The SCOTUS vs the NCAA: What the ruling really means

  • First, a synopsis of what drove the ruling:

    To really understand what went down with regard to the recent SCOTUS decision regarding the NCAA, it helps to understand just what “The Law” is.
    ”The Law”, in the hands of lawyers, politicians, and judges - even SCOTUS judges - is oftentimes as much about finding a way for the law to support the actions one wants to take, as it is about some pre-set code that drives one’s actions. It is, for lack of a better analogy, a Chicken-and-Egg conundrum.

    In the case in question, what the SCOTUS is clearly saying is the following:
    You cannot run a billion-dollar enterprise - and pay millions of dollars to untold numbers of coaches, administrators, and University yukmaluks - and pretend to wrap that enterprise up in the cloak of “academics” in order to deny fair treatment to those who produce the product.

    That is really what the SCOTUS told the NCAA. Some of the precise language in the ruling was:
    ”The NCAA also submits that a rule of reason analysis is inappropriate because its member schools are not “commercial enterprises” but rather institutions that exist to further the societally important noncommercial objective of undergraduate education. This submission also fails.”
    ”Those who run this enterprise profit in a different way than the student-athletes whose activities they oversee. The president of the NCAA earns nearly $4 million per year. Commissioners of the top conferences take home between $2 to $5 million. College athletic directors average more than $1 million annually. And annual salaries for top Division I college football coaches approach $11 million, with some of their assistants making more than $2.5 million.“
    At one point in the rulings, after outlining the NCAA’s arguments, the Court simply stated:
    ”None of this (the NCAA’s arguments) helps the NCAA.”

    Make no mistake, if all of intercollegiate Athletics were operating under the parameters and scale of Volleyball, Baseball, Field Hockey - or any of the “NCAA Sports” other than Football and Men’s Basketball, that generate billions of dollars of revenue - a case like this would never have come before the Court. There simply would not have been sufficient resources at stake to make it worth anyone’s efforts.

    One need to read nothing more than the four concluding sentences of the ruling to hear what the SCOTUS is saying:
    ”But 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. “

    So, what happens now?

    In absolutes, the case was an anti-trust case, brought by NCAA athletes against the NCAA. The plaintiffs - the athletes - contended that the NCAA unfairly acted as a Trust, to limit the level of compensation that the athletes could earn.
    This issue was really not in any doubt or up for debate. The NCAA does, without question, regulate and constrain the compensation that collegiate athletes can earn. The Court clearly stated that in their ruling:
    ”The Court does so based on the uncontested premise that the NCAA enjoys monopsony control in the relevant market— such that it is capable of depressing wages below competitive levels for student-athletes and thereby restricting the quantity of student-athlete labor.”

    So, the question before the Court was, essentially, whether or not it was legal for the NCAA to do it.
    The SCOTUS said, in a word, “No”.

    What will happen now?

    Let’s first talk about what the ruling does NOT do.
    The case before the SCOTUS, that came to the SCOTUS from the 9th Circuit Court, dealt only with compensation in the form of “educational benefits”. So, with this ruling, the Court - in affirming the lower court’s ruling - has not created a “pay for play” scenario in college sports.
    What it did do was to essentially take the lid off of the NCAA’s ability to prevent the athlete’s from receiving market-based “educational benefits” - which could manifest themselves in any number of as yet undefined ways. From providing scholarships for years after an athlete is no longer eligible to participate in a sport, to increased stipends and grants (over and above the Cost of Attendance), graduate school tuition, etc.
    But, again, this ruling on June 21, 2021 does NOT - in and of itself - open up the athletes to being “paid to play”, outside of the University/Student relationship.

    The ruling’s scope was also limited to Football and Men’s Basketball athletes - those being the two sports that operate as a substantial business - as opposed to all of the so-called “non-revenue” sports.

    So that, in a nutshell is where we are now.

    But what was, in my opinion, more revealing was the commentary the Court laid out with respect to the issues NOT yet before the Court (because they were not specified in the case that arose from the 9th Circuit).
    Specifically, in addressing further relief for the athletes - with respect to compensation above and beyond “educational costs” - the Court discussed the NCAA’s one remaining pathway towards maintaining their anti-trust exemption. That pathway being the NCAA’s argument that an exemption was in order to assure “fair competition on seller-side market” (ie, to protect the NCAA’s ability to provide the consumers - the fans - with an “amateur athletics” product). After laying out the NCAA’s arguments on that point, the Court said:
    ”We see things differently.”
    ”Given the sensitivity of antitrust analysis to market realities—and how much has changed in this market—we think it would be particularly unwise to treat an aside in Board of Regents [the case the NCAA used to try to bolster their argument] as more than that.” … “With this much agreed it is unclear exactly what the NCAA seeks. To the extent it means to propose a sort of judicially ordained immunity from the terms of the Sherman Act for its restraints of trade—that we should overlook its restrictions because they happen to fall at the intersection of higher education, sports, and money—we cannot agree.”
    ”Recall that the court found the NCAA failed “to establish that the challenged compensation rules . . . have any direct connection to consumer demand.”

    That - the SCOTUS effectively pre-disqualifying the NCAA’s argument for anti-trust exemption based upon the need to “deliver an amateur athletics product” to consumers - is really what should make Mark Emmert, and his contingent of University Presidents, sweat.

    Justice Kavanaugh, wrote a concurring brief - and in it he all but invited a plaintiff to step forward to challenge ALL of the NCAA’s restrictions on athlete compensation. Excerpts from that brief:

    ”But this case involves only a narrow subset of the NCAA’s compensation rules—namely, the rules restricting the education-related benefits that student athletes may receive, such as post-eligibility scholarships at graduate or vocational schools. The rest of the NCAA’s compensation rules are not at issue here and therefore remain on the books. Those remaining compensation rules generally restrict student athletes from receiving compensation or benefits from their colleges for playing sports. And those rules have also historically restricted student athletes from receiving money from endorsement deals and the like. I add this concurring opinion to underscore that the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws.”

    And then Kavanaugh goes on at length outlining the ways on which the NCAA appears to grossly violate anti-trust laws, including:
    ”Everyone agrees that the NCAA can require student athletes to be enrolled students in good standing. But the NCAA’s business model of using unpaid student athletes to generate billions of dollars in revenue for the colleges raises serious questions under the antitrust laws. In particular, it is highly questionable whether the NCAA and its member colleges can justify not paying student athletes a fair share of the revenues on the circular theory that the defining characteristic of college sports is that the colleges do not pay student athletes. And if that asserted justification is unavailing, it is not clear how the NCAA can legally defend its remaining compensation rules.”
    And concluding with:
    “The NCAA is not above the Law.”

    Given the ruling today - and the commentary in the concurrent brief - placing a bet on the NCAA would appear to be a longshot.
    The 9-0 decision with respect to the case at issue, along with Kavanaugh’s comments, clearly indicate a SCOTUS that may not be friendly to any arguments the NCAA might make with respect to continuing to exploit their (in the Court’s terminology) monopsony.

    The current model for the large revenue-producing Football and Men's Basketball programs is on the verge of a cliff. Kinda' like Sergeant Snorkle hanging on to that limb in the old Beetle Bailey cartoons.

    In my opinion:

    It didn't have to get to this point. But when you have an NCAA "led" by the likes of Mark Emmert - "advised" by the likes of Donald Remy - and "governed" by the likes of Eric Barron and his cohorts - and hordes of "make me a millionaire" coaches and administrators - all of whom took the stance of seeing who could bury their heads further into the sand, while simultaneously competing to see who could take the biggest gulps from the money trough (a tough set of tasks to take on simultaneously ) that's what ya' get.