The NCAA's Legal Troubles + ICYMI | NIL Newsletter #197
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Today’s Newsletter takes a closer look at the NCAA’s outstanding legal troubles—cases, legislation, and warnings that could fundamentally affect the nature of the Association.
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Major News
The NCAA’s Quest for an Antitrust Exemption
As the NCAA continues to lobby Congress for federal NIL legislation, it stresses one key issue that ultimately may prevent any form of legislation — an antitrust exemption.
The NCAA, historically, has had a difficult time under antitrust laws, to say the least. In NCAA v. Board of Regents, the Supreme Court ruled that the NCAA had violated antitrust laws by controlling television rights of universities. More recently, in NCAA v. Alston, the Supreme Court held that the NCAA once again violated antitrust laws, this time pertaining to student-athlete compensation for academic awards.
In Alston’s concurrence from Justice Kavanaugh: “The NCAA has long restricted the compensation and benefits that student athletes may receive. And with surprising success, the NCAA has long shielded its compensation rules from ordinary antitrust scrutiny. Today, however, the Court holds that the NCAA has violated antitrust laws […] [T]he NCAA says that colleges may decline to pay student athletes because the defining feature of college sports, according to the NCAA, is that the student athletes are not paid […] But the labels cannot disguise the reality: The NCAA’s business model would be flatly illegal in almost any other industry in America.”
The NCAA’s business model relies, in-part, on a lack of revenue-sharing with athletes. In 2021, NCAA revenue totaled $1.15 billion, of which $850 million came from its contract with CBS and Turner for the March Madness Tournament. Under the NFL’s current collective bargaining agreement, players receive approximately 48.8% of league revenue in salaries. If the NCAA were to operate under a similar agreement, it would owe its athletes over $500 million each year.
An antitrust exemption from federal legislation would certainly protect the NCAA from the courts, who seem unwilling to allow the NCAA to skirt antitrust laws any longer. This exemption, however, seems unlikely to exist in any final legislation passed by Congress.
More on the NCAA’s push for an antitrust exemption is available HERE.
State Officials’ Increasing Involvement
As the NCAA continues to seek an antitrust exemption from Congress, it faces increasing pressure from state officials. On October 24th, the State of Florida’s CFO, Jimmy Patronis, released a letter that he sent to NCAA President Charlie Baker. In a call for increased transparency, Patronis acknowledged the Tez Walker transfer decision, before questioning why Florida State’s Darrell Jackson remained ineligible.
“The NCAA’s lack of transparency on this issue raises equal protection and anti-trust concerns.”
“As Florida’s CFO, I respectfully submit this letter as a formal public records request to the NCAA for all records regarding the NCAA’s transfer waiver process for UNC Wide Receiver Tez Walker and FSU Defensive Tackle Darrell Jackson. Moreover, any information uncovered during the public records process will assist the state with the discover phase of any necessary legal proceedings.”
North Carolina’s Attorney General, Josh Stein, likely played a role in Tez Walker’s eligibility decision with his strongly worded letter to NCAA President Baker.
“I write to express my concern about the NCAA’s decision to bar Devontez Walker from playing football for the University of North Carolina at Chapel Hill this season. That decision is wrong—and likely illegal […] Restricting Mr. Walker from playing at UNC-Chapel Hill this fall raises serious antitrust concerns as an illegal restraint of trade. In essence, the NCAA has imposed a sweeping, unilateral, one-year non-compete restriction, in violation of both state and federal law.”
In total, nearly a dozen state officials have contacted the NCAA in the past few months, raising a number of anti-trust concerns. These potential lawsuits, however, all likely pale in comparison to the significance of the House v. NCAA case making its way through Judge Claudia Wilken’s courtroom.
Class Certification Granted in House v. NCAA
On Friday, Judge Wilken granted class certification to three different groups of college athletes in House v. NCAA. The case, brought by ASU swimmer Grant House (above), Illinois football player Tymir Oliver, and Oregon women’s basketball player Sedona Prince, seeks damages for the NCAA’s restriction on athletes’ ability to profit from NIL pre-2021.
Class certification makes over 14,000 current and former college athletes eligible to claim damages if the class wins the case over the NCAA. The NCAA has claimed that the athletes are asking for over $1.4 billion in damages. It is unclear if that amount includes the tripling of damages that occurs in antitrust cases. Therefore, in a worst-case scenario for the NCAA, they would owe nearly $4.2 billion in damages to the classes.
To this point, nearly every motion has gone the way of the athletes. They were able to bar the NCAA’s expert witness from trial, while the NCAA was unable to return the favor to the athlete’s expert witness. Judge Wilken also resided over NCAA v. Alston, another resounding loss for the NCAA. If history is to be believed, the outcome here could be a backbreaking loss for the NCAA.
ICYMI
The Syracuse-focused Orange United Collective is matching donations up to $250,000. LINK
Washington filed a motion opposing the request from Washington State and Oregon State to control the Pac-12 Board. LINK
Chicago State’s Matthew and Ryan Bewley filed a lawsuit against the NCAA to force eligibility. LINK
Have you checked out OSC’s website?
Head to www.OptimumSportsConsulting.com to find important resources and features relating to all things NIL. These resources include State by State Resources for Admins, Agents and Athletes, including our initial “OSC Summaries” for over a dozen states coming soon.
More to come too, including links to helpful state information- agency laws and information about school policies, as well as seminar/congressional notes, worksheets, and much more!