By Gary Chester, JD, Senior Writer
The Sports Litigation Alert keeps attorneys, academics, and students up to date on developments in sports law every two weeks. The cases and articles paint a picture of this ever-developing body of law, as we explore emerging trends and legal issues in the sports industry. No segment of the industry is changing faster than intercollegiate athletics. The stark transition from an amateur model to a model focused on NIL compensation for student-athletes suggests the words of the late Hall of Fame broadcaster (and attorney) Howard Cosell, who told me during an interview for KMOX Radio: “What’s happening off the field is far more interesting than what’s happening on the field.”
To better understand where college sports are headed, we need to recognize the important developments of the past. This article presents a brief overview.
The Early Years
Not long after Harvard and Yale formed intramural rowing clubs, the two prestigious universities met in the first interscholastic athletic competition in the U.S. on August 3, 1852. The first Harvard-Yale Regatta was held at Lake Winnipesaukee, New Hampshire, where the Democratic presidential nominee (and future president) Franklin Pierce awarded the Trophy Oars to the victorious Harvard boatsmen. It was a thoroughly amateur event, but there was a commercial angle: the Yale oarsman who suggested the race, James Whiton, struck a deal with James N. Elkins of the Boston, Concord, and Montreal Railroad in which the rail company would transport spectators to the race.
The Harvard-Yale Regatta drew a huge crowd, and it became an annual event that continues to this day. The first intercollegiate matches in baseball, cricket, rugby, soccer, track and field, and football took place over the 14 years that followed. Football drew more national attention than other sports, partly because of its violent nature. President Theodore Roosevelt famously called for the abolition of football shortly after the 1905 season produced 18 deaths and 149 serious injuries.
The NCAA was formed in 1906 as the Intercollegiate Athletic Association to draw up the rules of competition and eligibility. The NCAA conducted its first national championship in 1921 when the University of Illinois won the track and field title in Chicago. More than a century later, the NCAA awards 90 national championships in 24 sports; there are 46 women’s championships and 41 men’s titles, and three coed championships for fencing, rifle, and skiing.
As colleges added more sports and public attention increased, the NCAA intensified its focus on eligibility issues. Football was of particular concern for the NCAA because overzealous supporters were rewarding successful athletes and recruiting talented “ringers” to play for colleges they did not attend. The U.S. is the only country to foster big-time athletics in its institutions of higher learning; in Europe, for instance, promising athletes choose between a college education and a career in professional sports.
College presidents and administrators justified the marriage between sports and higher education by emphasizing the life lessons derived from participating in athletic competition. They believed that students who played college sports needed to be students first and athletes second, and they dedicated themselves to preserving amateurism in intercollegiate athletics. The NCAA established an elaborate set of rules for eligibility, and it created a division which was dedicated to enforcing the rules.
The NCAA had limited clout, however, until it faced a crisis in the 1950s. From 1940 through 1950, the University of Pennsylvania’s home football games were televised on ABC. In 1950, the DuMont Television Network broadcast some of Notre Dame’s home games. The NCAA’s member institutions were fearful that live broadcasts would hurt game attendance, and the NCAA in 1951 forced Penn and Notre Dame to cancel their TV contracts. The NCAA relented the following year after facing threats of antitrust hearings in Congress. It sold the rights to televise one game each week to NBC before switching to ABC in 1954. ABC generally televised one game each Saturday, with an occasional doubleheader, for decades.
The NCAA’s handling of television rights strengthened its authority. The organization permitted scholarships in 1964, but its growing volume of regulations sometimes confused and frustrated athletic administrators. Although the scholarships were supposed to preserve the amateur status of intercollegiate sports and deter under-the-table payments, the NCAA enforcement division was kept busy as illegal payments continued. An extreme case involved SMU football coach Ron Meyer, who coached a losing program that was suddenly able to secure top high school prospects from across the country in the 1970s.
Meyer, his assistants, and SMU boosters paid so-called student-athletes thousands of dollars and furnished some with fancy cars. Despite incurring multiple NCAA sanctions, SMU continued for years to use slush funds to compensate its football players. The NCAA levied the “death penalty” on the SMU program, banning the school from playing in the 1987 season and cancelling SMU’s home games in 1988.
For several years, the NCAA doggedly pursued the University of Nevada-Las Vegas basketball program, which had skyrocketed to national prominence under the colorful coach Jerry Tarkanian, nicknamed “Tark the Shark.” An investigation revealed 38 improper recruiting practices, including 10 by Tarkanian. The NCAA held a “hearing” with UNLV and Tarkanian, with no NCAA representatives or witnesses appearing, before it imposed sanctions. UNLV suspended Tarkanian, who sued the NCAA on the grounds that he was denied due process of law under the Fourteenth Amendment in violation of 42 U.S.C. § 1983. The Nevada Supreme Court found for Tarkanian, but the ruling was reversed in NCAA v. Tarkanian, 488 U.S. 179 (1988), where the High Court held that there was no violation of due process because the NCAA was not a state actor.
The NCAA would continue to wield power over its amateur model of intercollegiate sports, but its authority would face a series of substantial challenges.
The Television Era
In 1972, Title IX of the Education Amendments of 1972 became law. Title IX prohibits gender-based discrimination in educational institutions that receive federal funding. The law forced colleges to elevate several women’s sports from club status to varsity status. Some administrators feared that the cost of women’s college sports would adversely affect football and men’s basketball. 1977, 63 universities that wanted greater national television coverage (and revenue) formed the College Football Association (CFA). Many were members of the Southeastern Conference and the Big Eight Conference.
In 1981, the CFA negotiated a television contract with NBC. The NCAA had negotiated a four-year deal with CBS and ABC that limited the total number of televised games and the number of TV appearances for each university. The NCAA’s television plan intended to reduce the perceived negative effect of live television on football game attendance. The NCAA threatened members of the CFA with sanctions, and the two sides litigated their differences all
the way to the U.S. Supreme Court.
In NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984), the High Court affirmed the Eleventh Circuit’s finding that the NCAA’s TV rights restrictions violated the Sherman Antitrust Act. The Court rejected the NCAA’s contention that its interest in maintaining competitive balance in college football was a reasonable restraint of trade. “No other NCAA sport employs a similar plan,” the Court noted, “… in the most closely analogous sport, college basketball, complete balance has been maintained without resort to a restrictive television plan.”
The decision coincided with an era of rapid growth for cable television. The number of televised games almost immediately skyrocketed from one per week to 20-30 on some cable TV systems. The case also marked the start of an era of litigation involving the NCAA. In 2006, the former Oklahoma quarterback Jason White, who won the Heisman Trophy in 2003, led a class action against the NCAA, alleging that its limits on the value of an athletic scholarship unlawfully precluded student-athletes from receiving funds to cover the full cost of attendance. The plaintiffs alleged that the NCAA violated the Sherman Act by limiting athletic-based aid to tuition, books, housing, and meals. (It did not cover computers, tutoring, travel, and other expenses.) After the NCAA lost its motion to dismiss, the parties reached a settlement in which the NCAA agreed to compensate former athletes and create a fund to cover career-development services and other related expenses.
Merriam-Webster defines “amateur” as: one who engages in a pursuit, study, science, or sport as a pastime rather than as a profession. As the value of a four-year athletic scholarship soared into six figures, it was clear that student-athletes were engaging in more than just a pastime. In 1985, the NCAA expanded the men’s March Madness field from 48 to 64 teams, a far cry from the eight-team field in the initial tournament in 1939. In 1998, the NCAA sanctioned the first football championship game as part of the Bowl Championship Series, or BCS. Previously, the so-called “mythical” national title was determined by the results of the major bowl games and the subsequent Associated Press sportswriters’ poll and the United Press International Coaches Poll.
The NCAA would further expand the fields for football and men’s and women’s to attract increasingly lucrative television contracts. In 2010, the NCAA inked a 14-year, $10.8 billion deal with CBS and Turner Broadcasting for TV rights to the men’s basketball tournament, with more than $700 million going annually to NCAA member schools. In 2015, the agreement was extended to 2032. The eight additional years of the contract are worth $8.8 billion, nearly matching the value of the original 14-year deal.
Television money and private gifts have enabled many institutions to improve their facilities and fund non-revenue producing men’s and women’s sports. Media revenues, merchandising, and donations have also led to a surge in coaches’ salaries, with the highest paid college football coaches earning more than $10 million annually. Nevertheless, the NCAA insisted that college sports were distinct from professional sports, and that student-athletes were amateurs. If an athlete made money in one sport, the athlete was regarded as an ineligible professional for every sport.
In one notable case, the NCAA ruled that Olympic skier and University of Colorado football player Jeremy Bloom would be ineligible to play football if he accepted money for endorsing a brand of ski equipment. In Bloom v. NCAA, 93 P.3d 621 (Colo. App. 2004), a state court denied Bloom’s request for an injunction against the NCAA because the NCAA’s rules were related to the legitimate goal of preserving the distinction between amateur and professional sports, and the NCAA had applied the rules fairly to Bloom.
Other judicial rulings made it clear that the same student-athletes who were generating billions in revenue were taking the risk of incurring concussions and other serious injuries without a source of compensation. Rensing v. Indiana State Board of Trustees, 444 N.E.2d 1170 (1983) and other decisions held that student-athletes who were injured in their sports activities could not collect workers’ compensation benefits because they were not employees.
A high-profile example of the monetary risk of injury arose in the fourth quarter of the 2003 Fiesta Bowl National Championship Game between Miami and Ohio State. Miami’s outstanding running back, Willis McGahee, a Heisman finalist and a potential first pick in the NFL draft, suffered multiple torn ligaments in his left knee when he was tackled after catching a screen pass. Three months later, USC quarterback Carson Palmer was drafted number one, while Buffalo picked McGahee at number 23. McGahee was the first running back chosen, but the knee injury clouded his future and cost him millions.
A more profound episode occurred when Eric LeGrand of Rutgers became paralyzed while making a tackle in a 2010 game. The injury occurred on a kickoff return, and it may have contributed to safety rules that were subsequently implemented. The message to student-athletes was clear: they were earning millions for their schools while shouldering all the risk of a career-ending, life-altering injury.
The Players Strike Back
For decades, college sports were an adjunct to academics. Players had virtually no rights, as evidenced in an NIL case involving TCU’s Heisman Trophy winning quarterback, Davey O’Brien. (Yes, the award for top college QB is named after him.) After O’Brien became the first quarterback to win the Heisman in 1938, the manufacturer of Pabst Blue Ribbon beer published a promotional calendar which included an unauthorized photo of O’Brien and a 1939 college football schedule. The quarterback sought compensation for the commercial use of his photo without permission in O’Brien v. Pabst Sales Co., 124 F.2d 167 (5th Cir. 1941), O’Brien sought compensation for the unauthorized use of his photograph. The court denied O’Brien’s claim because the only recognized cause of action was invasion of privacy, and O’Brien was a public figure who had authorized TCU to distribute his photo and had otherwise sought publicity.
Twelve years later, athletes and celebrities won a significant victory when the Second Circuit recognized that public persons had a property right in their name, image, and likeness—referred to as a player’s “right of publicity.” In Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc., 202 F.2d 866 (2d Cir. 1953), the court considered a contract dispute between competing bubble gum card manufacturers that had signed the same MLB players to exclusive contracts. The court rejected the argument that one “has no legal interest in the publication of his picture other than his right of privacy.”
The right of publicity (and the related tort of appropriation) took center stage in college sports after the NCAA licensed the likenesses of college football and basketball players to EA Sports for computer video games. Former Nebraska and Arizona State quarterback Sam Keller led a class action lawsuit against the interactive entertainment company in Keller v. Electronic Arts, Inc., 724 F.3d 1268 (9th Cir. 2013), asserting that EA’s games improperly used player likenesses and playing styles for commercial purposes without permission. The court accepted the student-athletes’ argument that their right of publicity outweighed EA’s First Amendment rights. EA and the NCAA’s licensing company paid $40 million to settle with about 100,000 college athletes who appeared in EA’s video games.
Having found a friendly venue in the Ninth Circuit Court of Appeals, attorneys for student-athletes based their legal battles in California, where they were handled by U.S. District Judge Claudia Wilken. In O’Bannon v. NCAA, 802 F.3d 1049 (9th Cir. 2015), Judge Wilken found that the NCAA’s amateurism rules preventing student-athletes from receiving compensation for the use of their NILs were an illegal restraint of trade under the Sherman Act. The Ninth Circuit affirmed, prompting California in 2023 to pass the Fair Pay to Play Act requiring its state universities to permit student-athletes to receive NIL compensation. When most other states drafted similar laws, the NCAA was compelled to permit college athletes to obtain compensation for the use of their NILs.
The “Procollege” Era
The nature of college sports was officially transformed by the U.S. Supreme Court in Alston v. NCAA, 141 S.Ct. 2141 (2021). There, the High Court affirmed the Ninth Circuit’s holding that NCAA restrictions on compensation were subject to a “rule of reason” standard, rather than a less restrictive test. The Supreme Court unanimously found that certain NCAA limitations on student-athlete compensation violated federal antitrust laws under this standard.
The sea change in college sports continued in 2023, when the NCAA responded to a federal antitrust lawsuit challenging its restrictions on student-athlete transfers. There would no longer be a one-year waiting period, so intercollegiate athletes could transfer at will. They became free agents after every season, a practice that stands in stark contrast to the rights of professional athletes who are usually under team control for several years pursuant to collective bargaining agreements and/or individual contracts.
For better or for worse, the veil of amateurism has been lifted. Promising high school athletes are enticed to commit to colleges through lucrative endorsement agreements with local businesses and national brands. To the public, it appears that the most promising student-athletes base their choice of college primarily on compensation and less on noncommercial considerations such as academic reputation, coaching, location, or campus appeal.
The sports concept of “who wants it more” has shifted from the field to the stadium suites occupied by generous alumni and business leaders. From July 2021 to July 2024, NIL compensation for University of Texas football players reportedly exceeded $20 million; the next highest level was for LSU football players at $8.7 million. The most lucrative deal for an individual player was $6.2 million for Shedeur Sanders, the Colorado quarterback and son of Buffaloes’ head coach Deion Sanders. The 22-year-old senior has contracts with Nike, Beats by Dre, and Google.
The big money is not confined to football: LSU gymnast Livvy Dunne, who reportedly has more than 13 million followers on social media, has earned more than $9.5 million. Dunne has deals with apparel companies such as Vuori, American Eagle, and Nautica. Institutions with a mission to educate have essentially launched GoFundMe campaigns in which wealthy donors raise funds to pay for promising athletes to wear their preferred team’s colors and logos.
The NIL/open portal era has enriched many student-athletes, while simultaneously creating headaches for coaches. It is difficult to develop team cohesiveness in football, basketball, and other team sports when participants come and go as they please. Head coaches had always relied on alumni support to advance their careers, but alumni and business boosters have become the foundation of a new business model in which student-athletes are paid professionals with unlimited free agency in what may described as “procollege” sports.
The procollege business model has frustrated coaches and altered careers. Nick Saban, arguably the most successful head coach in college football history, publicly feuded with Texas A&M Coach Jimbo Fisher in 2022 after the Aggies surpassed Alabama (as well as Georgia, Ohio State, and Texas) in signing the number one recruiting class. Saban accused Texas A&M of buying high school talent with NIL deals, and Fisher responded by calling Saban narcissistic. Two years later, Saban, who won six national championships at Alabama and one at LSU, retired from coaching. He cited the changing landscape of the sport and “player attitudes.”
Much of the changing landscape is the result of television. The exodus of colleges from the Pac 12 and the Big 12 to the SEC, Big Ten, and ACC have created mega-conferences designed to attract maximum television revenue. The Big Ten strategically stretches from coast to coast and covers half of the top ten media markets. The motivation for the Big Ten to accept USC, UCLA, Washington, and Oregon was a seven-year TV deal with CBS, Fox, and NBC that could produce as much as $100 million in revenue each year to each of the 18 member schools.
What’s Next?
Procollege sports is a thriving industry. The NCAA had argued in several antitrust cases that it needed to distinguish intercollegiate/amateur athletics from professional sports, or fan interest would decline. The numbers belie that argument, however, as the average per game college football attendance in 2023 surpassed the 2022 average–-the first increase in successive seasons since 2017. College basketball saw a decline in attendance between 2017 and 2023, but television ratings for men’s March Madness have held steady for a decade, and the first round in 2024 averaged 8.3 million viewers, making it the most-watched first round ever under the traditional format.
The procollege model has increased the visibility of women’s intercollegiate athletics to its highest level since Title IX became law in 1972. The second round of the 2024 women’s NCAA basketball tournament averaged a record 1.4 million viewers, and the Sweet 16 averaged 2.4 million viewers, a 96% increase over 2023. The most remarkable growth story may be volleyball, with attendance increasing over the past five years, highlighted by an outdoor match at the University of Nebraska in 2023 that drew 92,003 fans to set a world attendance record for women’s athletics. The number of televised volleyball matches has soared, and viewership has continued to grow; notably, the 2023 NCAA championship match drew a record 1.7 million viewers on ABC, reflecting significant growth since the 2018 title game drew 968,00 viewers on ESPN2. The 2024 title match featuring Penn State and Louisville averaged 1.3 million viewers and hit a peak of 1.9 million.
Amidst this increased visibility and growth, the institutions that participate in big time, big money procollege sports face unprecedented challenges. The NCAA needs to encourage (or compel) greater opportunities for women athletes as required by Title IX. Judicial decisions over the past several years have made it clear that too many universities are too quick to cut women’s varsity sports teams and too slow to elevate club sports to varsity status. This is happening in an age in which about 55% of the 19 million undergraduate students are women.
Title IX also covers sexual harassment on campus because failing to protect victims of sexual harassment diminishes their opportunity to reap the benefits of a college education. Case decisions over the years reflect a vast disparity in the procedures that each institution employs, and deficiencies in the resolution process that both complainants and defendants have criticized. The NCAA needs to adopt standards for investigations and hearings that address the concerns of victims, as well as those accused of harassment.
As previously indicated, the NCAA needs to address the high turnover rate for student-athletes in some sports. This became obvious during the 2024 College Football Playoff, with two teams suffering meaningful portal losses before play began. Arizona State lost a dozen players to the portal before the Sun Devils faced Texas, and Penn State backup quarterback Beau Pribula announced he would transfer just days before the Nittany Lions’ first-round game against SMU. Pribula accepted a NIL deal from Missouri reportedly worth $1.5 million.
Would paying procollege athletes directly as employees restore order and equity to this industry? Will procollege athletes demand direct compensation if they decide to unionize? (At least two prominent organizations are trying to unionize intercollegiate athletes.) How will inconsistent state laws governing NIL compensation affect college sports? These are but a few of the issues confronting intercollegiate athletics.
Finally, the financial ramifications of a major antitrust settlement are unknown. On April 7, 2024, Judge Wilken granted preliminary approval of a settlement between the NCAA, Power Five Conferences, and student-athletes in House v. NCAA in the U.S. District Court for the Northern District of California. The class action lawsuit led by former Arizona State swimmer Grant House challenged the NCAA rules prohibiting student-athletes from promoting products, benefitting financially from their social media posts, and otherwise profiting from the use of their NILs.
Under the proposed settlement, the NCAA would pay $2.576 billion over ten years primarily to Power Five football and men’s and women’s basketball student-athletes who were on a roster and received athletics aid at any time from June 15, 2016 through September 2024. Student-athletes in other sports will qualify if they can show that they lost third-party NIL opportunities during the relevant period.
The Takeaway
Intercollegiate athletics arrived at this critical juncture because its college presidents and athletic administrators mistakenly believed they could cling to a model of amateurism that would exempt the NCAA and its member institutions from the Sherman Act. But soaring media and merchandising revenues, exorbitant salaries for coaches and administrators, and the increasing demands on student-athletes (e.g., expanding schedules) cut through the façade. If the NCAA wanted to maintain a smaller scale of college sports, it needed to reiterate that its primary mission was education, and to constrain its own growth. For that, the schools needed to obtain a limited antitrust exemption.
Having failed to obtain the assistance of Congress in the past, it will be interesting to see if the NCAA and its member institutions can meet the challenges ahead by working with student-athlete organizations, or if federal intervention will be necessary.
