By: Donald L Swanson
On June 21, 2021, the U.S. Supreme Court orders the National Collegiate Athletic Association (“NCAA”) to stop limiting “education-related compensation or benefits” that schools provide to student athletes—any such limitation violates U.S. antitrust laws. [Fn. 1]
This is not the first time the U.S. Supreme Court has declared NCAA conduct unlawful under the same U.S. antitrust laws—it is the second, as discussed below.
The NCAA has regulated college athletics for many years—and has punished colleges and athletes for violating its rules. Unfortunately, however, the NCAA’s regulatory and enforcement efforts have often been inconsistent, shortsighted and wrongheaded—sometimes spectacularly so.
Fortunately, the U.S. Supreme Court has been here to reign them in — twice.
Prior Supreme Court Loss—Television Restrictions & Revenue
A prime example of a spectacularly shortsighted NCAA regulation is this:
- back in the 1970s and early 1980s, NCAA restricted the number of college football games that could be televised;
- the purpose was to protect in-person attendance at college football games.
Fortunately, back in 1984 the U.S. Supreme Court declares such regulation to be unlawful—in violation of the same U.S. antitrust laws at issue in the 2021 opinion. [Fn. 2]
As a result, we now have a television market for college football and basketball games providing hundreds of millions of dollars each year to colleges all across the United States. Such amounts:
- dwarf any in-person ticket revenue that might have been preserved under the NCAA’s regulation; and
- enable the current discussions to occur on how college athletes should be compensated for their efforts—because there is money (and lots of it) to discuss.
Trivial vs. Major Violations
A prime example of a spectacularly wrongheaded NCAA enforcement action involves my alma mater: the University of Nebraska.
Back in 2011, the University self-reported a technical violation of NCAA rules about textbooks. The University reported that it provided to its scholarship athletes, from 2007 to 2010, textbooks that professors recommended for classes the students took.
Yep. That’s it. That’s the violation: the University was only allowed by NCAA rules to provide books that professors required—they were not allowed to provide books the professors merely recommended.
The professor-recommended books were provided in good faith by university bookstore staff, who believed their actions were within NCAA rules.
So, the University’s self-report of the violation:
- identified the total value of the recommended textbooks it provided at $28,000; and
- self-imposed a $38,000 fine for the violation (computed as the $28,000 value + a $10,000 penance-payment from the University Bookstore for its mistake).
The NCAA accepted the University’s $38,000 proposed fine. But it also put the University on probation for two years, with an explanation that the NCAA,
- “spared Nebraska a stiffer punishment for what the Division I Committee on Infractions determined to be major violations across multiple sports over multiple years” (emphasis added).
Seriously?! That’s a “major violation”?!
Oh . . . and get this: the U.S. Supreme Court’s 2021 opinion on education-related benefits shows that the NCAA’s punishment of the University of Nebraska was unlawful under U.S. antitrust laws:
- the University of Nebraska should never have been put on probation; and
- it should not have paid a fine.
Q: “Your boss is quite a card player, Mr. Kelly; how does he do it?” A: “He cheats.” [From “The Sting” (1973).]
It’s happening . . . and everyone knows it. Cheating, that is—by coaching staffs in college football and basketball.
By “cheating,” we’re talking about real-life, clandestine payments of high-dollar amounts by college coaching staffs, or their bagmen, to recruits and players.
The problem is that the NCAA can’t—and won’t—police this problem. It’s another example of a faulty and spectacularly inconsistent problem within the NCAA.
It takes the FBI to expose cheating and corruption in college basketball — there’s no self-reporting on this. Check out this article: An FBI Sting Operation Just Exposed College Basketball’s Worst-Kept Secret. The FBI’s allegations are of a scheme in which bribes were offered to get recruits to specific college programs, with the feds having evidence that a prized recruit “was paid $100,000 to sign” with a certain college.
Armed with evidence gathered by the FBI and submitted in open court proceedings, what enforcement actions have the NCAA taken? Not much.
Indeed, some sanctions the NCAA imposed in response are shockingly similar to the two-years probation and fine the University of Nebraska incurred for providing professor-recommended textbooks to students in a good-faith.
Will College Bankruptcies Follow?
Colleges with over-sized athletics budgets (that’s probably every college with a Division I football and/or basketball team, including my alma mater) are quaking in their boots—or should be. Here’s why:
- The concurring opinion by Justice Kavanaugh in the 2021 opinion would prohibit the NCAA from any and all regulations on compensation payments to college athletes; and
- Under that view, all colleges would have to compete openly, directly and dollar-for-dollar, in recruiting and retaining athletes.
The concern under such a view would be particularly acute for coaching staffs that have been cheating. If there is no regulation, then no one can cheat. Since colleges would compensate athletes and recruits openly and without apology:
- under-the-table or bribery payments will be irrelevant and ineffectual; and
- cheaters will have to compete directly, unable to gain an under-the-table advantage, which is likely to be something they are unable to do.
All of this could run many colleges out of the football or basketball business . . . and/or put them into bankruptcy.
The world of college athletics will never be the same, following the U.S. Supreme Court’s 2021 opinion in NCAA v. Alston.
Predicting what will happen is an impossibility. But the likelihood is that we will see such things as activity in Congress, alignments and realignments of colleges and conferences, and major adjustments within the NCAA
No one knows what the ultimate effect and result of the new NCAA opinion from the U.S. Supreme Court will be. Hopefully, the result will be as helpful and valuable as the last time the Supreme Court reigned-in the NCAA, when it opened the television market for college sports—and helped everyone involved!
Footnote 1. The U.S. Supreme Court opinion is National Collegiate Athletic Association v. Alston, Supreme Court Case No. 20-512 (issued June 21, 2021).
Footnote 2. The U.S. Supreme Court opinion is NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 885 (1984)
** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.