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US College Sport: “The NCAA is not above the law” - But what comes next?

By Iacovos Iacovides, APC Sports Consulting, Nicosia, Cyprus

On 21 June 2021, the US Supreme Court unanimously ruled (9-0) in favour of Division I college athletes that the limits on education-related benefits, championed by the National Collegiate Athletic Association (NCAA), could not be legally enforced in the case of National Collegiate Athletic Association v. Alston, No. 20-512.

This seminal ruling has almost certainly opened Pandora’s box and more legal battles vis-à-vis the peculiar regulations of the NCAA will follow. Although important in and of itself, the Supreme Court’s decision will form the lynchpin for the future of college sport in the US.

In the grand scheme of things, the decision is the latest of a series of blows inflicted upon the NCAA. This time, the battle has moved from the legislative arena to the judiciary. It seems that the tide is irreversible and the NCAA will keep losing ground. The court ruled against the NCAA on the basis that its modus operandi, regulations and stipulations in relation to educational benefits essentially violate the country’s antitrust laws and more specifically the Sherman Antitrust Act of 1890 that targets monopolies.

Justice Brett Kavanaugh stated that “the NCAA is not above the law”. In a separate opinion, he even seemed to imply that he also endorses actual compensation for student-athletes. The NCAA tried to fight back using its cardinal argument: putting forth the amateurism shield. In other words, that the amateur nature of college sport exempts the NCAA from such laws. However, it is hard – even for such a powerful organisation – to convince people that the multibillion-dollar industry that college sport has grown into hardly qualifies as amateur.

Justice Neil Gorsuch stated in his Opinion that:

Put simply, this suit involves admitted horizontal price fixing in a market where the defendants exercise monopoly control.”

And added:

To the extent it means to propose a sort of judicially ordained immunity from 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.”

College sport is an industry that generates over US$18 billion each year, whilst, in 2019, the revenues of the NCAA alone were almost US$1.2 billion. Yet, college athletes receive no compensation for their labour.

It has become clear that the amateurism argument has crumbled and the NCAA needs to find new ways if they wish to maintain their ironclad grip on the industry, which is slowly slipping away. What the ruling means, in practice, is that colleges can now give student-athletes modest cash payments, laptop computers and other educational supplies, on top of the free tuition and accommodation that many student-athletes already receive.

The attorney representing the student-athletes called the ruling “historic” and emphasized its importance for those who will not turn pro which is the overwhelming majority — 98% of student-athletes.

The most important aspect of the ruling, however, is the aftermath and what will follow this decision. For example, what about college athletes being compensated for the use of their image rights? This is another bone of contention and the subject of other legal proceedings.

It seems that the time is ripe for change as state legislatures, the national judiciary branch and even the executive branch of the US government all seem to favour drastic changes in the landscape of college sports.

The White House Press Secretary, Jen Psaki, commented that “athletes’ hard work should not be exploited” and that “the President believes that everyone should be compensated fairly for his or her labor.”

The present NCAA position is, nowadays, a case of ‘shamateurism’!  

For further information, log onto: ‘www.apc-sport.com’

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The editors of  the Journal Sports Law & Taxation are Professor Ian Blackshaw and Dr Rijkele Betten, with specialist contributions from the world's leading practitioners and academics in the sports law and taxation fields.

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Dr. Rijkele Betten

Consulting editor
Prof. Dr. Ian S. Blackshaw

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Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam

 

Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Pirola Pennuto Zei & Associati, Milano

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