Business of football: The Supreme Court sends a message to the NCAA

We are clearly at an inflection point in college athletics. Last week a seminal case on rights of college athletes produced a beat down of the NCAA from the highest court in the land. And as of this Thursday, name, image and likeness (NIL) rights for college athletes are upon us, whether the NCAA likes it or not. Let’s examine.

Alston decision

One can count on two hands how often a case involving sports has reached the U. S. Supreme Court, so sports business and law nerds like myself were giddy last week when it happened in a case regarding limitations on benefits for college athletes.

In a 9–0 unanimous decision, the Supreme Court upheld the lower court’s decision that NCAA restrictions on “education-related benefits” for college athletes violated antitrust law. Justice Neil Gorsuch authored the majority opinion in favour of the plaintiffs, albeit a narrow decision dealing only with education-related benefits and not the larger issue of pay-for-play or other big-picture issues with college athletes. And there was language the NCAA has since claimed as a “win” for itself: It was still free to create limits on benefits unrelated to education.

While there was a narrow focus to the overall ruling, the case, as noted below, appears to be a harbinger for the NCAA of things to come.

Kavanaugh cut deep

Trying to read the tea leaves from oral arguments with a Supreme Court case is a dangerous exercise, but in this case the questioning held true to form. Justice Brett Kavanaugh was clearly the most strident justice in his questioning of the NCAA lawyer during the presentation of the case, and his written concurring opinion took a sledgehammer to the organization.

Kavanaugh attacked the circular nature of the NCAA’s argument that athletes’ not being paid is a defining feature of college sports and drew stark analogies to how preposterous the NCAA’s business model would look in other industries: highly violative of antitrust law. Here is one of his many savaging remarks: “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. … The NCAA is not above the law.”

Justice Kavanaugh seemed to be inviting the next plaintiff—and there are already many circling—to “bring it on” to the Supreme Court, where he will be waiting to rule on a much bigger and broader issue than education-related benefits. Brett Kavanaugh, enemy of the NCAA. Who knew?

Impact

It’s rare for sports cases to reach the highest court in the land, but a unanimous decision is a harbinger of much larger industry changes to come.

As noted above, this case did not take up the issue of pay-for-play that many have advocated for and that typically brings the headlines. Why, then, did the plaintiffs and superlawyer Jeffrey Kessler not argue for broader change in this case, which we now know would have been well-received by at least Justice Kavanaugh? Well, that decision appeared to be strategic; the plaintiffs wanted a “win,” which they got, rather than risking a loss on broader issues.

Even with the narrow decision, there will be reverberations from this decision immediately. We are not naive to what happens in the uber competitive world of college athletics, especially without a clear definition of what “education-related benefits” are. With ambiguity, as there is now, the definition of these benefits will expand. Who is to say whether an athlete should have a $ 2,000 computer or a $ 10,000 computer? A $ 1,000 video monitor or a $ 20,000 video system that has high-quality streaming of lectures, which can also serve as a gaming device and home entertainment system? A $ 5,000 internship or a $ 50,000 internship? The NCAA may still enforce any “no Lamborghini” rule, as the court put it, but there are a lot steps between spartan education-related benefits and a Lamborghini.

As for broader issues, their time is coming. A couple of days after the decision, there was a hearing on the case of House v. NCAA, a case where the plaintiffs are requesting that the NCAA not be allowed to have NIL restrictions on the athletes. The NCAA’s motion to dismiss that case was denied. And speaking of NIL …

The NCAA’s abdication of NIL

A new age of marketing and branding opportunities for college athletes is dawning on Thursday, with the NCAA’s plodding acceptance. As we continue to note, the NCAA’s change in treatment of athletes seems only motivated by the two “L” words: litigation and legislation. And both have initiated change regarding name, image and likeness.

There were already six states—including Florida and Texas—with NIL legislation set to go into effect on July 1. Schools in those states have been able to tell their athletes with confidence about NIL opportunities, creating an immediate imbalance that was already being exploited in recruiting. The NCAA, hounded by legislators as it has been hounded by judges, had to act. And in many ways, the NCAA is ceding its authority in this area to the individual schools and conferences themselves, especially in states without NIL laws, as if to say, “We wanted to slow play this, but I guess it’s too late. You guys handle it!”

This is stunning to me. As someone who had been part of planning meetings around NIL—within my purview at Villanova and the Big East Conference—I am keenly aware that the NCAA has had working groups on this issue for more than two years. Thousands of hours have been devoted to the erecting of “guardrails”—their phrase, not mine—to ensure that NIL rights are not to be confused with “pay-for-play” and that schools’ logos and marks won’t be used. Now, although states and schools will incorporate some of those similar guardrails, more than two years of work by many good and talented people across hundreds of universities is being pushed aside for a more decentralized process. The NCAA seems to be throwing up its hands, perhaps too rattled from the Alston decision to enact any policy restricting college athletes at this time.

A changed mindset toward agents

One important change that has to happen immediately is this: The NCAA and its member schools need to take a different attitude toward agents. Schools and coaches need to now understand that agents—NIL agents—will be around their players in a way that has faced so much resistance before. The presence of agents is not only now allowed but even encouraged.

Who qualifies as an NIL agent and how are they regulated? Well, that is a good question, with the only NCAA guideline so far being that these agents are not allowed to be agents seeking representation of the athletes for their pro careers, only for NIL opportunities. Good luck enforcing that.

As I hear from them every day, I know that there are so many young people trying to enter into the agent business, and there are many barriers to representing athletes in their professional careers. Here, however, is an opening that many are trying to use to wedge their way into that world. I have made videos for our Villanova athletes as to what to look for and not look for in NIL agents. It could be the wild, wild West out there, but at the end of the day, the NCAA brought this upon itself, dawdling while legislation and litigation pecked away.

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Speaking of my role at Villanova and my involvement with the athletics department there, I admit to conflicted thoughts here. We have 650 athletes in 24 sports, only one of which—the one that has won two of the last six NCAA men’s basketball championships—makes money. I know how fragile the ecosystem of college athletics is beyond the outliers of top college football and basketball programs. And I know that, despite the perception of unlimited funds from boosters and donors, most sports struggle to stay afloat. However, as a scholar in sports law, I also know that fairness and “justice” require more compensation for these athletes, no matter the veil of amateurism. We have seen the model change in Olympic sports, and we are seeing it change in college sports as well.

We are clearly at a transitional stage for the NCAA. A broader pay-for-play case may be coming, and the Supreme Court seems to be telegraphing to lawyers and plaintiffs, and there are plenty of them out there circling, to bring them another case. And now NIL rights to monetize student-athlete brands are here.

Change is afoot, and change is usually a good thing. Stay tuned.

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