The Fight Over College-Athlete Compensation

by Garrett Emmons


What you can do:

  • Be on the lookout for laws regarding college athlete compensation in your state. Arizona, Iowa, Mississippi, New Mexico, New York, Pennsylvania, and West Virginia are all expected to enact new legislation in 2021
  • To follow the development of the Supreme Court case, go to supremecourt.gov/docket/docketfiles/html/public/20-512.html

On Monday afternoon a U.S. Ninth Circuit Court of Appeals panel heard arguments surrounding whether college athletes should be compensated past athletic scholarships and other costs of attendance [1]. The case—brought by Shawne Alston, a former running back for West Virginia University—is just one part of a multi-year legal challenge to the NCAA’s rules on student athletes, which greatly limit these students’ economic agency.

The NCAA’s current economic model is dependent on the concept of amateurism. The NCAA defines an amateur as “someone who does not have a written or verbal agreement with an agent, has not profited above his/her actual and necessary expenses or gained a competitive advantage in his/her sport” [2]. In short, it means that student-athletes are not able to earn extra compensation for participating in athletic activities. Importantly, amateurism is not optional. Student athletes have to receive an amateur certification before they are eligible to compete [3]. The NCAA states that the amateur requirement is necessary to ensure that student-athletes are students first, but critics have argued that its real purpose is to keep the bulk of the economic benefits from the student-athletes and for the colleges themselves. 

In 2014, UCLA basketball star Ed O’Bannon brought forward a case in which Judge Claudia Wilken, Senior Judge of the United States District Court for the Northern District of California, ultimately ruled such that colleges began to give deferred payments of $5,000 a year to basketball and football players in exchange for being able to use their likeness [4]. Five years later, Judge Wilken ruled on a class action lawsuit by Alston and other Division I athletes that the NCAA had to lessen its benefits and compensation limitations [5]. But that ruling was a far cry from what the athletes wanted, which was essentially unlimited compensation. In fact, it was circumscribed to mostly scholastic materials—“computers, science equipment, musical instruments” in the words of Wilken [6]. 

The legal challenges to the NCAA system are essentially made on antitrust grounds; “NCAA limits on education-related benefits do not play by the Sherman Act’s rules,” the Ninth U.S. Circuit Court of Appeals has ruled [7]. The Sherman Act forbids efforts to monopolize by eliminating competition. In this case, the court is arguing that preventing college-athletes from receiving benefits from other sources is anticompetitive. Furthermore, “the NCAA’s interests in amateurism didn’t exclude its rules from the same kind of antitrust scrutiny that applies to other organizations.” [8]

Yet, such rulings have done little to alter the NCAA’s economic model. It is clear that the fight to change the NCAA’s rulings into ones that place agency in the hands of the students has been slow to achieve progress. For that to change, state legislatures need to join the cause.

Within a few months of the aforementioned class-action lawsuit, the California State Senate passed a bill that could potentially set off wide-sweeping alterations to the NCAA and college athlete compensation. The bill allows college athletes, in all colleges and universities in the state, whether public or private, to be paid through sponsorships and endorsement deals on their name, image, and likeness [9]. It also prohibits colleges from stopping students from acquiring external compensation and retaining agents. However, these rules do not go into effect until 2023. 

Thirty-three states could be passing similar legislation in the near future [1]. Unfortunately, this potential legislation is complicated by the fact that the NCAA seems to desire to get ahead of state laws and has made its own pledges to relax restrictions on college athletes, starting in 2021 [5]. These relaxations could include permitting athletes to use their name, image, and likeness for profit, interact freely on social media, and sign external endorsement deals. The NCAA’s willingness to alter its own rules, however, is likely dependent on how aggressively state legislatures are willing to challenge them and how various legal challenges shape up.

A crucial watershed in the fight could be upcoming action on the federal level. On March 31, the Supreme Court is going to hear arguments for another NCAA case on student-athlete compensation [10]. Last Wednesday, the Department of Justice officially aligned itself with the student-athletes in challenging the NCAA’s restrictions in this case [8]. According to Andy Staples, senior college football writer for The Athletic: “[i]f the plaintiffs prevail, it would make it illegal for schools to pass an NCAA rule capping any sort of non-cash benefit that could even be remotely tied to education” [11]. 

Others have argued that ending amateurism would disrupt the delicate student-athlete balance and cause schools and athletes to lose any semblance of being actual ‘students’ in favor of earning as much money as possible from athletic activity [12]. That is certainly the stance the NCAA purports. But the truth of the matter is that college athletics is already big business. In 2019, NCAA athletics departments reported a combined revenue of $18.9 billion [13]. The issue being debated between the students and the NCAA, either explicitly or implicitly, is not whether college athletics should be commercialized or college athletes celebritized, but to whom the profits will go. Another potent strain of thought, though, is against the entire commercialization and focus on college athletics to begin with. Critics in this vein decry schools’ supposed focus on athletics over scholastics, going back to the high school level and even before. The multifaceted fight over student-athlete compensation goes beyond students’ extracurricular activities or even the economics of the NCAA; it’s about the nature of American colleges and education as a whole.


References

[1] https://www.wsj.com/articles/the-ncaas-other-march-madness-spring-brings-a-race-to-reshape-athlete-endorsement-rules-11583769190?mod=article_inline

[2] https://breakoutsports.net/2019/01/29/what-is-amateurism-and-why-does-the-ncaa-care-about-it/

[3] https://www.ncaa.org/student-athletes/future/amateurism

[4] https://www.wsj.com/articles/u-s-supreme-court-wont-review-appeals-on-pay-for-college-athletes-1475503527?mod=article_inline

[5] https://www.wsj.com/articles/ncaa-clears-way-to-allow-athletes-to-be-compensated-11572372807?mod=article_inline

[6] https://www.morganlewis.com/-/media/files/publication/outside-publication/article/2021/law360_keyissuesinhighcourtsreviewofncaaantitrustruling.pdf

[7] https://www.wsj.com/articles/ncaa-takes-another-court-hit-on-athlete-compensation-11589826409?mod=article_inline

[8] https://www.wsj.com/articles/justice-department-backs-college-athletes-in-supreme-court-case-11615416343

[9] https://www.wsj.com/articles/california-takes-aim-at-ncaa-pay-ban-11568244553?mod=article_inline

[10] https://time.com/5947071/march-madness-college-athlete-pay/

[11] https://theathletic.com/news/ncaa-athlete-compensation-supreme-court/9Zgc5xkjnWHx

[12] https://thehill.com/opinion/education/542471-ending-amateurism-would-be-disastrous-for-student-athletes?rl=1

[13] https://www.ncaa.org/about/resources/research/finances-intercollegiate-athletics#:~:text=The%20total%20athletics%20revenue%20reported,in%202019%20was%20%2418.9%20billion.