The N.C.A.A. argued that the payments were a threat to amateurism and that barring them did not violate the antitrust laws.
WASHINGTON — The Supreme Court unanimously ruled on Monday that the N.C.A.A. cannot bar relatively modest payments to student-athletes in a decision that questioned the association’s monopoly power at a time when the business model of college sports is under increasing pressure.
The decision concerned only payments related to education, but its logic suggested that the court may be open to a frontal challenge to the N.C.A.A.’s ban on paying athletes for their participation in sports that bring billions of dollars in revenue to American colleges and universities. In a concurring opinion, Justice Brett M. Kavanaugh seemed to invite such a challenge.
“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,” Justice Kavanaugh wrote. “And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The N.C.A.A. is not above the law.”
The N.C.A.A. did not immediately comment on Monday.
The case before the Supreme Court did not directly touch on the issue of whether athletes may earn money off their names, images and likenesses, but the decision arrived on Monday with the N.C.A.A. already even more embattled than usual on that question.
Next week, student-athletes in at least six states are poised to be allowed to make money off their personal fame — not because of action by the N.C.A.A., but because of state officials who grew tired of the industry’s decades-long efforts to limit the rights of players.
The N.C.A.A.’s response to the pressure routinely rising out of statehouses since 2019 has been, in effect, to stall.
Less than two weeks before some of the new laws are scheduled to take effect in Alabama, Florida, Georgia, Mississippi, New Mexico and Texas and allow athletes to make endorsements and monetize their social media presences, the N.C.A.A. has not agreed to extend similar rights to players nationwide. And in a setback last week for the association, senior members of Congress said that they did not expect to strike a deal for a federal standard before July 1.
A powerful N.C.A.A. panel is scheduled to meet this week to discuss how players could profit off their renown, but it is not clear when members will vote, particularly in the wake of Monday’s ruling.
Gabe Feldman, the director of the sports law program at Tulane University in New Orleans, said he saw the Supreme Court ruling as a modest victory for the N.C.A.A.’s critics, in part because the justices “had the opportunity to undercut the N.C.A.A.’s broader amateurism argument and chose not to.”
But he said that the withering concurring opinion by Justice Kavanaugh was “the most anti-N.C.A.A., damning antitrust opinion that has ever been authored” and could amount to a blueprint to future challenges.
“The longer term concern for the N.C.A.A. is if enough justices and federal judges join with Justice Kavanaugh’s view,” he said. “It could only be a matter of time before all of the N.C.A.A.’s restrictions on compensation are struck down as antitrust violations.”
Throughout its 115-year history, the N.C.A.A. has largely defended the notion that students should play sports in exchange for no more than a scholarship, books, room and board and, more recently, the estimated cost of attending college, a figure that can include travel and other living expenses.
But as television rights deals have swelled across the decades, sending billions of dollars into the N.C.A.A. and its member conferences each year and fueling arms races for top-notch facilities and big-name coaches, the model has come under increasing scrutiny and left the college sports industry vulnerable to legal and political challenges.
To N.C.A.A. officials, the Alston case, coming after years of other litigation that even led to the protracted absence of a popular college football video game, was fundamental to the future of an association whose main duties are to organize championship events and to set and enforce rules for roughly 500,000 college athletes.
In April, Mark Emmert, the N.C.A.A. president, said he was looking for “clarity about what the law is, clarity about who has responsibility for what, clarity about how these issues will be decided, whether through congressional processes, through legal processes or through N.C.A.A. decision-making processes.”
In Monday’s decision, Justice Neil M. Gorsuch, writing for the court, took a measured approach, saying his task was merely to assess a limited injunction entered by a trial judge, one that allowed payments for things like musical instruments, scientific equipment, postgraduate scholarships, tutoring, study abroad, academic awards and internships. It did not permit the outright payment of salaries.
“Some will think the district court did not go far enough,” Justice Gorsuch wrote. “By permitting colleges and universities to offer enhanced education-related benefits, its decision may encourage scholastic achievement and allow student-athletes a measure of compensation more consistent with the value they bring to their schools. Still, some will see this as a poor substitute for fuller relief.”
“At the same time, others will think the district court went too far by undervaluing the social benefits associated with amateur athletics,” he added.
Justice Kavanaugh’s concurring opinion was bolder.
“The N.C.A.A. couches its arguments for not paying student athletes in innocuous labels,” he wrote. “But the labels cannot disguise the reality: The NCAA’s business model would be flatly illegal in almost any other industry in America.”
“All of the restaurants in a region cannot come together to cut cooks’ wages on the theory that ‘customers prefer’ to eat food from low-paid cooks,” he wrote. “Law firms cannot conspire to cabin lawyers’ salaries in the name of providing legal services out of a ‘love of the law.’”.
“Price-fixing labor is price-fixing labor,” Justice Kavanaugh wrote. “And price-fixing labor is ordinarily a textbook antitrust problem because it extinguishes the free market in which individuals can otherwise obtain fair compensation for their work.”
Justice Gorsuch, writing for the court, did take note of the fact that the N.C.A.A. is a “massive business” one in which “those who run this enterprise profit in a different way than the student-athletes whose activities they oversee.”
“The president of the N.C.A.A. earns nearly $4 million per year,” he wrote. “Commissioners of the top conferences take home between $2 to $5 million. College athletic directors average more than $1 million annually. And annual salaries for top Division I college football coaches approach $11 million, with some of their assistants making more than $2.5 million.”
Compensation for college athletes, by contrast, is strictly limited. Current and former players sued to challenged those limits, and they achieved a partial victory in the lower courts.
Last year, a federal appeals court affirmed the trial judge’s ruling that the N.C.A.A. was not free to limit benefits tied to education for Division I football and basketball players.
The court rejected the N.C.A.A.’s argument that compensating athletes would alienate sports fans who prize students’ amateur status. “Uncapping certain education-related benefits would preserve consumer demand for college athletics just as well as the challenged rules do,” Chief Judge Sidney R. Thomas wrote for a unanimous three-judge panel of the U.S. Court of Appeals for the Ninth Circuit, in San Francisco.
“Such benefits are easily distinguishable from professional salaries,” he wrote, as they are linked to education and could be provided in kind rather than in cash. “The record furnishes ample support,” Judge Thomas added, “that the provision of education-related benefits has not and will not repel college sports fans.”
The Supreme Court affirmed that ruling, stressing that it was only addressing a limited set of issues.
The trial judge, Justice Gorsuch wrote approvingly, “enjoined only restraints on education-related benefits — such as those limiting scholarships for graduate school, payments for tutoring, and the like. The court did so, moreover, only after finding that relaxing these restrictions would not blur the distinction between college and professional sports and thus impair demand.”
The N.C.A.A. had argued that paid internships posed particular hazards because they could involve unlimited sums. But Justice Gorsuch said that association retained “considerable flexibility,” one that left “room to police phony internships.”
Similarly, he rejected fears that allowing in-kind benefits would allow schools to give students luxury cars to get to class. “Under the current decree,” Justice Gorsuch wrote, “the N.C.A.A. is free to forbid in-kind benefits unrelated to a student’s actual education; nothing stops it from enforcing a ‘no Lamborghini’ rule.”
The Supreme Court last considered how antitrust laws applied to the association in 1984, ruling that its restrictions on television coverage of college football games were unlawful. But the decision, National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma, included an influential passage on student-athletes.
“The N.C.A.A. plays a critical role in the maintenance of a revered tradition of amateurism in college sports,” Justice John Paul Stevens wrote for the majority in that case. “There can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of” the antitrust laws. The Biden administration filed a brief supporting the athletes in the new case, National Collegiate Athletic Association v. Alston, No. 20-512, saying that the Ninth Circuit had struck the right balance by focusing on educational expenses.
Aside from the pandemic, no issue has engaged the N.C.A.A. more in recent years than the rights of student-athletes, including whether they may profit from their fame.
Justice Gorsuch wrote that money had played a role in college athletics since its earliest days,
“From the start, American colleges and universities have had a complicated relationship with sports and money,” he wrote. “In 1852, students from Harvard and Yale participated in what many regard as the Nation’s first intercollegiate competition — a boat race at Lake Winnipesaukee, New Hampshire.”
“But this was no pickup match,” Justice Gorsuch wrote. “A railroad executive sponsored the event to promote train travel to the picturesque lake.”
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