Thursday, August 15, 2013

It's Time for the Courts to Recognize that NCAA Amateur Rules Contradict Antitrust Law

If there is ever to be an about face on the legality, or lack thereof, of NCAA amateur rules and compensation of athletes, it will come from a belated recognition of barefaced antitrust by the courts. Imagine there exists a group of a thousand or so businesses of varying sizes and dispersed all across the country, and each firm offers a very similar set of product lines. Then suppose this group bands together and forges an agreement whereby, that rather than pay wages to a particular class of workers needed for producing one of the secondary product lines—valuable workers to the industry, but with limited job options elsewhere— instead compensate them with free access to one of the other product lines. The deal could also include the provision of housing and board, but absolutely nothing more. The actual value of the exchange may vary across firms, but the agreement,much to the benefit of each, would restrict all firms signing on to the pact to the modest in-kind payment.

As far-fetched and impractical as this scenario is for any other industrial application, it depicts the NCAA’s restrictions on compensation to athletes. In any other context collusion among firms to fix workers' compensation is a flagrant violation of the Sherman Antitrust Act. NCAA member institutions have agreed to eliminate the price competition in the market for students' athletic services by setting the allowed compensation to athletes as the “cost of attendance” to each college or university. In the jargon of antitrust law, these circumstances depict a price fix, a naked restraint of trade. It’s one thing to fool the public with the amateurism ruse, but judges? How has the NCAA steadfastly escaped the law?

The NCAA is not immune from antitrust scrutiny and, especially since the 1980s, its restrictions in other areas have been overturned by court decisions. For example, NCAA policies limiting competition in television broadcasts, NCAA v. Board of Regents of the University of Oklahoma (1984), and wage fixing in labor markets for assistant coaches, Law v. NCAA, (1998) were prohibited as a consequence of civil challenges invoking Sherman. Conversely, the courts have hardly been willing to entertain challenges to the rules designed preserve the amateur status of the athletes. Judges have bought the line put forth in the NCAA's Constitution that the competitive athletics programs of member institutions are designed to be a vital part of the educational system, and as such can only be preserved by a “clear demarcation between amateur and professional sports”.

Legal protection of their amateur rules from antitrust law relies on the NCAA’s deft portrayal of the sport participant’s dual role as both student and athlete. When subject to review, the NCAA has made a convincing effort to sufficiently entangle athletics and education so that the existence of a relevant market for athletic services cannot be effectively separated from educational mission of universities. The market for educational services is the one that is relevant, and though there is no US Supreme Court interpretation, federal district and appellate court decisions have, in almost every case, maintained that there is no relevant (labor) market for the athletic services of college students. In both of the the most prominent legal challenges to the NCAA's amateur standards, Jones v. NCAA (1975) and Banks v. NCAA (1992) the court denied the plaintiffs exactly on the basis of the failure to establish that a relevant market for their athletic skills existed. In subsequent challenges the NCAA has offered settlements before the appeals process has run a full course, for example White v NCAA(2006) where the Association was sued for price fixing under Sherman.

Holding that no relevant labor market exists implies that there is no market competition for athletic services. In that view potential college students, including those who possess exceptional athletic skills, are searching the higher education market for a suitable school. If they are good enough at their sport they may be offered a scholarship so as to offset their tuition, supplies, and room and board, but that is a secondary exchange.  While that may be the case for some students, for most athletes at the Division I level, especially those in the revenue generating sports, that interpretation is nonsense! University athletic programs compete, and do so vigorously, for the services of athletes. It’s called recruiting and the practice is as old as college sports. Yet, the roles remain bundled as athletes must also be (full time) students, but educational services are clearly the secondary market in this case. Notwithstanding, NCAA policies in about every respect but compensation treat the athletes like workers. Primarily, if they cannot perform at the necessary level the scholarship can be revoked—no work- no pay. There is no question what matters most when it comes to keeping their "jobs".

A mandate necessitated by court decision on a civil challenge is the surest way to change the system. A statutory proscription is unlikely, and the NCAA will never do what is right and fairly compensate the athletes; those collecting the returns have  far too good a deal. For the courts to engage, a Curt Flood type player has to emerge, and will probably face difficult choices in following the case all the way through in the face of settlement offers. Moreover unlike the Flood decision, the court cannot be swayed by arguments and sentiments that the right ruling will ruin college sports as we know them. It will take the right plaintiff with a compelling case, and the onus is on the courts to make it right.

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