NCAA defends scholarships for college athletes

Lawsuit challenges rules that support hundreds of thousands of students

 

Case Summary | Statements | NCAA and Amateurism | Case Histories

Case Summary

In a lawsuit entitled Alston v. NCAA, the NCAA is defending its rules that establish a clear line between collegiate and professional sports and are essential to providing academic opportunities for nearly half a million college athletes each year.

The lawsuit also named each of the Division I Football Bowl Subdivision conferences as co-defendants. Those conferences are working with the NCAA in joint defense. The plaintiffs asked the court to eliminate or replace current rules and order that schools should be allowed to pay athletes unlimited amounts for their athletic performance. Only the sports of men’s basketball and football in Division I were directly involved with this case, although its conclusion may have a significant impact across all NCAA sports.

In the trial, the NCAA reiterated that college sports have a unique place in the landscape of athletic competition and have enabled tens of thousands of student-athletes to earn their college degrees debt-free each year. In particular, the NCAA argued:

NCAA rules prioritize both academics and athletics:Allowing student-athletes to be paid for athletics performance would undermine the balance between the two and detract from the integration of academics and athletics in the campus community.

NCAA rules further the popularity of college sports: The U.S. District Court for the Northern District of California and the U.S. Court of Appeals for the 9th Circuit already have recognized in an earlier case, O’Bannon v. NCAA, that fundamentally changing the nature of college sports through elimination of financial aid and benefits rules would erode the appeal for fans, alumni and students.

No viable alternative that meets legal standards has been identified: The plaintiffs did not propose a less restrictive alternative to the NCAA rules they are challenging. The plaintiffs offered two unworkable proposals. First, the plaintiffs argued that each athletics conference should have complete autonomy, which would divide college sports. Second, the plaintiffs argued that the NCAA should eliminate restrictions on benefits that tether college sports to academics, which is a poorly disguised effort to permit “pay-for-play” and would professionalize college sports.

NCAA members are best positioned to govern college sports: Courts generally recognize that a membership association should be allowed to implement and enforce its own rules without judicial interference. In the case of the unique nature of college athletics programs, the Supreme Court of the United States has made it clear that the NCAA has ample latitude to administer college sports. The plaintiffs could not simply replace the judgment of more than 1,100 colleges and universities with what they believe to be a better system.

The NCAA asked the Northern District of California to dismiss Jenkins v. National Collegiate Athletic Association et al. because the claims are identical to those decided in the Alston case.

Trial Summary

During the Alston v. NCAA trial, the NCAA presented testimony and evidence that demonstrated the importance of protecting college sports, which provides student-athletes with an opportunity to receive an education while competing in high-level athletic contests against fellow students. Renowned experts in economics and higher education supported the NCAA’s position.

Important facts and evidence from the trial:

Economic experts testified that sports fans value NCAA rules promoting amateurism, which distinguish college sports from professional sports.

University leaders said that paying student-athletes would contradict the schools’ educational mission and could result in the elimination of academic programs or non-revenue sports.

Student-athletes acknowledged that the education they received has helped them throughout their lives.

College athletics officials outlined the important role of amateurism in distinguishing student-athletes from paid, professional players.

NCAA officials described how the NCAA and its member schools uphold the values of college athletics while providing student-athletes with assistance for expenses associated with being a college student.

NCAA officials testified to data that showed student-athletes graduated at rates higher than nonathletes — and at some of the highest rates ever — and that student-athletes have confirmed the positive impact of their schools’ integration efforts.

Decision and Appeal

Judge Wilken issued her decision and a permanent injunction in Alston in March 2019. The court’s decision:

Recognized that college sports should be played by student-athletes, not by paid professionals.

Acknowledged that the popularity of college sports stems in part from the fact that these athletes are indeed students, who must not be paid unlimited cash sums unrelated to education.

Substituted the court’s judgment for the NCAA’s and its members in determining how to maintain the distinction between college and professional sports.

While the ruling upheld the distinction between full-time students who play college sports and professional athletes, it is inconsistent with decisions by the Courts of Appeals and the Supreme Court that have said the NCAA should have “ample latitude” to apply its rules in superintending college athletics. For this reason, among others, the NCAA and conference defendants have decided to appeal the District Court’s decision.

NCAA Statements Related to Grant-in-Aid Cap Litigation

Date

April 10, 2019

 

Lawsuit Status

NCAA files motion to dismiss the Jenkins lawsuit

NCAA Statement

“Yesterday we asked the court to finally dismiss the Jenkins suit because the claims there are identical to those just decided in the Alston case. In fact, the plaintiffs in Jenkins make up the very group of student-athletes who were involved in the Alston case.”
— NCAA

 

Date

March 23, 2019

 

Lawsuit Status

NCAA files a notice of appeal, stating that it will appeal Judge Wilken’s decision to the U.S. Court of Appeals for the 9th Circuit.

NCAA Statement

“The NCAA’s longstanding commitment, supported by its schools and conferences, is to provide student-athletes with the educational benefits they need to succeed in school and beyond. While the District Court upheld the distinction between full-time students who play college sports and professional athletes, it erred by giving itself authority to micromanage decisions about education-related support. We believe, and the Supreme Court has recognized, that NCAA member schools and conferences are best positioned to strengthen and revise their rules to better support student-athletes, rather than forcing these issues into continuous litigation. The NCAA and conference defendants unanimously agree to appeal the District Court’s decision.”
— Donald Remy, NCAA chief legal officer

 

Date

March 8, 2019

 

Lawsuit Status

U.S. District Judge Claudia Wilken issues her decision and a permanent injunction.

NCAA Statement

“The court’s decision recognizes that college sports should be played by student-athletes, not by paid professionals. The decision acknowledges that the popularity of college sports stems in part from the fact that these athletes are indeed students, who must not be paid unlimited cash sums unrelated to education. NCAA rules actively provide a pathway for tens of thousands of student-athletes each year to receive a college education debt-free. Although the court rejected the plaintiffs’ desire for a free-market system, we will explore our next steps as appropriate. We believe the ruling is inconsistent with the decision by the 9th Circuit Court of Appeals in O’Bannon. That decision held that the rules governing college athletics would be better developed outside the courtroom, including rules around the education-related support that schools provide.”
— Donald Remy, NCAA chief legal officer

 

Date

Dec. 18, 2018

 

Lawsuit Status

Trial concludes.

NCAA Statement

“Once again, we demonstrated that our rules provide a pathway for tens of thousands of student-athletes to receive a college education debt-free. Replacing those students with paid professionals will fundamentally change the face of college sports, de-emphasize academics and reduce future opportunities for aspiring college-goers. Witness after witness testified that a college education and the experience it provides is an invaluable opportunity that pays dividends throughout one’s lifetime — not just on the field of play. Indeed, the support provided by the NCAA and its members to student-athletes has resulted in more Division I student-athletes earning their degrees than ever before — achieving academic and career success at record levels. We will continue to provide opportunities for student-athletes to earn their degrees and compete at the highest levels of their sports in the years to come.”
— Donald Remy, NCAA chief legal officer

 

The NCAA and Amateurism

The NCAA helps make it possible for hundreds of thousands of students to get a college education, debt-free.

Each year, NCAA colleges and universities provide more than $3.2 billion in athletics scholarships to more than 175,000 student-athletes. These scholarships not only open the door to opportunities but also mean that students do not have to take on the burden of large student loans.

The NCAA also financially supports student-athletes in multiple ways. From its annual revenue, generated primarily from television and marketing rights and championship ticket sales, the NCAA distributes funds in more than a dozen ways — almost all of which support nearly half a million student-athletes. Learn more about how the NCAA uses its funds to support student-athletes across the country.

 

In addition to financial scholarships, the NCAA provides resources and sets rules that help students succeed academically.

The NCAA continually is reviewing and revising its rules to better support student-athletes in the classroom.

Division I athletics programs can offer cost of attendance to the student-athletes playing the sports of basketball and football, as well as other sports. In addition to tuition, fees, books and room and board, these scholarships provide for expenses such as academic-related supplies, transportation and other similar living expenses while pursuing a college education.

NCAA schools also provide access to tutoring, study labs and career counseling services, helping to ensure student-athletes have ample academic and professional support. Learn more about how the NCAA is committed to improving the student-athlete experience.

In addition to the support provided by the NCAA and its members, the academic support provided to student-athletes has resulted in graduation rates that meet or exceed that of all other students.

Most importantly, student-athletes are often more attractive job candidates because they have demonstrated the ability to balance competing demands, work in a team environment and push themselves to excel.

 

Replacing scholarships with salaries would devastate college sports as we know it.
  • Changing the rules to allow payment of student-athletes based on their athletics ability incentivizes athletics over academics, according to experts.
  • Similarly, student-athletes would be less integrated into the student community if players were paid professionals, according to experts.
  • For many universities, the result could be fewer dollars for academics, fewer scholarships and fewer nonrevenue sports. As a result, schools may:
    • Divert funds from their academic budgets to continue competing in the athletic arena.
    • Drop some or all their nonrevenue or unprofitable sports, such as wrestling, track and field, gymnastics, tennis, volleyball, or swimming and diving.
    • Cut the number of student-athletes who get scholarships so the school would have more money to attract and pay the top basketball and football stars.
    • Recognize they could no longer compete with the highest-resourced schools, meaning the big sports schools would get even more dominant and the gap between them and other programs would widen, resulting in a smaller group of competitive programs.

Case Histories

O’Bannon v. NCAA

In 2009, Ed O’Bannon, a former UCLA basketball student-athlete, sued the NCAA and the Collegiate Licensing Co., challenging rules that prevented student-athletes from being compensated for the use of their name, image and likeness. Among other things, O’Bannon claimed the rules violated antitrust law.

After years of procedural developments, O’Bannon’s antitrust claims were tried before Judge Claudia Wilken in the U.S. District Court in Oakland, California, in June 2014.

 

 

District Court Proceedings

After a bench trial, Judge Wilken found there were two procompetitive justifications for rules that place restraints on student-athlete compensation: The rules help to integrate athletics and academics, and the rules play a role in preserving the popularity of the NCAA’s product.

However, the court then held that the procompetitive characteristics of the rules could be achieved by allowing revenue from players’ likenesses to be collected, held in a trust, and distributed equally and based on licensing, not athletic performance; compensation would be capped at $5,000 for every year of eligibility. Student-athletes, however, could not receive money for endorsements of commercial products, as it would undermine the efforts of both the NCAA and its member schools to protect against the “commercial exploitation” of student-athletes. – Judge Claudia Wilken’s Ruling, O’Bannon v. NCAA, August 2014

 

Appellate Court Proceedings

Following the district court ruling, both the NCAA and the plaintiffs appealed the decision to the U.S. Court of Appeals for the 9th Circuit. In September 2015, the appeals court struck down the compensation component of the lower court decision, ruling that federal antitrust law does not require compensating student-athletes beyond the full cost of attending college.

The Appellate Court supported the district court’s finding that the NCAA’s rules served the procompetitive purposes of integrating academics with athletics and preserving the popularity of the NCAA’s product by promoting its current understanding of amateurism. The decision said:

“Both we and the district court agree that the NCAA’s amateurism rule has procompetitive benefits. But in finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs.
9th Circuit Court of Appeals Ruling, O’Bannon v. NCAA, September 2015

As such, the appellate court rejected the portion of the district court ruling that would have allowed student-athletes to be paid up to $5,000 per year of eligibility for use of their name, image and likeness in annual deferred cash compensation. The appellate court further noted:

“The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap.
 9th Circuit Court of Appeals Ruling, O’Bannon v. NCAA, September 2015

“In light of that, the meager evidence in the record, and the Supreme Court’s admonition that we must afford the NCAA ‘ample latitude’ to superintend college athletics, Bd. of Regents, 468 U.S. at 120, we think it is clear the district court erred in concluding that small payments in deferred compensation are a substantially less restrictive alternative restraint.”
9th Circuit Court of Appeals Ruling, O’Bannon v. NCAA, September 2015

“Today, we reaffirm that NCAA regulations are subject to antitrust scrutiny and must be tested in the crucible of the Rule of Reason … The Rule of Reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student-athletes. It does not require more.
9th Circuit Court of Appeals Ruling, O’Bannon v. NCAA, September 2015

 

The Supreme Court Proceedings

In October 2016, the U.S. Supreme Court denied requests by both the plaintiffs and the NCAA to review the 9th Circuit Court’s decision.

 

Grant-In-Aid Cap Litigation

In 2014, as the O'Bannon v. NCAAlitigation was making its way through the appeals process, class-action litigation challenging the NCAA rules was consolidated before Judge Wilken in the U.S. District Court Oakland, California.

This lawsuit challenged rules adopted by the NCAA and athletics conferences that govern the kind of aid that can be provided to student-athletes.

The NCAA sought to dismiss the case in September 2014. However, Judge Wilken — who also presided over the O’Bannoncase— denied the motion, saying that the current case involves different student-athletes (not just male basketball and football players, but female basketball players), and seeks different remedies (not just injunctive relief, but damages, too) that were not addressed in O’Bannon.

Then, in the fall of 2017, both the NCAA and plaintiffs submitted motions seeking summary judgment. The NCAA argued that the O’Bannonruling precludes student-athletes from their claims against the NCAA, because the Court of Appeals already had determined that the rules have procompetitive benefits and that any compensation could appropriately be limited to the cost of attendance. In March 2018, Judge Wilken decided to let the case proceed, writing that while the NCAA demonstrated procompetitive benefits of amateurism, the plaintiffs have put forth sufficient evidence related to less restrictive alternatives. As the court stated:

Defendants have presented sufficient evidence in support of the two procompetitive effects found in O’Bannon to create a factual issue for trial. This includes a survey of consumer preferences, which led Defendants’ expert Dr. Bruce Isaacson to conclude that fans are drawn to college football and basketball in part due to their perception of amateurism.

Defendants also present evidence that paying student-athletes would detract from the integration of academics and athletics in the campus community. For example, Professor James T. Heckman testified that paying student-athletes would likely lead them to dedicate even more effort and possibly more time to their sports, potentially diverting them ‘away from actually being students and towards just being athletes.’”
Judge Claudia Wilken’s Order Granting in Part And Denying in Part Cross-Motions for Summary Judgment, In re: National Collegiate Athletic Association Athletic Grant-In-Aid Cap Antitrust Litigation, March 2018

 

 

Alston V. NCAA (Grant-In-Aid Cap Litigation)

In 2014, as the O'Bannon v. NCAA litigation was making its way through the appeals process, class-action litigation challenging the NCAA rules was consolidated before Judge Wilken in the U.S. District Court in Oakland, California.

This lawsuit, known as Alston v. NCAA, challenges rules adopted by the NCAA and athletics conferences that govern the kind of aid that can be provided to student-athletes.

The NCAA sought to dismiss the case in September 2014. However, Judge Wilken — who also presided over O’Bannon — denied the motion, saying that the current case involves different student-athletes (not just male basketball and football players, but female basketball players), and seeks different remedies (not just injunctive relief, but damages, too) that were not addressed in O’Bannon.

Then, in the fall of 2017, both the NCAA and Alston plaintiffs submitted motions seeking summary judgment. The NCAA argued that the O’Bannon ruling precludes student-athletes from their claims against the NCAA, because the Courts of Appeals already had determined that the rules have procompetitive benefits and that any compensation could appropriately be limited to the cost of attendance. In March 2018, Judge Wilken decided to let the case proceed, writing that while the NCAA demonstrated procompetitive benefits of amateurism, the plaintiffs had put forth sufficient evidence related to less restrictive alternatives.

During the 11-day Alstontrial, which began in September 2018 and concluded on December 18, 2018, the NCAA demonstrated that its rules promote the popularity of college sports and encourage the integration of student-athletes on campus. NCAA experts and college officials explained that the plaintiffs’ efforts to pay certain student-athletes would isolate them from campus life, pull resources from the rest of their universities, and fundamentally change college sports as we know it.

On March 8, 2019, Judge Wilken issued her decision and a permanent injunction in Alston. The court’s decision recognized that college sports should be played by student-athletes, not by paid professionals. The decision acknowledged that the popularity of college sports stems in part from the fact that these athletes are indeed students, who must not be paid unlimited cash sums unrelated to education. As the court stated:

“Defendants have sufficiently shown a procompetitive effect of some aspects of the challenged compensation scheme. They are the cost-of-attendance limit on the grant-in-aid, the limits on compensation and benefits unrelated to education, and the limits on cash or cash-equivalent education-related awards and incentives for academic achievement or graduation. The procompetitive effect of these caps is preventing unlimited, professional-level cash payments, unrelated to education, that could blur the distinction between college sports and professional sports and thereby negatively affect consumer demand for Division I basketball and FBS football.”
Judge Claudia Wilken’s Findings of Fact and Conclusions of Law, In re: National Collegiate Athletic Association Athletic Grant-In-Aid Cap Antitrust Litigation, March 2019

However, in its decision, the District Court determined that there was a viable less restrictive alternative to the NCAA’s rules related to benefits and compensation. In her injunction, Judge Wilken stated:

“Defendant National Collegiate Athletic Association … including its member schools and conferences … are hereby permanently restrained and enjoined from agreeing to fix or limit compensation or benefits related to education that may be made available from conferences or schools … on top of a grant-in-aid. … The compensation and benefits related to education … that the NCAA may not agree to fix or limit … are the following: computers, science equipment, musical instruments and other tangible items not included in the cost of attendance calculation but nonetheless related to the pursuit of academic studies; post-eligibility scholarships to complete undergraduate or graduate degrees at any school; scholarships to attend vocational school; tutoring; expenses related to studying abroad that are not included in the cost of attendance calculation; and paid post-eligibility internships.”
Judge Claudia Wilken’s Permanent Injunction, In re: National Collegiate Athletic Association Athletic Grant-In-Aid Cap Antitrust Litigation, March 2019

While the District Court did determine that the NCAA could define compensation and benefits that are “related to education” and regulate the provision of these benefits by conferences and schools, it also retained the authority to micromanage decisions about education-related support. The NCAA and conferences believe, and the Supreme Court has recognized, that NCAA member schools and conferences are best positioned to strengthen and revise their rules to better support student-athletes, rather than forcing these issues into continuous litigation.

For this reason, among others, the NCAA and conference defendants have decided to appeal the District Court’s decision in Alstonto the U.S. Court of Appeals for the 9th Circuit.