The NCAA Lost A Major Supreme Court Case Over How Student-Athletes Are Compensated

While the NCAA can still restrict cash payments to players, the organization can no longer limit education-related benefits schools can give to them.

The NCAA on Monday lost a major Supreme Court fight over how student-athletes are compensated for playing games that make their schools, and the organization, billions of dollars per year.

The decision doesn’t mean that NCAA athletes will start drawing salaries for playing, nor will it affect the ongoing battle over whether players can profit off of their own names or likenesses. But it will mean that schools can do a lot more to attract and compensate students who play NCAA Division One basketball and football. Though the decision is narrow, it’s a significant step for advocates who have pushed to compensate NCAA student-athletes.

In a unanimous opinion written by Justice Neil Gorsuch, the justices agreed with a lower court that the NCAA’s limits on the kinds of education-related payments schools can make to compensate athletes violate antitrust laws, while leaving its caps on non-education-related payments in place.

The decision will mean that schools can compensate athletes not just with scholarships to pay for the cost of attendance (that’s already allowed), but can also pay for things like computers, musical instruments, graduate programs, and other education-related costs. Schools will also be allowed to pay for student-athletes' study abroad programs, offer other scholarships, and fund internships after they’ve finished playing for the school.

The decision does allow the NCAA to put caps on cash awards for academic achievement or graduation, but that cap cannot fall below the NCAA’s limit on cash awards for athletic participation.

The case was brought by a group of former NCAA players, led by former West Virginia football player Shawne Alston and former University of California basketball player Justine Hartman, back in 2014. The former players argued that their schools and the NCAA worked together to keep their compensation unfairly low in violation of antitrust laws.

The NCAA fought the case in the name of “amateurism” — arguing that not paying students is what makes the players amateurs and distinguishes college sports from professional sports and makes it popular. Essentially, their argument boiled down to: Americans love watching college basketball and football, in part, because the players are not paid.

The justices didn’t seem to buy that during oral arguments in March, as the New York Times and other outlets reported. “It does seem … that the schools are conspiring … to pay no salaries to the workers who are making the schools billions of dollars on the theory that consumers want the schools to pay their workers nothing. And that just seems entirely circular and even somewhat disturbing,” Justice Brett Kavanaugh said at the time.

Justice Clarence Thomas said he thought it was “odd that the coaches’ salaries have ballooned,” given that they are amateurs just like the players.

Kavanaugh wrote a concurring opinion on Monday, in which he compared the NCAA's argument to restaurants coming together to lower the salaries of chefs “on the theory that ‘customers prefer’ to eat food from low-paid cooks.”

Kavanaugh suggested that the NCAA’s other restrictions on how athletes are compensated may not survive future legal challenges. “The NCAA couches its arguments for not paying student-athletes in innocuous labels. But the labels cannot disguise the reality: The NCAA’s business model would be flatly illegal in almost any other industry in America,” he wrote.

The students were backed up by the Biden administration — acting solicitor general Elizabeth Prelogar helped argue the case before the Supreme Court — as well as a group of former NCAA employees who wrote an amicus brief arguing that the NCAA’s limits on student compensation were unfair, particularly as the organization experienced a “dramatic” increase in revenue.

The United States District Court for the Northern District of California originally ruled for the students in March 2019, invalidating the NCAA’s caps on education-related benefits. That ruling was put on hold while the NCAA appealed up to the 9th Circuit Court of Appeals. The 9th Circuit, too, sided with the students, upholding the lower court ruling, which went into effect in August.

Gorsuch wrote in Monday's opinion that the court wasn’t taking a look at broader questions about the NCAA’s monopoly status, including its other limits on how student-athletes are compensated. The court, he wrote, was only asked to look at whether the district court was right to override the NCAA’s limits on education-related benefits.

“Some will think the district court did not go far enough,” Gorsuch wrote. “By permitting colleges and universities to offer enhanced education-related benefits, its decision may encourage scholastic achievement and allow student-athletes a measure of compensation more consistent with the value they bring to their schools. Still, some will see this as a poor substitute for fuller relief.”

In his concurring opinion, Kavanaugh called Monday's opinion “an important and overdue course correction,” but wrote that he wanted “to underscore that the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws.”

He concluded the opinion with, “The NCAA is not above the law.”

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