Faced with the prospect of reshaping college athletics, the U.S. Supreme Court issued a narrow but potentially transformative ruling Monday in a case that pitted college athletes against the NCAA.
At issue in the case were NCAA rules that limit educational benefits for college players as part of their scholarships.
The athletes maintained that the NCAA has, in effect, been operating a system that is a classic restraint of competition — in short, a system that violates the nation's antitrust laws. The NCAA countered that its rules are largely exempt from antitrust laws because they are aimed at preserving amateurism in college sports and because the rules "widen choices for consumers by distinguishing college sports from professional sports."
On Monday, however, a unanimous court ruled that the NCAA rules are not reasonably necessary to distinguish between college and professional sports.
The NCAA "seeks immunity from the normal operation of the antitrust laws," Justice Neil Gorsuch wrote for the court. But he added the court declines this request because "this suit involves admitted horizontal price fixing in a market where the defendants exercise monopoly control."
Gorsuch acknowledged that "some will see this as a poor substitute for fuller relief."
But in a concurring opinion, Justice Brett Kavanaugh accused the NCAA of "price fixing."
"The NCAA's business model would be flatly illegal in almost any other industry in America," he wrote. "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."
Amy Perko, CEO of the independent Knight Commission on Intercollegiate Athletics, notes that having the conferences each establish their own limits on educational compensation would mean there would be competition among the conferences, and an athlete who doesn't like the benefits offered in one conference might sign up with a school in a different one.
Monday's decision is narrow, she said, but it could be "transformative" in collegiate athletics. And the kinds of educational benefits that might be allowed could also be transformative. They include not just academic scholarships but also scholarships for graduate school, paid internships and the elimination of caps on disability insurance so that injured athletes are guaranteed income in the future if they suffer a career-ending injury before being able to play professionally.
College football and basketball are in a world of trouble these days, with athletes viewed as exploited at the same time schools pay millions of dollars to coaches and spend hundreds of millions on palatial training centers, arenas and stadiums.
Although many NCAA rules were not an issue in this case, they are increasingly an issue for the public. Take, for instance, the NCAA rules that bar athletes from earning money from their "name, image and likeness." The NIL, as it is known, has become so unpopular that in the majority of states, legislatures either are considering or have already passed laws that ban these NIL restrictions. Indeed, in five states, those laws will go into effect July 1.
Behind the scenes in Congress, the NCAA has been scrambling to come up with a consensus on legislation that would allow athletes to control, or at least make money off their own names, images and likenesses.
Perko said she believes that change alone will "transform" college athletics, and not just for players who are big stars. "In the modern world we live in, and that these young people live in," she observes, lesser athletes will be able to "monetize" their names via social media.
In a statement, Jeffrey Kessler , lead counsel for the athletes, called the court's decision "historic," saying it could have a meaningful impact on those athletes who will never join the pros.
"Hopefully, it will also swing the doors open to further change, so that we can finally see a fair and competitive compensation system in which these incredible players get to benefit from the economic fruits of their labors and pursue their educational objectives," he said. "Only then will the NCAA truthfully be able to say it is devoted to the welfare of the student athletes."
While today's decision preserves the lower court ruling, it also reaffirms the NCAA's authority to adopt reasonable rules and repeatedly notes that the NCAA remains free to articulate what are and are not truly educational benefits, consistent with the NCAA's mission to support student-athletes.
"Even though the decision does not directly address name, image and likeness, the NCAA remains committed to supporting NIL benefits for student-athletes," said NCAA President Mark Emmert in a statement. "Additionally, we remain committed to working with Congress to chart a path forward, which is a point the Supreme Court expressly stated in its ruling."
RACHEL MARTIN, HOST:
The Supreme Court has sided with student athletes in a decision with big repercussions for college sports. In a unanimous decision, the court ruled that the NCAA must lift restrictions it's got on education-related benefits to student-athletes because those restrictions violate federal antitrust laws. This was a relatively narrow question for the court to consider, but the language of the decision has implications far beyond that and may well transform college athletics as we know it today.
Joining us now, NPR legal affairs correspondent Nina Totenberg. Good morning, Nina.
NINA TOTENBERG, BYLINE: Good morning, Rachel.
MARTIN: Let's start with the issue that really is the grounding for this decision, these restrictions that the NCAA has on student-athletes. Explain that.
TOTENBERG: So at the moment, the NCAA rules limit educational benefits for college players as part of their scholarships. The athletes challenge that, maintaining that the NCAA has been operating a system that's a classic restraint of competition - in short, that it violated the nation's anti-trust laws. The NCAA appealed and said that the trial court in this case went too far by expanding educational benefits for athletes to include things like paid internships and musical instruments. As I said, both sides appealed. And today the Supreme Court said the lower court, like Goldilocks, got it just right.
MARTIN: Right. So we should back up. Yes, the Supreme Court has upheld a lower-court decision. So what does all this mean in practical terms for the players, for the NCAA, for fans?
TOTENBERG: Well, it could be, as you said, transformative to college athletics. That's what the CEO of the independent Knight Commission on Athletic Education (ph), Amy Perko, told me some weeks ago. It could mean that the individual conferences each establish their own limits on educational compensation. And that could mean that there would be competition among the conferences. So the athlete who doesn't like the benefits in one conference that are offered might sign up with a school in a different conference. And just to give you some examples, a conference could include academic scholarships, graduate scholarships to graduate school. They might eliminate caps on disability insurance so that injured athletes are guaranteed income in the future if they suffer a career-ending injury before being able to play professionally. There are wide swath of things that are not available now that could conceivably be in the future.
MARTIN: I understand Justice Brett Kavanaugh wrote a concurring opinion. He said he would have gone even further, actually, than the court's decision in the end. What did he say?
TOTENBERG: Well, Justice Neil Gorsuch wrote the opinion for the unanimous court, recounting, among other things, all the statistics about how the NCAA and its leaders, as well as coaches and athletic directors, have gotten rich on this system. Kavanaugh would have gone further. But it gives you an idea of the minimum high regard that the whole court has for the NCAA. Here's what he - what Kavanaugh said in his opinion. (Reading) 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. All 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. And on and on and on - he said, 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.
MARTIN: This is some of what the NCAA's lawyers had argued, that by giving student-athletes any kind of these benefits, that it would diminish their position as amateurs, and somehow that would affect the fans and their enthusiasm...
MARTIN: ...Which the court has now said is untrue.
NPR legal affairs correspondent Nina Totenberg, we appreciate your reporting on this. Thank you.
TOTENBERG: Thank you. Bye-bye. Transcript provided by NPR, Copyright NPR.