Justice Kavanugh’s concurrence in Alston v. NCAA arguably summarizes the rationale in creating the NIL market: “Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.” 594 U.S. 69, 112 (2021). Kavanaugh’s strong language represents prevailing sentiments toward the NCAA’s decades-long commercial appropriation. Facially, it echoes the boiling frustration of thousands of athletes whose NILs the NCAA appropriated since the Board of Regents decision. See Board of Regents v. NCAA, 468 U.S. 85 (1984). A recondite sentiment reaps from irritated sports-law scholars, including 21st century Supreme Court Justices, who acknowledge that the NCAA’s arrogant and passive attitude toward the serious allegations in the landmark O’Bannon and Alston decisions that ultimately created the current NIL Wild West and subsequent flood of litigation currently drowning the NCAA. See O’Bannon v. NCAA, 802 F.3d 1049 (9th Cir. 2015). An examination of the NIL Trilogy – Board of Regents, O’Bannon, and Alston – shows how the NCAA’s reliance upon favorable dicta potentially played a significant role in ushering in this chaotic era of collegiate sports.
The courts’ decisions in the NIL Trilogy are based upon the Rule of Reason. Once plaintiffs established antitrust standing – proving they suffered the type of injury antitrust laws are intended to prevent and such injury flows from unlawful NCAA conduct – courts moved to the first prong of Rule of Reason analysis, examining whether the plaintiffs identified the rules’ anticompetitive effects. Then, the NCAA was charged with identifying a procompetitive purpose for its challenged rules. Regardless of whether the NCAA truly met its burden, the courts continued to the third Rule of Reason prong, which required plaintiffs to identify substantially less restrictive alternative means of achieving the challenged rule’s procompetitive purpose. Courts found the plaintiffs met satisfied this high standard in O’Bannon and Alston.
Initially, the NCAA enjoyed essentially antitrust exemption, based almost solely on language in Board of Regents. The issue centered on the NCAA’s rules for televising college football games. See Board of Regents, 104 S. Ct. at 2955-2957. These rules would ordinarily be per se unlawful: rules setting a minimum price TV networks must pay NCAA member schools constitutes a price fixing agreement, and rules artificially capping the number of televised game licenses for sale constitutes an output-restricting agreement. Id., at 2962. After analyzing the facts under the Rule of Reason, the Supreme Court affirmed the Tenth Circuit’s finding that the NCAA’s conduct violated the Sherman Act because its actions constituted an unlawful horizontal restraint of trade. Id. at 2959. However, because college sports could not exist without certain horizontal agreements (such as standardizing the size of the field, the number of players on the team, and the extent that physical violence was encouraged or prohibited), NCAA rules should not be held per se unlawful even when they appear to be pure “restraints on the ability of member institutions to compete in terms of price and output.” Id. at 2960-61. Thus, the challenged rules were not per se unlawful because the NCAA fostered competition in other sports – just not for televised football. Id., at 2961. Notably, NIL implications are found in the Court’s concluding remarks, which emphasized the NCAA’s “critical role” in maintaining a “revered tradition of amateurism in college sports” by using its ample latitude to preserve the student-athlete’s role in higher education, adding richness and diversity to intercollegiate athletics and thus, is “entirely consistent with the Sherman Act.” Id., at 2970.
Twenty years later, the Court’s concluding remarks in Board of Regents served as one of the NCAA’s cornerstone arguments against subjection to antitrust law. See O’Bannon, 802 F.3d at 1061. The plaintiffs – a class of all former and current D1 men’s basketball and football student athletes whose NILs were potentially included in EA NCAA video games – alleged that the NCAA's amateurism rules, insofar as they prevented compensation for use of the athletes’ NILs, illegally restrained trade under the Sherman Act. Id. at 1055. The NCAA argued Board of Regents’s holding makes its amateurism rules presumptively valid – thus, any antitrust challenge fails as a matter of law. Id., at 1061. However, the Nineth Circuit interpreted Board of Regents to mean that challenged NCAA rules must be examined under the Rule of Reason, and the Court’s encomium to amateurism was dicta. Id., at 1063. Thus, the NCAA is not above antitrust law, and courts must not shy away from requiring the NCAA to play by the Sherman Act's rules. Id. at 1079.
Despite the Nineth Circuit’s rejection of the NCAA’s Board of Regents argument in O’Bannon, the hauntingly familiar antitrust-exemption assertion reared its head once again in the 2021 Alston decision. There, a class of current and former D1 FBS football and men’s and women’s D1 basketball players alleged the NCAA’s rules restricted the compensation they may receive in exchange for their athletic services, thereby violating § 1 of the Sherman Act. See Alston, 141 S. Ct. at 2151. SCOTUS quickly reminded the NCAA that its dicta did not suggest that courts must reject all challenges to the NCAA’s compensation rules. Id. at 2157. Further, the existence of antitrust violations depends on careful analysis of market realities, which significantly evolved since 1984. Id., at 2158. The NCAA dramatically increased the amounts and kinds of benefits schools may provide to student athletes, such as increasing the size of permissible benefits incidental to athletics participation. Id. The Court directly addressed Board of Regents’s key issue by noting the one-billion-dollar difference between what CBS paid for broadcasting March Madness in 1984 ($16 million) versus what it paid in 2016 ($1.1 billion). Id. Thus, given the sensitivity of antitrust analysis to market realities – and the drastic changes in this market since Board of Regents – SCOTUS thought it particularly unwise to treat an aside in Board of Regents as more than that. Id.at 2158.
In rejecting the Board of Regents argument, SCOTUS touched upon a potential explanation as to why the NCAA twice relied upon a sinking ship. One is stare decisis – a favorable SCOTUS decision would render the Nineth Circuit’s admonishment of the Board of Regents argument mute. The explanation addressed in Alston, however, mentions SCOTUS precedent at the heart of many failed attempts for an antitrust exemption: Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs – a 1922 SCOTUS decision regarded as an unrealistic, inconsistent aberration. 259 U.S. 200 (1922); see Alston, 141 S. Ct. at 2159.
Like the NCAA, the National League never disputed it operated as a monopoly. It argued that an activity does not turn interstate "merely because people came from another State to do it," and supported its contention by noting Congress did not regulate baseball players’ interstate movement. Fed. Baseball, 42 S. Ct. at 206. Noting this was a case of first impression, SCOTUS found that baseball exhibitions did not implicate the Sherman Act because they did not involve interstate trade or commerce – even though teams regularly crossed state lines (as they do today) to make money and enhance their commercial success. See id. at 465; Alston, 141 S. Ct. at 2159. This extreme judicial deference has since proved elusive for every other league. See Radovich v. National Football League, 77 S. Ct. 390 (1957) (holding that the NFL was not exempt from antitrust law); United States v. International Boxing Club of New York, Inc. 75 S. Ct. 259 (holding that boxing was not exempt from antitrust law). I theorize the NCAA continued to push the Board of Regents argument in hopes that SCOTUS would succumb to its precedent as it arguably did in the wake of Fed. Baseball, despite a litany of precedent holding the contrary. See Toolson v. New York Yankees, 346 U.S. 356 (1953) (determining Congress’s failure to pass legislation subjecting baseball to antitrust law created the exemption, despite no evidence of Congress’s authority to do so); Flood v. Kuhn, 407 U.S. 258 (1972) (determining stare decisis and Congress’s failure to reverse the antitrust exemption required the Court to uphold the reserve clause).
It is worth noting that the Baseball Trilogy touches upon a possible route for the NCAA to obtain its elusive antitrust exemption. This May, Congressmen Russell Fry (R-S.C.) and Barry Moore (R-Ala.) introduced a bill proposing a national liability shield protecting schools, student athletes, and conferences as they navigate the NIL Wild West. Arguably, without such a shield, anyone and everyone whose NIL the NCAA commercially appropriated may seek compensation. Jesse Taylor – a former University of Alabama at Birmingham drum major– requested a copy of EA’s NCAA 25 via X with a photo of his own NIL in NCAA 07. While damming the flood of litigation O’Bannon and Alston produced may determine the NCAA’s chance of survival, American jurisprudence places the NCAA in the same category as thousands of other miffed defendants subjected to what they purport constitutes inequitable judicial decision-making. In short, the NCAA is not above the law.
Keeton Cross is a third-year law student at Cumberland School of Law. She can be found on X @keeton_cross and on LinkedIn (Keeton Cross).