Supreme Court agrees to hear NCAA athlete compensation case: how will this be a game-changer for colleges and their athletes?
February 2, 2021
For decades there has been an outcry from college athletes and the public regarding the NCAA’s rules limiting student-athletes’ ability to earn revenue.
In May 2020, the 9th U.S. Circuit Court of Appeals upheld an earlier ruling by U.S. District Judge Claudia Wilken prohibiting the NCAA from limiting compensation or benefits for Division I football and basketball student-athletes that are “education-related.”
Now, for the first time in nearly 30 years, the Supreme Court will hear the case and decide the fate of thousands of NCAA student-athletes and the organization itself.
Regardless of the ruling, it’s likely that the student-athletes fight to monetize their athletic skills while in college will not end here. Likewise, the NCAA will likely continue fighting to restrict student compensation and benefits.
How Much the NCAA and Colleges Earn
Before discussing the Supreme Court’s current case, it’s essential to understand the beginnings of the feud between the NCAA and the student-athletes; money. The NCAA has reported annual revenues north of $1 billion. They have annual net assets of nearly $400 million.
That’s not to mention that the NCAA retains a non-profit status. They spend or save their revenue, pay coaches and staff, etc., all while avoiding taxes. Many prominent business leaders and non-profit experts have called for the NCAA to lose its not-for-profit status. Take a look at some of the mind-blowing numbers below.
- In 2014 the NCAA signed a 12-year contract with ESPN for $7.3 billion.
- In 2016 the NCAA signed a contract extension with CBS Sports and Turner Broadcasting that will eventually eclipse $1 billion per year.
- The president of the NCAA makes more than $1.9 million per year.
- The average FBS head football coach makes more than $2 million a year.
Understanding the Athletes Case Against The NCAA
The question that many student-athletes and others have is, “How can the NCAA make so much money, but only pay their athletes in monetarily limited scholarships?” By the way, scholarships are not as expensive as you might think. The average athletic scholarship for student-athletes is only about $18,000 per year.
On the surface, this may seem fair. However, many student-athletes (especially Division 1 football and basketball players) argue that they help generate billions in revenue, but they only receive a fraction of it.
What’s even worse is the students are not allowed to profit off their image, likeness, and name. They aren’t even allowed to hold a regular job due to their obligations to education and sports.
This monetary disparity has led many to speak out against the NCAA in favor of allowing athletes to make a profit or at least receive fair compensation, just like any other profession.
Timeline of the Cases Against The NCAA
The NCAA is not unfamiliar with lawsuits regarding compensation, television rights, recruiting practices, and scholarships. Student-athletes have been filing suits and speaking out against the organization for years. Take a look at a timetable of antitrust lawsuits filed against the NCAA.
- NCAA v. Board of Regents – 1984 (The Supreme Court ruled in favor of the Board of Regents)
- White v. NCAA – 2008 (The NCAA settled out of court)
- Alston v. NCAA (Alston won, the case is currently under review by the Supreme Court)
- O’Bannon v. NCAA & EA sports (pending)
The main issues regarding the suits mentioned above are antitrust laws. The federal 9th Circuit Court of Appeals upheld a previous decision by a lower court stating that the rules in place to limit education-related benefits for student-athletes creates an impermissible restraint on trade that violates Section 1 of the Sherman Antitrust Act.
What’s Already Been Accomplished
The NCAA has long faced scrutiny over its categorization of players as “amateurs.” While the student-athletes still have a long way to go before they are seen as partners, many strides have been made legislatively, via public opinion, and in the courtroom. Take a look at a few of the most recent “victories” for NCAA student-athletes below.
- May 2019: The 9th U.S. Circuit Court of Appeals upholds a lower court ruling banning the NCAA from capping “education-related” compensation or benefits for Division I basketball and football student-athletes.
- October 2020: Governor Gavin Newsome signs into law Senate Bill 206, “Fair Pay to Play Act,” which allows student-athletes in the state to profit off their name, image, or likeness.
- 2020: 10 more states have introduced their versions of the “Fair Pay to Play Act.” Votes are likely to occur sometime in 2021.
Though the NCAA agreed to change its rules to allow student-athletes to profit off their names, image, and likeness by 2021, they have decided to abstain from the scheduled vote until the Supreme Court renders its ruling.
How Will This Be A Game Changer For College Athletes And Colleges?
Under current laws, the NCAA is banned from capping education-related compensation for Division I college athletes in basketball and football programs. However, if the Supreme Court rules in favor of the NCAA, it could irrevocably change the landscape of student-athlete compensation. Most colleges lose money on Division I sports (namely, football).
While there are a few outliers, many colleges are operating in the red. Depending on how the Supreme Court rules on the case, colleges could stand to lose millions more. It will further increase the recruitment and revenue gap between Division I powerhouse schools and small institutions. It could also lead to a cut in other athletic programs.
Contact The Federal Defenders Today
Many in the NCAA argue that they do what’s in the best interest of the student-athletes, amateurism, and colleges. The pending Supreme Court case is a lesson to any successful business or non-profit; anything can happen.
If you have questions as a student-athlete about legal representation, about antitrust laws or how we can help you, contact The Federal Defenders or give us a call at (800) 712-0000 for your free, confidential consultation.
Michael Humphreys has spent more than 25 years with the United States Department of Justice as a federal prosecutor, including approximately 10 years in Washington, D.C., handling cases all over the United States. Up until the end of 2018, he was a federal prosecutor with the United States Attorney’s Office in Las Vegas. An attorney with a very broad range of criminal and civil experience, Michael is no stranger to the courtroom having been involved with high-stakes federal litigation. If you need powerhouse lawyers for your federal case, get Michael on your side. Michael handles federal criminal and civil matters across the United States.