Supreme Court to Hear Challenge to NCAA Pay-to-Play Prohibition

In NCAA. v. Alston and AAC v. Alston the U.S. Supreme Court will decide whether the National Collegiate Athletic Association (NCAA) eligibility rules which prohibit pay-to-play violate antitrust law. The Ninth Circuit ruled against the NCAA. Numerous state legislatures have considered and some have adopted compensation for student-athletes beyond what the NCAA allows.

While the NCAA disallows pay-for-play it does allow schools to reimburse student-athletes for their reasonable and necessary academic and athletic expenses. The student-athletes in this case claim that the NCAA student-athlete payment limits are an anticompetitive restraint of trade in violation of federal antitrust law.

The relevant antitrust analysis is called the Rule of Reason. First, the student-athletes had to establish that the NCAA restrained trade; (2) next the NCAA had to show that the restraint had procompetitive effects; and (3) then the student-athletes had to demonstrate that substantially less restrictive alternatives are available.

The NCAA doesn’t dispute the first point—that its compensation framework is anticompetitive.

The NCAA defended the compensation limits as being procompetitive because they “preserve ‘amateurism,’ which, in turn, ‘widen[s] consumer choice’ by maintaining a distinction between college and professional sports.” The Ninth Circuit mostly disagreed with the NCAA concluding that only “unlimited cash payments akin to professional salaries” and not restriction on “certain education-related benefits” are procompetitive.   

Ninth Circuit agreed with the district court’s list of less restrictive alternatives including prohibiting the NCAA from “(i) capping certain education-related benefits and (ii) limiting academic or graduation awards or incentives below the maximum amount that an individual athlete may receive in athletic participation awards, while (iii) permitting individual conferences to set limits on education-related benefits.”

In its petition asking the Supreme Court to hear this case the NCAA points out that three federal circuit courts of appeals have rejected similar lawsuits. The NCAA offers numerous objections to the Ninth Circuit’s application of the Rule of Reason. The NCAA argues: “The decision below deprives the NCAA of the leeway that sports governing bodies and joint ventures ordinarily have under antitrust law, leeway that this Court and others have recognized the NCAA needs to administer intercollegiate athletics. Instead, the decision below vests nationwide supervision of eligibility to participate in intercollegiate athletics in one district judge, with authority to be exercised through an endless string of antitrust lawsuits challenging NCAA rules—even if those rules have been upheld in prior cases.”