Are College Sports Doomed?

Today the U.S. Supreme Court decided an antitrust case, National Collegiate Athletic Association v. Alston, on a 9-0 vote. In its opinion, the Court rejected the NCAA’s appeal of a 9th Circuit decision that invalidated the NCAA’s restrictions on colleges’ education-related benefits for athletes. Some are interpreting the decision, and especially Justice Kavanaugh’s concurring opinion, as representing a sort of death knell for the NCAA, a view that I think goes too far.

First, though, what was the case about? A group of student-athletes sued the NCAA, alleging that its rules violate Section 1 of the Sherman Act. The students challenged both the NCAA’s restrictions on education-related benefits (e.g., scholarships for graduate school or payments for academic tutoring) and its restrictions on non-education-related benefits (i.e., the fact that athletes can’t be paid for their services).

Most of the traditional antitrust issues were not seriously disputed. The NCAA clearly exercises monopoly control over college sports, with the result that compensation received by athletes is reduced below a market level:

Though member schools compete fiercely in recruiting student-athletes, the NCAA uses its monopsony power to “cap artificially the compensation offered to recruits.” Id., at 1097. In a market without the challenged restraints, the district court found, “competition among schools would increase in terms of the compensation they would offer to recruits, and student-athlete compensation would be higher as a result.” Id., at 1068. “Student-athletes would receive offers that would more closely match the value of their athletic services.” Ibid. And notably, the court observed, the NCAA “did not meaningfully dispute” any of this evidence. Id., at 1067; see also Tr. of Oral Arg. 31 (“[T]here’s no dispute that the—the no-pay-for-play rule imposes a significant restraint on a relevant antitrust market”).

The NCAA’s defense was that its rules are necessary to preserve amateur college sports as distinct from professional sports. Without this distinction, the market for amateur sports would collapse:

The NCAA’s only remaining defense was that its rules preserve amateurism, which in turn widens consumer choice by providing a unique product—amateur college sports as distinct from professional sports. Admittedly, this asserted benefit accrues to consumers in the NCAA’s seller-side consumer market rather than to student-athletes whose compensation the NCAA fixes in its buyer-side labor market.

This is by no means a stupid argument. The District Court, in an opinion that the Supreme Court found to be well-reasoned, essentially accepted the NCAA’s rationale, but drew a distinction between education-related and non-education-related benefits. It found that the former have little to do with preserving the distinction between amateur and professional sports, and invalidated them, while upholding the NCAA’s limits on non-education-related benefits.

Both parties appealed to the 9th Circuit Court of Appeals, which affirmed the District Court. The student-athletes were apparently satisfied with this result, and did not appeal further. The NCAA, on the other hand, appealed the adverse ruling on education-related benefits to the Supreme Court. Thus, the fundamental issue of whether the NCAA’s ban on paying student-athletes violates the Sherman Act was not before the Supreme Court. The NCAA’s decision to appeal was by no means a blunder on a par with Oscar Wilde’s libel suit, but some would say that the appeal was ill-advised.

The Supreme Court unanimously upheld the ruling of both the District Court and the Court of Appeals. Judge Gorsuch’s majority opinion is well worth reading. It offers an interesting history of the NCAA and of “amateur” sports in America. It includes a section on the need for judicial modesty that should be must reading for all newly-appointed judges. But it says nothing very revealing about the ultimate issue: can the NCAA legally impose a regime in which young athletes generate billions of dollars in revenue, from which everyone benefits except them? Thus, the Court’s opinion concludes:

For our part, though, we can only agree with the Ninth Circuit: “‘The national debate about amateurism in college sports is important. But our task as appellate judges is not to resolve it. Nor could we. Our task is simply to review the district court judgment through the appropriate lens of antitrust law.’” 958 F. 3d, at 1265. That review persuades us the district court acted within the law’s bounds.

But Justice Kavanaugh’s concurrence went further:

The bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year. Those enormous sums of money flow to seemingly everyone except the student athletes. College presidents, athletic directors, coaches, conference commissioners, and NCAA executives take in six- and seven-figure salaries. Colleges build lavish new facilities. But the student athletes who generate the revenues, many of whom are African American and from lower-income backgrounds, end up with little or nothing.

Justice Kavanaugh suggests that one solution to the current dilemma is legislation. He points out the complexities that need to be resolved, arising in part from the fact that only a few college sports–football, basketball, and in some cases hockey–are revenue generating. I think that Congress ultimately will resolve these issues in favor of permitting athletes in the revenue-generating sports to be paid. This is largely because athletes in the revenue-generating sports are mostly black. As Justice Kavanaugh wrote, “[T]he student athletes who generate the revenues, many of whom are African American and from lower-income backgrounds, end up with little or nothing.” In today’s climate, I think there is little chance that Congress will be deaf to that appeal.

What is not clear is whether, once schools are free not just to recruit athletes but to pay them, college sports as we know them will survive.