Supreme Court rules against NCAA in dispute over student-athlete compensation

The Supreme Court on Monday ruled unanimously against the NCAA in a dispute over limits placed on education-related compensation that student-athletes can receive.

The decision, written by Justice Neil Gorsuch, clears the way for colleges to provide more school-related perks to students like computers, musical instruments and internships, and some legal experts say the case could be a prelude to challenges aimed more broadly at compensation restrictions on college athletes.

Justice Brett Kavanaugh agreed with the judgment but wrote a separate concurring opinion that contained a blistering critique of the NCAA’s business model, which generates considerable revenue, particularly from Division I football and basketball.

“Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate,” Kavanaugh wrote. “And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.”

The dispute arose after a group of college athletes sued the NCAA, alleging its rules on player compensation ran afoul of antitrust laws that bar certain restraints on the competition for talent and labor.

In a March 2019 ruling siding with the college athletes, U.S. District Judge Claudia Wilken found that the NCAA’s limits on “computers, science equipment, musical instruments and other tangible items … related to the pursuit of academic studies” were unlawful and blocked their application.

A three-judge panel of the U.S. Court of Appeals for the 9th Circuit affirmed that decision last year, prompting the NCAA’s appeal to the Supreme Court.

The Biden administration backed the student-athletes in their suit.

The NCAA told the justices that if the rulings below were allowed to stand, it would “fundamentally transform” the nature of college athletics by “blurring the traditional line between college and professional athletes.”

The justices on Monday were ultimately unpersuaded by the NCAA’s argument that allowing more generous education-related perks would erode the unique “amateurism” model that distinguishes college athletics from professional sports.

Still, some legal experts described Monday’s decision as relatively modest in scope since the court did not alter the NCAA’s limits on sports-related compensation.

“This ruling does not open the door to kind of a free for all for the big colleges to start competing for athletes,” said antitrust expert Herbert Hovenkamp, a law professor at the University of Pennsylvania.

But Hovenkamp said he expects more challenges to the NCAA’s limits in the coming years.

“We can anticipate there’ll be another case within the next year or two, in which some group of plaintiffs, or some big schools, want to go further and just open up the field to wide-open bidding of the type we’ve got in professional sports, where every school makes its own deals,” he added.

Monday’s decision comes as the NCAA faces increased scrutiny over a business model that critics view as exploitative of student-athletes.

In a statement, the NCAA said that while Monday’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.”

Gorsuch, writing for the court, noted that the NCAA was free to appeal to Congress for legislation that would make it “exempt from the usual operation of the antitrust laws,” and pointed to agricultural cooperatives and the insurance industry as examples.

Among the legislative proposals that have been introduced in Congress are measures that would allow student-athletes to receive compensation, either through a revenue-sharing arrangement or by monetizing instances where their “name, image and likeness” (NIL) are commercially reproduced.

NCAA President Mark Emmert said in a statement that the association “remains committed to supporting NIL benefits for student-athletes.”

“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,” Emmert said.

Updated at 1:10 p.m.