Supreme Court grapples with NCAA rules limiting some payments for student athletes

Several Supreme Court justices seemed skeptical of justifications put forward by the NCAA on Wednesday to restrict education-related benefits for student athletes who are seeking broader compensation.

At the same time, however, the justices expressed concern about the future and distinctiveness of college sports if courts continue down the road of second-guessing the NCAA’s definition of amateurism that leads it to limit payments.

The case thrusts the justices into the center of a debate — for the first time since 1984 — that could reshape college athletics. They appeared to be searching for a line to draw that would balance reasonable educational benefits for students against the concerns of the NCAA that its survival depends upon its distinction from pro sports.

Justice Brett Kavanaugh pressed a lawyer for the NCAA.

“I start from the idea that the antitrust laws should not be a cover for exploitation of the student athletes, so that is a concern, an overarching concern here,” he said.

But Justice Sonia Sotomayor said at another point: “How do we know that we are not just destroying the game as it exists?”

The legal issue before the justices is the interaction between the NCAA that restricts paying athletes in order to promote the amateur nature of college sports and anti-trust laws aimed at protecting competition.

The student athletes behind the current suit, Football Bowl Subdivision and Division 1 men’s and women’s basketball players, led by former West Virginia football player Shawne Alston, initially sought to eliminate all other restrictions on payment.

A district court did not go that far.

Instead, it preserved limits on compensation unrelated to education, but ruled that caps on some education-related benefits violate anti-trust laws. The ruling was largely upheld by the 9th US Circuit Court of Appeals, although the schools are waiting for the Supreme Court to act before making any changes.

The dispute comes as college sports raise billions of dollars from ticket sales, television contracts and merchandise, and supporters of the students say the players are being exploited and barred from the opportunity to monetize their talents. In 2016, for example, the NCAA negotiated an eight-year extension of its broadcasting rights to March Madness, worth $1.1 billion annually.

Seth Waxman, a lawyer for the NCAA, urged the court to reverse the lower court decision, arguing that it would cause money to flood into a few schools under the guise of “education related spending.” He said it would allow, for instance, post-eligibility internships worth thousands of dollars.

“These new allowances are akin to professional salaries,” he said.

Chief Justice John Roberts and Justice Clarence Thomas pushed Waxman, however, on the fact that the NCAA already has some rules on the books that seem to contradict the amateurism model and that while coaches are benefiting from college sports, students aren’t.

Thomas said, “It just strikes me as odd that the coaches’ salaries have ballooned” while the league restricts payment to students.

Kavanaugh pressed an “overarching concern” of exploiting players.

As things stand, schools are allowed to provide tuition and fees, room and board, books and other expenses related to the cost of attendance. They are permitted to make payments for certain athletic participation awards, tutoring and study abroad expenses related to a course.

If the Supreme Court agrees with the lower courts, it will mean that the NCAA must permit student athletes to receive unlimited non-cash “education-related benefits” including post-eligibility internships. The students can also receive annual payments up to $6,000 if they maintain academic eligibility.

In court papers, Andrew Pincus, arguing on behalf of the athletic conferences, cautioned that if the court affirms the lower court decision it will lead to a slippery slope of questionable spending not entirely related to education as well as a multitude of lawsuits.

“Given the likelihood that schools will race each other to the bottom once universal ‘academic achievement’ payments are authorized,” Pincus argued, the lower court opinion “threatens to make pay-to-play ubiquitous in college football and basketball.”

He added that post-eligibility cash internships could become typical and might be financed by boosters — further infecting a sport based on amateurism.

Jeffrey L. Kessler, a lawyer for Football Bowl Subdivision and Division 1 men’s and women’s basketball players behind the challenge, dismissed such concerns, telling the justices that the model of amateurism can be maintained even when providing more compensation to the students for education-related expenses.

He urged the justices to agree with the lower court in an opinion that he believed was carefully tailored, freeing the conferences and the schools to compete for student athletes by supporting their academic achievement.

But Roberts pressed on the involvement of courts and subsequent cases where judges will have to weigh in on business decisions made by the NCAA and others.

He equated reviewing other rules that will come to the courts as a game of “Jenga.” Judges would pull apart one rule and then another and then “all of a sudden the whole thing comes crashing down.”

“I just don’t know if the judge is the best person to assess the competitive effect of the rules,” he said at another point.

Thomas, too, was concerned about constant litigation and the impact that allowing more compensation would have on smaller schools less able to compete for the big players. “The bigger schools would begin to cherry-pick,” he said, from lower schools “simply because they are able to afford” it.

The Biden administration has weighed in in favor of the lower court decision, reasoning that it reached a proper balance serving the interests of both sides and concluding that while payments unrelated to education could be blocked, some others related to education could not be.

Gabriel Feldman, the director of the sports law program at Tulane University, said that the restrictions on compensation are in place because the court’s prior interpretation balanced anti-trust law with the NCAA’s desire to preserve its amateur status.

“If the Supreme Court finds that amateurism is no longer a legitimate argument for the NCAA it could open the door to competition among schools for college athletes,” Feldman said.

Other experts aren’t sure that more money for expenses related to education will undermine the distinction between college and pro sports.

“All college fans know that there is already a lot of money in college athletics and it doesn’t seem to hurt the demand,” Audrey Anderson, a lawyer at Bass, Berry & Sims, said.

“Some of the athletes are already getting something when their team wins for playing well, and the district court found that allowing them to get similar cash awards for academic achievements or unlimited benefits related to their education won’t change the market for the product,” she said.

This story has been updated with details from the hearing.