By: Emma Staller
Volume IX – Issue II – Spring 2024
I. Introduction
Far away from the vistas of Cayuga's waters, Dartmouth College, Cornell's Ivy League sibling, steps into the spotlight as changes rock the landscape of collegiate athletics and reshape the conversation on fair compensation for student-athletes. Earlier this past March, players on the Dartmouth College men's basketball team voted 13–2 to join Service Employees International Union Local 560 in Hanover, New Hampshire, marking a historic decision with potentially far-reaching implications for college sports. [1] Despite Dartmouth’s swift appeal of the team’s right to unionize, according to the National Labor Relations Board (NLRB), Dartmouth college basketball players are to be considered employees under the NLRA. This vote marks a revolutionary moment for National Collegiate Athletic Association (NCAA) athletes. Following the wake of failed unionization attempts in the past, an NLRB regional manager cleared the way for this latest push by ruling that Dartmouth’s athletes may vote to establish a union. [2]
Despite the vote from student-athletes, it is improbable that this will serve as the definitive resolution, given the Dartmouth administration's resistance to classifying its basketball players as employees of the institution. [3] In a statement from Dartmouth's administrative board, they express pride in their strong community with campus unions while firmly opposing the recent actions taken by the basketball team: "In this isolated circumstance, however, the students on the men's basketball team are not in any way employed by Dartmouth. For Ivy League students who are varsity athletes, academics are of primary importance, and athletic pursuit is part of the educational experience. Classifying these students as employees simply because they play basketball is as unprecedented as it is inaccurate. We, therefore, do not believe unionization is appropriate.” [4] Even with the Ivy League institution's opposition, this marks the first time that student-athletes, long considered amateurs in college sports, can form a union and seek fair compensation and other rights like professional athletes. [5] This ruling marks significant ground gained in the plight of recognizing student-athletes as employees entitled to compensation for their sports participation." [6]
Similar progress was seen in 2014 when Northwestern football players received a comparable ruling at the regional level of the NLRB, although it was later overturned at the national level due to jurisdictional issues. [7] The difference lies in Northwestern's affiliation with the Big Ten NCAA conference, which includes public institutions, leading to instability in labor relations across state lines. However, Dartmouth is a private institution in the private Ivy League conference, meaning there is a higher likelihood of this ruling creating a national precedent for public and private universities. Which implications does the NLRB decision form for college football and other NCAA sports moving forward? Is this the definitive end of amateurism? While Dartmouth's men's basketball team are then pioneers in playing for pay, this case is not an isolated incident. Rather, NCAA v. Alston (2021) has flung wide open the doors to such scenarios. One thing is clear: We stand at the precipice of change in college athletics, as the issue of recognizing college athletes as employees of their academic institutions may soon resurface on the Supreme Court docket.
II. Examination of Precedent
The Supreme Court of the United States delivered a groundbreaking ruling on June 21, 2021, in the antitrust case National Collegiate Athletic Association v. Alston. The ruling addressed the legality of the NCAA's limitations on student-athlete compensation and benefits. Current and former student-athletes from men's Division I Football Bowl and men's and women's Division I basketball, collectively known as "student-athletes," initiated an antitrust class action against the NCAA and eleven Division I conferences, alleging that the NCAA's bylaws unreasonably limited their compensation and benefits. [8] In a unanimous decision, the Supreme Court ruled that the NCAA's rules violated the Sherman Antitrust Act (1890) by restricting non-cash education-related benefits, including post-eligibility scholarships, tutoring, study-abroad expenses, and paid internships. The Sherman Antitrust Act of 1890, codified in 15 U.S.C. §§ 1-38, was the first Federal act that outlawed monopolistic business practices and trusts. [9] The Sherman Antitrust Act, as stated in § 1 of the Act, declares that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” [10] Additionally, § 2 of the Act prohibits monopolization or attempts at monopolizing any aspect of interstate trade or commerce, making such actions a felony with severe penalties. [5]
In NCAA v. Alston (2021), the central legal question revolved around determining whether the National Collegiate Athletic Association (NCAA)’s prohibition on compensation for college athletes violated federal antitrust law. [11] In a unanimous decision in the Roberts court, the Court upheld the district court’s ruling, which was based on the rule of reason analysis. This analysis found that the NCAA and its member schools collectively possessed monopsony power in the relevant market, defined as the market for student-athlete services in Division I basketball and football. [12] They used this power to restrain compensation without risking their market dominance. The district court further found that there were no viable substitutes in the Division I market for student-athletes to switch to in response to decreases in compensation. [13] As a result, the NCAA’s compensation framework had significant anticompetitive effects by limiting competition among member institutions to offer better compensation when recruiting student-athletes, ultimately leading to depressed athletics participation and suppressing the price and quantity of student-athlete labor below competitive levels. [14]
It is noteworthy that the Court in its reasoning against the NCAA in support of Alston clarified a prior statement made in the 1984 case NCAA v. Board of Regents of the University of Oklahoma noting that the NCAA’s role in maintaining the “revered tradition of amateurism” was “entirely consistent with the goals of the Sherman Act” was not a shield against all challenges to compensation restrictions. [15] In the NCAA v. Board of Regents of the University of Oklahoma (1994), Justice John Paul Stevens, writing for a 7-2 majority, held that the NCAA's plan for televised football games violated the Sherman Act by creating a structure that restricts the free market's responsiveness to viewer demands in terms of price and output. [16] This decision, finding that the NCAA's control over broadcasts created a monopoly, artificially increases the value of live tickets and limits market competition. 18 Despite this ruling, the Court acknowledged the NCAA's argument regarding the preservation of amateurism, which it claimed was pro-competitive. The Court referenced controversial language from the 1984 case, noting that the NCAA plays a critical role in maintaining “a revered tradition of amateurism in college sports;” that it has “ample latitude to play that role;” and that the preservation of amateurism is “entirely consistent with the goals of the Sherman Act.” [17]
III. Reconstructing the Relationship Between Amateurism and Business
Alston, however, did not definitively address whether and where the preservation of amateurism could serve as a successful pro-competitive rationale, leaving the door open for future courts to interpret and reconsider their decisions based on evolving market realities, because markets tend to be “more effective than the heavy hand of judicial power when it comes to enhancing consumer welfare.” [18] This decision opens the door for re-establishing the intricate relationship between universities or colleges and student-athletes from a business transactional perspective. Alston acknowledged that the NCAA heavily relied on amateurism to exploit student-athlete labor either for free or at reduced rates in college sports. [19] Taking amateurism to the extreme simplifies and solidifies the relationship between institutions and student-athletes instead of aligning their business interests on an equal footing within a competitive market [20] The Court indicated that amateurism hinders market dynamics and competition in the student-athlete labor market, emphasizing the necessity for a critical discussion on defining amateurism, given its statement that "the national debate about amateurism in college sports is important.” [21]
Following the Court’s decision in NCAA v. Alston, which ruled that NCAA rules limiting education-related compensation violated antitrust laws, the NCAA took steps to better align amateurism with business perspectives, voting independently to permit student-athletes to receive compensation for their name, image, and likeness (NIL). Despite these adjustments, the NCAA continues to limit schools' direct compensation to athletes that is unrelated to education even though the organization reaps annual revenues of around $1 billion. [22] While the student-athletes did not contest the remaining rules in the Supreme Court, the Alston ruling, along with underlying antitrust principles that weren't addressed by the Court, sets the stage for a potential future challenge against the NCAA's constraints on non-education-related compensation.
The Court's decision in NCAA v. Alston marks a pivotal shift in the legal landscape of collegiate sports. By establishing that antitrust rules apply to labor market regulations in college athletics, the Court has placed the NCAA's compensation rules under Sherman Act scrutiny, necessitating a valid pro-competitive justification from the NCAA. [23] The traditional narrative surrounding restrictions in college sports compared to professional leagues is challenged by this departure from previous understandings. It is for reasons such as these that Justice Kavanaugh so pointedly underscored a continuing critical concern regarding the equitable distribution of benefits in collegiate sports. He astutely observes that despite the substantial revenues generated by college athletics, student-athletes often do not directly benefit from these earnings, expressing frustration that "enormous sums of money" circulate to various entities except the athletes themselves. [24] This observation reflects a growing sentiment within the sports community that the current compensation framework disproportionately advantages other stakeholders while leaving student-athletes with limited financial opportunities.
Justice Kavanaugh's concurrence also delves into the legal complexities surrounding the remaining rules that restrict non-education-related compensation, as challenged in lower courts but not further pursued in the Supreme Court. His emphasis on the Supreme Court's decision applying a rule of reason test to these rules hints at potential legal challenges and revisions in NCAA compensation policies. The suggestion that student-athletes could challenge these rules without risking the destruction of college athletics implies significant changes in the realm of collegiate and amateur athletics are imminent. Despite this, the NCAA remains focused on limiting non-education-related compensation, as indicated by Division II Presidents Council chair Sandra Jordan's statement affirming that college sports will not become pay-for-play. [25] Nevertheless, the Court's decision in Alston means that pay-for-play is likely on the NCAA’s one-yard line. [26]
IV. From Jerseys to Job Contracts: An Employment Law Perspective
The question of compensating student-athletes through NIL deals is not merely about acknowledging their rightful earnings but about navigating potential legal and systemic disruptions. Recent instances, such as Dartmouth's men's basketball team seeking employee status, underscore the seismic impact such changes could have on amateur sports, particularly smaller programs. [27] While the allure of a revamped compensation system under the new NIL framework is undeniable, it presents a maze of legal complexities and calls for structural reforms.
Concerns linger about the financial viability of smaller athletic programs and less lucrative sports, prompting serious considerations about sustainability and fairness. The National Labor Relations Board (NLRB) ruling stated that the profitability of a sport should not be a deciding factor in considering players as employees. [28] However, this overlooks a fundamental reality—the financial aspect is intrinsically linked to the feasibility of implementing an employee compensation model in college athletics. Paying student-athletes as employees transforms the landscape into a business transaction, altering the essence of amateur sports and potentially jeopardizing the holistic development that collegiate athletics aim to foster. This pivotal juncture forces us to reassess the foundational principles of college athletics: Has it become a transactional enterprise, where athletes barter their cleats for contracts?
As labor law expert Michael LeRoy bluntly puts it, "If you’re in a non-revenue sport, you have to be realistic about it—that your sport could be on the chopping block." [29] While cutting sports is one strategy, the search for funds to pay athletes opens a Pandora's box of possibilities, as LeRoy humorously notes, "many other possibilities would require some outside entity to swoop into the market, be it private equity, professional leagues, or the U.S. Olympic committee. The chances of that type of lifeline appear wishful at best." [30]
NCAA president Charlie Baker's "Project D-I" proposal adds a dash of intrigue, offering a glimpse into a potential future where universities commit to paying athletes a minimum of $30,000 annually through a trust. 31 This initiative, as Baker himself envisions, aims to kick-start discussions about the NCAA's path forward amidst mounting legal challenges. The Big Ten and SEC have joined forces by forming a joint advisory group, aiming to lead the way in finding solutions for a sustainable future in college sports. This partnership has sparked speculation among administrators in other conferences, with talks of a possible departure from the NCAA altogether. As they grapple with costly legal battles that could cost billions, the key question emerges: will these conferences forge a new path or rely on employment contracts and league regulations for stability?
IV. Final Thoughts
The landscape of college athletics is in flux, with the evolving landscape of compensating amateur athletes in college athletics signaling a period of significant transformation and uncertainty. These developments are new and unexplored, presenting challenges and opportunities. While compensating amateur athletes beyond NIL deals poses challenges, it also opens up new possibilities. The key is to find a balance that ensures fair compensation without undermining the institutions that bring joy and provide employment opportunities. The delicate equilibrium between providing financial opportunities for student-athletes and preserving the integrity and sustainability of collegiate sports institutions requires careful navigation. As we stand on the cusp of unprecedented changes, it is crucial to approach these discussions with a mix of optimism and caution, considering the long-term implications for all stakeholders involved in collegiate athletics.
Endnotes
[1] Cobb, David. 2024. “Dartmouth men's basketball team votes to unionize in historic moment for college sports.” CBS Sports. https://www.cbssports.com/college-basketball/news/dartmouth-mens-basketball-team-votes-to-unionize-in-historicmoment-for-college-sports/.
[2] Cobb, David. 2024.
[3] Ibid.
[4] Ibid.
[5] Parks, James. 2024. “Dartmouth labor ruling: Will college football players be paid in future?” Sports Illustrated. https://www.si.com/fannation/college/cfb-hq/ncaa-football/dartmouth-nlrb-ruling-college-football-players-pay-for-play.
[6] Parks, James. 2024.
[7] Ibid.
[8] Yoo, Kwanghyuk D. 2021. “SCOTUS Analysis: NCAA v. Alston | Emory University School of Law | Atlanta, GA.” Emory Law. https://law.emory.edu/news-and-events/releases/2021/08/scotus-yoo-ncaa-v-alston.html.
[9] U.S. National Archives. 2022. “Sherman Anti-Trust Act (1890) | National Archives.” National Archives. https://www.archives.gov/milestone-documents/sherman-anti-trust-act.
[10] Cornell Law School Legal Information Institute. n.d. “Sherman Antitrust Act | Wex | US Law | LII / Legal Information Institute.” Law.Cornell.Edu. Accessed March 17, 2024. https://www.law.cornell.edu/wex/sherman_antitrust_act.
[11] NCAA v. Alston, 141 S. Ct. 2141
[12] Yoo, Kwanghyuk D. 2021.
[13] Ibid.
[14] Ibid.
[15] NCAA v. Fla. Bd. of Regents, 1994 U.S. Dist. LEXIS 21579
[16] Stevens, John P. 1984. “National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma.” Oyez. https://www.oyez.org/cases/1983/83-271.
[17] Yoo, Kwanghyuk D. 2021.
[18] Ibid.
[19] Ibid.
[20] Ibid.
[21] Ibid.
[22] Mulhern, James. 2021. “NCAA v. Alston.” Harvard Law Review. https://harvardlawreview.org/print/vol-135/ncaa-v-alston/.
[23] Mulhern, James. 2021.
[24] Ibid.
[25] Mulhern, James. 2021.
[26] Ibid.
[27] Parks, James. 2024. “Dartmouth labor ruling: Will college football players be paid in future?” Sports Illustrated. https://www.si.com/fannation/college/cfb-hq/ncaa-football/dartmouth-nlrb-ruling-college-football-players-pay-for-play.
[28] Parks, James. 2024.
[29] Auerbach, Nicole. 2024. “College athletes are getting closer to becoming employees. What would happen next?” The Athletic. https://theathletic.com/5313992/2024/03/04/college-athletes-employees-dartmouth/.
[30] Auerbach, Nicole. 2024.
[31] Ibid.