June 22, 2021
I don’t care what the game is. When you lose 9-0, that’s a convincing loss.
Yesterday, the NCAA suffered a convincing loss, when the U.S. Supreme Court ruled, 9-0, that the NCAA’s limits on the education-related benefits that schools can provide athletes violating federal antitrust law. You can read the decision here.
The Court’s decision brings to an end a litigation that commenced seven years as a class-action lawsuit filed against the NCAA and the major collegiate athletic conferences by athletes who played Division I football and basketball. Under the NCAA’s rules, universities generally are allowed to provide athletes with scholarships covering tuition while they are NCAA-eligible, and they are allowed to cover basic expenses like textbooks and room and board. But most other forms of compensation are banned.
The athletes contended in their lawsuit that the NCAA’s restrictions violate federal antitrust laws by barring the athletes from receiving fair-market compensation for their labor. A federal district court in California agreed in part: It ruled that the NCAA could restrict benefits that are unrelated to education (such as cash salaries), but it barred the NCAA from limiting education-related benefits. After the U.S. Court of Appeals for the 9th Circuit upheld that decision, the NCAA and the athletic conferences went to the Supreme Court, which late last year agreed to take up the case.
Justice Kavanaugh’s concurrence was particularly noteworthy. Kavanaugh, who coached his daughter’s high school basketball team and tried to make the Yale University basketball team when he was an undergraduate, wrote separately to emphasize that the Court’s narrow decision — addressing only whether the rules restricting education-related benefits were illegal — could and should be extended to the NCAA’s other compensation rules. The NCAA should consider the language in his concurrence a shot over the bow:
“The NCAA’s business model would be flatly illegal in almost any other industry in America. All of the restaurants in a region cannot come together to cut cooks’ wages on the theory that ‘customers prefer’ to eat food from low-paid cooks. Law firms cannot conspire to cabin lawyers’ salaries in the name of providing legal services out of a ‘love of the law.’ Hospitals cannot agree to cap nurses’ income in order to create a ‘purer’ form of helping the sick. News organizations cannot join forces to curtail pay to reporters to preserve a ‘tradition’ of public-minded journalism. Movie studios cannot collude to slash benefits to camera crews to kindle a ‘spirit of amateurism’ in Hollywood.
“Price-fixing labor is price-fixing labor. And price-fixing labor is ordinarily a textbook antitrust problem because it extinguishes the free market in which individuals can otherwise obtain fair compensation for their work. Businesses like the NCAA cannot avoid the consequences of price-fixing labor by incorporating price-fixed labor into the definition of the product. Or to put it in more doctrinal terms, a monopsony cannot launder its price-fixing of labor by calling it product definition.
“The bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year. Those enormous sums of money flow to seemingly everyone except the student athletes. College presidents, athletic directors, coaches, conference commissioners, and NCAA executives take in six- and seven-figure salaries. Colleges build lavish new facilities. But the student athletes who generate the revenues, many of whom are African American and from lower-income backgrounds end up with little or nothing.”