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Thomas Gallatin / June 23, 2021

A Big Defeat for the NCAA’s Monopoly

A unanimous SCOTUS ruling opens the door for student athletes to seek financial compensation.

The U.S. Supreme Court on Monday handed down yet another unanimous decision, ruling against the NCAA’s rules on limited education-related benefits for student athletes. Declaring the NCAA in violation of the Sherman Act, the justices in NCAA v. Alston rejected the NCAA’s argument that its monopoly is legitimate. Maybe bigger than the ruling itself are the future implications — the Court has effectively opened the door for student athletes to eventually win the right to enjoy financial compensation for their play.

In his opinion, Justice Neil Gorsuch wrote:

No one disputes that the NCAA’s restrictions in fact decrease the compensation that student-athletes receive compared to what a competitive market would yield. No one questions either that decreases in compensation also depress participation by student-athletes in the relevant labor market — so that price and quantity are both suppressed.

The justices did note the NCAA’s argument that without its compensation-limiting rule, there would be no amateur sports; all athletes would be professionals:

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.

However, even given that reality, the justices still saw the current situation as untenable. Justice Brett Kavanaugh cut directly to the heart of the issue in his concurring opinion: “Price-fixing labor is price-fixing labor. … The NCAA’s business model would be flatly illegal in almost any other industry in America.” Kavanaugh further observed:

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.

For many college sports fans, this decision may strike against the long-held ideal of the collegiate amateur athlete playing for school loyalty with the only compensation being that of a “free” or discounted education. We certainly sympathize with this appeal for college sports. In many respects, that model will likely still remain the ideal and the norm for the vast majority of college athletes.

However, it cannot be denied that superstar college athletes generate wealth for their schools well beyond the cost of their degree — massive amounts of capital that they have been excluded from enjoying. In a capitalist economy, there’s something wrong with that. And the Supreme Court just opened the door for it to change.

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