.S.C. § 1.
[18] In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1062 (N.D. Cal. 2019). The district court classified the compensation limitations as a horizontal price-fixing between competitors, which is usually a per se violation, yet applied the Rule of Reason of the degree of cooperation necessary in the industry. Id. at 1066.
[19] Id. at 1097.
[20] Id.
[21] Id. at 1098.
[22] Id.
[23] Id.
[24] Id. at 1099.
[25] Id.
[26] Id.
[27] Id. at 1100.
[28] Id.
[29] In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig., 958 F.3d 1239 (9th Cir. 2020); Nat’l Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141 (2021).
[30] In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1083 (N.D. Cal. 2019).
[31] Id. at 1087.
[32] Id.
[33] Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 102 (1984).
[34] O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049, 1076 (9th Cir. 2015).
[35] Nat’l Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141, 2167 (2021) (Kavanaugh, J., concurring).
[36] Id. at 2169. Kavanaugh also noted that many of these student-athletes are African American and from a lower-income background. Id. at 2168.
[37] In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig., 958 F.3d 1239, 1269 (9th Cir. 2020) (Smith, J., concurring).
[38] Id.
[39] Id.
[40] United States v. Topco Assocs., Inc., 405 U.S. 596, 611 (1972).
[41] Nicholas C. Daly, Amateur Hour is Over: Time for College Athletes to Clock in Under the FLSA, 37 Ga. St. U. L. Rev. 471, 476 (2021).
[42] Id.
[43] Dan Murphy, Everything You Need to Know About the NCAA’s NIL Debate, ESPN (2021), https://www.espn.com/college-sports/story/_/id/31086019/everything-need-know-ncaa-nil-debate [https://perma.cc/QH7K-SLMM].
[44] Hosick, supra note 10.