HOW TO COMPENSATE STUDENT ATHLETES.
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Limiting Pay for Play in College Sports
JULY 11, 2016 1:25 PM EDT
Noah Feldman
The odds have gone up that the Supreme Court will consider whether rules governing amateur participation in U.S. college sports violate antitrust law. The central issue is whether student-athletes should be compensated for their efforts.
The National Collegiate Athletic Association, or NCAA, was the defendant in the original lawsuit, and had already asked the justices to review the compromise decision issued by a federal appeals court in 2015. Now the plaintiffs’ lawyers have agreed, filing a brief that argues the Supreme Court should take on the case.
Agreement from both sides is no guarantee the court will listen. But it’s relatively unusual -- and worth understanding if you care about the future of college sports.
The backdrop for the current state of play is the decision issued by the U.S. Court of Appeals for the Ninth Circuit in September. The opinion can be seen as a classic Solomon-style effort to give something to each side.
Lawyers for the named plaintiff, Edward O’Bannon, and a class of similarly situated athletes, had convinced the federal district court to rule that the NCAA’s amateurism rules preventing certain compensation counted as a restraint of trade under the Sherman Antitrust Act. The district court had then ordered two different remedies. First, it said the NCAA could no longer bar member schools from providing scholarships for the full cost of attendance. Second, it said the NCAA couldn’t stop member schools from compensating student athletes up to $5,000 a year, to be paid after graduation.
The Ninth Circuit upheld the basic logic of the lower court’s decision, and analyzed the NCAA’s amateurism rules from the perspective of antitrust law. It upheld the order that would effectively let schools provide scholarships up to the full cost of attendance.
But the appellate court struck down the more controversial piece of the lower court’s remedy that allowed a paid salary. That decision smacked of compromise, and indeed, one of the judges on the panel dissented from the part of the opinion that rejected the compensation order.
The NCAA asked the Supreme Court to reverse the decision. Its central argument is that the Ninth Circuit misunderstood a 1984 Supreme Court precedent, NCAA v. Board of Regents of Univ. of Oklahoma. In that case, the justices applied antitrust law to strike down the NCAA’s exclusive football television contract with ABC, and in the process radically transformed the nature of college athletics in the U.S.
In the course of reading its holding, the court distinguished the television contract from other aspects of the NCAA’s policies. It said that it was “reasonable to assume that most of the regulatory controls of the NCAA are justifiable means of fostering competition among amateur athletic teams and therefore procompetitive because they enhance public interest in intercollegiate athletics.”
And the court concluded by observing that “there can be no question but that … the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act.”
According to the NCAA, these statements amounted to a holding by the Supreme Court that the NCAA’s amateurism policies are procompetitive, not anticompetitive, under the Sherman Act. If that were true, then the Ninth Circuit couldn’t contradict that holding.
The best reading of the 1984 precedent is that it didn’t mean to establish once and for all that NCAA amateurism is procompetitive. The words “reasonable to assume” strongly suggest that real-world evidence could overcome the assumption. And the justices’ 1984 statement about the value of student-athletes sounds much more like a declarative dictum without precedential weight than a specific, self-conscious legal holding. It even comes in a separate concluding paragraph to the opinion, which would be a funny place for a whole new holding.
Even if the Ninth Circuit got it wrong -- and I don’t think it did -- the Supreme Court doesn’t like to take cases simply to correct errors. That’s why it’s noteworthy that the plaintiffs’ lawyers have now argued in their brief that the issue is so important that the Supreme Court should take it on.
Their main justification is size: the college sports industry now has revenues of $13 billion. That “would have been unfathomable” in 1984 when the earlier case was decided, the lawyers say. They’re certainly right about that. But if the Supreme Court in 1984 never meant to preclude antitrust analysis, as the Ninth Circuit held, it isn’t a very good reason for the court to take the case.
The plaintiffs’ lawyers are trying to be strategic. They want the justices to vacate the Ninth Circuit’s compromise opinion and force the NCAA to allow cash compensation for student-athletes. And in order to get there, they’re willing to risk the holding that allows for enhanced scholarships.
It could possibly work. Agreement between the parties that a case should be heard is some evidence to the justices that an issue really needs to be resolved. Yet this would have to outweigh the virtues of the appellate court’s compromise, as well as the appearance that both sides are simply seeking error correction.
There’s also a sub-issue in the case, a fascinating question of First Amendment law. The lower courts held that student-athletes can sue the NCAA for keeping money it makes from videogame sales featuring the players’ names and likenesses. The NCAA says it should be protected by its free-speech rights. That issue is worthy of its own analysis and discussion, which I’ll save for another column. But the presence of the free-speech issue might actually make it less likely for the court to take the antitrust issue, since it’s potentially confusing and the court likes clean, well-presented cases.
The upshot is that you shouldn’t rule out a blockbuster Supreme Court case next year on NCAA amateurism. After just finishing a Supreme Court term focused on abortion, affirmative action and religious liberty, it might make for a nice diversion.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Noah Feldman at nfeldman7@bloomberg.net
