Jurisprudence

The NCAA Is Running an Illegal Cartel

And the Supreme Court knows it.

Justice Neil Gorsuch speaks with Brett Kavanaugh
Justices Neil Gorsuch and Brett Kavanaugh Pool/Getty Images

The Supreme Court’s decision on Monday in NCAA v. Alston is technically only a narrow win for college athletes. By a 9–0 vote, the court held that the National Collegiate Athletic Association’s strict limits on these athletes’ “education-related benefits”—such as laptops or scholarships—violate antitrust laws. As a result, schools can now freely offer these benefits to their athletes, though they still are not allowed to pay them directly.

Not yet, at least. Read Alston closely, and you will find little, if anything, that limits the court’s reasoning to mere educational benefits. Instead, Justice Neil Gorsuch’s unanimous opinion for the court—and, especially, Justice Brett Kavanaugh’s scathing concurrence—painted the NCAA as a monopoly that flagrantly engages in anti-competitive, price-fixing behavior. The organization’s exercise in “monopoly power,” the court suggested, would not pass legal muster in any other context. And the court expressly rejected the NCAA’s feeble justification for exempting college athletics from antitrust principles. Alston thus undermines the shaky legal precipice upon which the organization has built its cartel, teeing up a future battle over athlete compensation that should terrify the NCAA.

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Since its creation in 1906, the NCAA has prevented college athletes from getting compensation for their labor. Under the organization’s current rules, athletes can’t receive direct payments or profit from endorsement deals. They are only allowed to accept scholarships “up to the full cost of attendance” at their current educational program. Notably, they cannot receive money for future programs—like graduate and vocational school scholarships—or other benefits relating to education, like computers and tutoring. The NCAA vigorously enforces these rules, saving colleges the trouble of having to compete for college athletes’ labor.

In most other professions, this strategy would run afoul of the Sherman Act, which prohibits collusion “in restraint of trade or commerce.” The NCAA, however, argues that its business model is distinct: Consumers, the NCAA claims, value “amateurism” in sports, a unique factor that allegedly makes college athletics so appealing (and profitable). The association argued for an exemption from the Sherman Act, or, at a minimum, extreme deference in setting its own rules. It also claimed that, even under normal antitrust analysis, its price-fixing agreements are justified, because compensation for college athletes would blur the line between professional and “amateur” sports, ultimately harming consumers.

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A federal district court partially accepted this last argument in 2019 while rejecting the rest. It permitted the NCAA to ban direct, unlimited compensation for athletes. Yet the court also held that the NCAA cannot forbid colleges from awarding education-related benefits to athletes. The student-plaintiffs accepted that decision, but the association appealed—first to the appeals court (where it lost again), and then to SCOTUS.

In his opinion for the court on Monday, Gorsuch gave the athletes a clean victory. He declined to exempt the NCAA from the Sherman Act, writing that organizations serving “uniquely important social objectives” do not get “special dispensation” to ignore the law. So even if the association is right that “amateurism in college sports” is a valuable objective, the NCAA cannot use it to avoid antitrust scrutiny. Gorsuch also repudiated the association’s demand for a highly deferential review because some “collaboration among its members is necessary.” For instance, NCAA members must decide “how many players may be on the field or the time allotted for play.” But when this “collaboration” assumes the form of “restraints that can (and in fact do) harm competition,” Gorsuch wrote, courts must take a closer look.

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That closer look is called the “rule of reason,” and it asks whether the NCAA’s rule “unreasonably restrains trade.” Gorsuch agreed with the lower courts that it does. Specifically, he shot down the association’s attempt to justify its cap on the education-related benefits by citing the “procompetitive effects” of amateurism in college sports. As the district court wrote, the NCAA failed to prove that this cap has “any direct connection to consumer demand.” Put simply, the association could not demonstrate that consumers would tune out of college sports if athletes received education-related benefits.

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Gorsuch took pains to note that a much bigger controversy—direct compensation of college athletes—was not on the table in Alston. No party brought the question to SCOTUS, so SCOTUS did not answer it. Still, Alston does not bode well for the NCAA’s fight against student payment. The ruling accuses the association of engaging in “admitted horizontal price fixing in a market where the defendants exercise monopoly control.” It highlights the hypocrisy of NCAA executives denying money to students while raking in millions of dollars. And it subjects the group’s anti-competitive tactics to close judicial scrutiny while expressing deep skepticism toward its rationale of preserving “amateur” sports.

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In his concurrence, Kavanaugh made this subtext explicit. “There are serious questions whether the NCAA’s remaining compensation rules can pass muster” under Alston. “The NCAA couches its arguments for not paying student athletes in 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.” He continued:

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.

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“Price-fixing labor is price-fixing labor,” Kavanaugh added. “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.” He went on:

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.

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After praising “important traditions” facilitated by the NCAA “that have become part of the fabric of America,” Kavanaugh concluded:

Those traditions alone cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student athletes who are not fairly compensated. 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. 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.

As a sports enthusiast, Kavanaugh plainly has strong feelings about the exploitation of college athletes. And it may not be too long until those feelings become the law of the land. His opinion in Alston simply takes Gorsuch’s reasoning a step farther, to its logical conclusion. The ostensible value of “amateurism” cannot justify collusion, price-fixing, and other monopolistic abuses of labor. Now that the Supreme Court has established that principle, it is difficult to see how the NCAA’s current business model can survive.

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