June 29, 2021

By Attorneys Emily Kolbe, Rebecca Reif, Alec LeSher

Whether student athletes should be paid has been a hotly debated issue for years. On June 21, the United States Supreme Court weighed in, issuing a lengthy decision in National College Athletic Association v. Alston. The Court was asked to decide whether the National Collegiate Athletic Association’s (“NCAA”) prohibition on member schools providing compensation in the form of “education-related benefits” to student-athletes violated federal antitrust law. The Court unanimously ruled that colleges and universities can offer education-related benefits, striking down the NCAA’s restrictions on such compensation under antitrust law.

Previously, the NCAA prohibited colleges and universities from providing anything other than scholarships for student-athletes. A group of college athletes sued, arguing that the NCAA is the only viable market for elite Division I college football and basketball and that the NCAA’s rules violated antitrust law because the athletes were unable to be compensated for the fair market value of their labor. The Court, agreeing with the lower courts that initially decided the case, held that the NCAA prohibition violated the Sherman Act by illegally fixing the price for student-athlete labor.

Crucially, the Court’s decision is limited to education-related benefits. The Court expressly approved of the NCAA’s prohibition on cash payments as a lawful way to protect the ideal of “amateurism” in college sports and prevent blurring the line between collegiate and professional sports. However, at least one member of the Court holds grave doubts about the overall legitimacy of the NCAA’s rules on compensation. In a concurring opinion, Justice Kavanaugh reflected on the fact that only the rules restricting education-related benefits were presented to the Court in this case, while the rest of the NCAA’s compensation rules remain on the books but “also raise serious questions under the antitrust laws.”

“Education-related benefits”

An education-related benefit is a broad, yet somewhat vague, concept. The Court held that the NCAA cannot prohibit institutions from offering benefits like scholarships for graduate degrees, computers, or tutoring to student-athletes. The NCAA argued this was a slippery slope, and that schools could end up offering things like luxury vehicles to students because transportation to campus could arguably be “education-related.” The Court rejected this argument, reminding the NCAA that it is “free to forbid in-kind benefits unrelated to a student’s actual education; nothing stops it from enforcing a ‘no Lamborghini’ rule.”

The ruling also notes that the NCAA has “considerable leeway” to develop its own definition of education-related benefits. Providing a textbook for classwork would presumably meet the “education-related” standard, whereas providing cash bonuses for winning games would not. The middle ground is where disputes will arise, but at this point the Court has not provided clear guidance.

In practical terms, the Court has opened a door previously closed in college athletics. What exactly lies on the other side is still unknown, since what constitutes permissible (or impermissible) “education-related benefits” is not defined. In the near future, we can likely expect to see new NCAA rules on the topic, including further guidance on education-related benefits, and potentially more litigation down the road over the NCAA’s remaining compensation rules. We encourage our higher education clients to monitor these changes and reach out for advice should any questions arise.

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Kolbe, Emily

Associate
Phone:
515-246-0362

LeSher, Alexander

Associate
Phone:
515-246-0312

Reif, Rebecca

Shareholder
Phone:
515-246-0347

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