IU professor: Opinions in Alston v. NCAA spell long-term trouble for amateurism model

The Supreme Court’s ruling in the case of Alston v. NCAA that was released Monday ultimately doesn’t change much about the way the NCAA and college sports operate, because not that much was at stake.

The U.S. district court that first heard the case, brought by a list of former student athletes including former West Virginia running back Shawn Alston, decided not to “disturb” NCAA rules regarding caps on scholarship and student athlete compensation but found that certain NCAA rules limiting education-related benefits to student athletes were unlawful and therefore enjoined those rules. The NCAA was still not pleased with that ruling and took it to the Ninth Circuit court of appeals and then the Supreme Court, hoping for a reversal. The athletes did not renew their “across-the-board” challenge at the Supreme Court level, so all the Supreme Court was really deciding was whether the NCAA could continue to limit benefits like the distribution of laptops or iPads or post-graduate internships. The fate of the NCAA’s model of amateurism was not being determined.

But according to Nathaniel Grow, associate professor of business law and ethics and the Yormark Family Director of the Sports Industry Workshop at the Indiana University Kelley School of Business, much more noteworthy than the decision itself were the indications on the part of the Court of how much further it would be willing to go toward more robust compensation for athletes.

The simple fact that the case was decided 9-0 at a time when the Court has been deeply politicized is in itself a statement of rare level of agreement among the justices. And the opinions written by justices Neil Gorsuch and Brett Kavanaugh made it very clear that the Court sees the NCAA’s business practices conflicting with the Sherman Anti-Trust Act.

“Reading the tea leaves a little bit, it definitely seemed like the majority was suggesting that they might be willing to go even further if the case and the plaintiffs, the way they presented it, allowed them to,” Grow said. “It definitely struck me that the Court was inclined to be not very lenient to the NCAA, that it will be very critical of the NCAA moving forward. This decision in and of itself, I don’t know if it’s super, super, significant in terms of what it does in the short term, but definitely in the long term, the NCAA is in a little bit of trouble legally if it can’t get Congress to step in and help it out.”

It was notable, Grow said, that the NCAA pushed to make sure this case got to the Supreme Court instead of letting the Ninth Circuit ruling stand, and that it made such a forceful defense of its business model only to see it forcefully struck down. In its written argument, the NCAA argued that amateurism defines its product as a competitive product with professional sports and therefore cannot be considered to be in conflict with anti-trust laws.

“A defining characteristic of of NCAA-regulated sports is that they are played by amateur student athletes, i.e., college students who are not paid for their play,” the NCAA said in its Brief of the Petitioner. “As this Court has recognized, amateurism in college sports is procompetitive because it widens choices for consumers by distinguishing college sports from professional sports.”

The Court did not buy into that notion at all. Kavanaugh disagreed strongly in his concurrent opinion, which was shared even more widely on social media than Gorsuch’s majority opinion.

“The NCAA couches its arguments for not paying student athletes with innocuous labels,” Kavanaugh wrote. “But the labels cannot disguise the reality: The NCAA’s business model would be flatly illegal in almost any other industry in America. All of the restaurants in a region can not come together to cut cooks’ wages on the theory that “customers prefer” to eat food from low-paid cooks. … Price-fixing labor is price-fixing labor. And price-fixing labor is ordinarily a textbook anti-trust problem because it extinguishes the free-market in which individuals can otherwise obtain fair compensation for their work.”

Professional sports leagues can get around price-fixing labor through means such as a salary cap, Grow said, because the athletes have unions and collectively bargain and that keeps the leagues on the right side of the Sherman Act and gives them an exemption. College athletes do not have unions with which to collectively bargain and in some states would not be permitted to have one if they wanted one.

So what that indicates, Grow said, is that if someone took a case to the Supreme Court to assert that the NCAA is in violation of Sherman and should better compensate college athletes, that person or those people would find a sympathetic ear from the Court.

The only thing saving the NCAA for now is the fact that the adjudication process moves slowly, especially when it comes to getting cases in front of the Supreme Court.

“This one took, what, five, six years, something like that?” Grow said. “Realistically, you’re probably looking at that kind of timetable if you’re doing it from a litigation perspective. There’s a lot of questions about, would a court be willing to say that full-on ‘pay for play’ is mandated by the Sherman Act? It wouldn’t be something super quick, where just because a Court said this, school can start free agency or better market competition. It’s going to take some time to work toward this. As far as this decision sparking future decisions, it’s probably a half-decade or more down the road.”

But it does add to momentum toward change that already appears to be brewing. It certainly adds more momentum toward allowing athletes to profit independently from their name, image and likeness rights (NIL), which is currently against NCAA rules. Several states have already passed legislation allowing for athletes to profit of their NIL rights, and Congress has been holding hearings while trying to shape national legislation. The NCAA opposed such ideas for so long, but has now seemed to drop that opposition.

If Congress were to pass a national NIL law and also grant the NCAA an anti-trust exemption, the organization would find itself in a much more safe position. It would be in much greater jeopardy if a court case created the possibility for member schools to have to pay athletes directly based on fair market value. That would put schools in an awkward position of having to find ways to come up with the money, which could come at the expense of employees or of non-revenue producing sports and athletes.

“You can see a path where there is some consensus that something ought to be done in terms of giving the NCAA some leeway,” Grow said. “If you look at the baseline numbers, and polls are all over the place, but people are generally more supportive of compensating student athletes, but I saw something fairly recently that when it comes down to universities putting basketball and football players on salary, only like 15 percent of Americans support that. There’s this weird scenario where everyone hates the NCAA, but at the same time, I don’t know if the majority supports full on pay-for-play. I can see that if the NCAA played that right, it could gain some traction.”

That’s especially true, Grow said, because the ability of the United States to compete athletically on a global international scale comes from its ability to use its college campuses as training grounds. Though the non-revenue sports do not add to the bottom lines of athletic departments, they do help shape Team USA in the Olympics and other international competitions. That’s likely to appeal to Congress in its deliberations.

“It’s not just, ‘Oh, we lose women’s tennis,’ from the perspective of the schools themselves,” Grow said. “The whole Olympic framework in this country depends heavily on the colleges and universities training the track stars and the swimmers, etc. That’s going to be the first thing that’s going to get cut. You could see some scenario in which Congress says, ‘Hey, this is a little untenable to have totally unregulated competition here.’ They’re worried about the Olympic part of it. I wouldn’t expect them to sign off and say the NCAA gets a blank check, but if they had enough protections in place that athletes would get some kind of more meaningful voice, you could see them getting more traction. I’m not a political scientist, I’m not sure how likely that is, but it’s not implausible in my mind to think they could find some momentum there at some point.”

Regardless of the direction the future takes, Grow sees Indiana in a pretty good position, especially because it has been proactive, pairing with NIL outfit Opendorse and investing in other ventures that should improve its branding and that of its student athletes.

“My sense is that the IU brand, especially in basketball, plays pretty well,” Grow said. “My gut would say this is a top-10ish program in terms of NIL impact, just given the legacy of the program and the attention it gets. the players who come in here are going to have lots of opportunities compared to other Big Ten institutions.”

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