We usually restrict our discussion to hardwood courts here on Rivals, but today's Supreme Court Ruling promises to shake up the future of college athletics and deserves a careful review. I've spent some time reading and analyzing the opinion and wanted to share my thoughts with you. We'll start by reviewing the law and the opinion and then talk about what this means for the future of college athletics.
The Law and the Opinion
The Law
The Sherman Act is the key American anti-trust law, and it restricts the ability of organizations to control the markets they operate in. Most people are familiar with the concept of a monopoly- where a business has such a large market share of an industry that they are able to influence how the industry functions, but the Sherman Act contains a broad array of provisions that restrict a variety of different kinds of interference in the competitive landscape- including monopsony, which is the word for buyer-side control of a market. In this case, the monopsony in question in the NCAA's complete control of the labor market for college athletes in football and basketball.
A group of student athletes sued the NCAA, saying two things: 1) that the restrictions on paying players for their athletic activity was an undue restriction on the industry, and 2) that the restrictions on paying players for non-athletic activities like paid scholarships, academic tutoring, and the like.
The lower courts ruled in favor of the NCAA on #1. They held that the restrictions on paying athletes protected consumer demand for the industry and weren't unfair. However, they ruled in favor of the athletes on #2, ruling that restricting athlete's ability to earn money for their academic success was unfair. The NCAA appealed that second part of the ruling to the Supreme Court, who also sided with the athletes today.
The Opinion
The Court ruled that while the NCAA can continue to fix compensation or benefits unrelated to education, they could not limit compensation or benefits related to education. Athletes will now be able to receive academic scholarships, including paid scholarship opportunities like a graduate fellowship, for example. The NCAA will be able to regulate these opportunities and cap compensation, but they can no longer completely ban it.
The Court applied the 'Rule of Reason' to the case. The NCAA pushed hard to have this not happen, and it will likely prove to be the part of this decision that has the biggest long term impact on college athletics. To make a determination under this rule, the athletes have to prove that the restraints 'produce significant anticompetitive effects', and if they do, they NCAA must prove that the restraints 'have a procompetitive rationale.' In this specific case, the NCAA couldn't provide a procompetitive rationale for restricting educational scholarships, and so they are not allowed to ban them.
The Fallout
Applying the Rule of Reason to NCAA athletics is a big deal, and there's a reason the NCAA fought so hard to have it not be applied. This opens the Association up to lawsuits for their restrictions on almost every conceivable way an athlete can make an extra dollar or two outside of playing the sport, and because it's such a fact-specific analysis, the NCAA is going to struggle to win these cases quickly or easily.
It's also important that this ruling was completely unanimous. That indicates that there is a lot of support across the judicial ideological spectrum for this line of thinking. Athletes have gained a significant amount of protection for their outside-the-stadium earning potential, and the NCAA is going to need to make persuasive arguments for why they have completely obstructed an athlete's ability to start a business, work as a spokesperson, or trade their likeness.
This isn't the dam breaking, but there's more cracks in it than the NCAA has fingers to fill them. It's likely D1 athletes will soon be able to get much closer to their actual earning potential and cash value to the sports they play.
One has to wonder what the likes of guys like Devin Lloyd, Britain Covey or past players like Kenneth Scott would make. Is it fair? The ruling will have its doubters. It’s tough to say they don’t deserve something though when Lloyd and Covey are prominently featured students-athletes. There’s also the past example of Scott producing content for the athletic department YouTube channel. Whatever happens, it will be interesting to see what happens next.
