Examining the Legal Landscape Involving Amateurism and the NCAA

Jan 29, 2021 | NCAA, Sample Issue

By Alex Sinatra

According to the National Collegiate Athletic Association (NCAA), it is a member-led organization dedicated to the well-being and lifelong success of college athletes[1] . It was founded in 1906 as the Intercollegiate Athletic Association of the United States (IAAUS) and later changed its name in 1910 to the NCAA. The need for an association like this was due to the lack of uniformity among collegiate athletics and the lack of athlete safety. Student athletes and schools were gaining unfair advantages over their rivals and there were a myriad of athlete deaths during practices and athletic contests.

The main objective of the NCAA in its infancy, was to create rules and regulations to govern intercollegiate athletic contests. These rules were meant to create an equal-playing field devoid of unfair advantages where athletes would be safe to compete in a collegial environment — at least that was the goal. However, over the years, the purpose and ethos of the NCAA changed. There was money to be made off of athletes and everyone seemingly wanted a piece.

Recently, the Supreme Court of the United States (SCOTUS) granted writ of certiorari to a case entitled National Collegiate Athletic Association v. Alston[2] . This case ultimately centers on the amateurism rules of the NCAA and whether compensation of student-athletes violates federal antitrust law. The issue presented in the case is: Whether the U.S. Court of Appeals for the 9th Circuit erroneously held, in conflict with decisions of other circuits and general antitrust principles, that the National Collegiate Athletic Association eligibility rules regarding compensation of student-athletes violate federal antitrust law.

The case centers on former West Virginia University student-athlete Shawne Alston who filed suit in the Northern District of California against the NCAA, SEC, ACC, Big 12, Pac 12 and Big Ten. He claims the defendants have “conspired to contain costs thereby fixing the value of full grant-in-aid in violation of Section 1 of the Sherman Act.” Alston seeks two things: 1. to certify a class of similarly situated student-athletes who competed from February 2010 to the present and 2. monetary damages (which are trebled under antitrust laws) and to enjoin the NCAA from enforcing their bylaws that cap full grant-in-aid.

Amateurism has been an oft used battle cry for the NCAA when rules and regulations are questioned. The association consistently points to amateurism as their guiding principle. But if you break down the amateurism rules and what the schools are providing the athletes versus what they are potentially giving up, it seems lopsided in the NCAA’s favor. In the most basic terms, in order to be eligible as a student athlete for an NCAA member school, an individual must not have received sports-related compensation[3] . In exchange for the student athlete giving away their ability to make money off their name, image, and likeness (“NIL”) while a student-athlete, they are receiving a free education. However, studies have indicated that student athletes aren’t always able to take full advantage of this “free” education because of the amount of hours they are taken out of the classroom by virtue of them representing their schools in athletic contests.

Why is the NCAA so adamant against athletes profiting off their own name, image, and likeness when students who are on academic scholarships and not athletes have full reign to create any legal business enterprise they desire?

I spoke with Ellen M. Zavian, a professor of sports law and entrepreneurship at George Washington University and Editor-in-Chief of esportsandthelaw, about this issue. In her entrepreneurship class, the students have an opportunity to create a startup. For the student-athletes in her class, they have additional hurdles imposed by the NCAA when launching a new enterprise.

“College should be a time to explore and take advantage of the resources universities offer, including developing and funding startups. If a Student-Athlete is a ‘student’ first, the NCAA should not require the entrepreneur Student-Athlete to share their startup idea nor require approval from the NCAA, no matter the product or service being launched.”

Two sections of the NCAA Division 1 manual[4] seem particularly relevant to understanding the restrictions placed on student-athletes.

Section 2.9 The Principle of Amateurism. Student-athletes shall be amateurs in an intercollegiate sport, and their participation should be motivated primarily by education and by the physical, mental and social benefits to be derived. Student participation in intercollegiate athletics is an avocation, and student-athletes should be protected from exploitation by professional and commercial enterprises.

The NCAA specifically chose the word avocation here. The word avocation means a hobby or minor occupation as opposed to a vocation which is a person’s employment or main occupation, especially regarded as particularly worthy and requiring great dedication. I do agree student-athletes should be protected from exploitation by professional and commercial enterprises, I contend, however, that NCAA is one such professional and commercial enterprises exploiting student-athletes.

While there is an NCAA rule known as the 20-hour rule, that limits the amount of time student-athletes are allowed to practice and participate in “countable” activities, many of the activities that aren’t countable take up huge blocks of time from the student-athlete’s schedule[5] . If you have ever spoken to a student athlete, they will tell you that the number of hours they are devoting to their sport is in sheer excess of twenty hours. The NCAA published a chart[6] to outline what activities are countable and which ones are not. Things like traveling to and from competition sites, attending banquets, and fundraising activities or public relations/promotional activities and community service projects. Competitions and associated activities, regardless of their length, count as three hours. Under various federal and state laws, between 35-40 hours is considered full-time work and I would argue most student-athletes are devoting at least this amount of time to their athletic endeavors and therefore their participation in intercollegiate athletics is a vocation and not an avocation.

In is only natural that when an individual devotes a large chunk of time to either a vocation or an avocation, they would be inclined to profit off their expertise. However, the NCAA limits what the student-athletes can create with their own name, image, and likeness. For instance, Rule 12.4 governs employment of student-athletes and Rule 12.4.4 governs self-employment.

Rule 12.4.4 Self-Employment. A student-athlete may establish his or her own business, provided the student-athlete’s name, photograph, appearance or athletics reputation are not used to promote the business.

This severely limits the types of businesses that student-athletes can create. It is akin to telling a fine arts student that they can create any business they choose, but it can’t be centered-around their artistic abilities. Not only is this a ludicrous restraint on trade, but it might also be considered a violation of the law.

There have been a smattering of lawsuits brought against the NCAA in recent years regarding athlete compensation and NIL. The suits brought against the NCAA regard claims of antitrust violations and restraint of trade.

“Over the last few years, the attitude at the courthouse has seemed to change and be less favorable for the NCAA. Although the NCAA has an enormous history of success in antitrust litigation, these many mounting cases seek to change the fortune of student-athletes and the model for intercollegiate athletics,”[7] Sports attorney Christian Dennie shared on his sports law blog for law firm Barlow Garsek & Simon, LLP.

Dennie has written numerous articles on the matter[8] . Prior to joining BGS, Christian worked in the athletics departments at the University of Oklahoma and the University of Missouri. Since his return to private practice, Christian has continued to work with and advise clients in the sports industry.

“Generally, I think the question is whether payment for items and expenses that are tethered to academics, but are not included within the NCAA s definition of full grant-in-aid would violate antitrust laws. It appears that academic expenses paid for by an institution would not be an issue that interferes with the protection of the amateur product. This would permit student-athletes to receive some academic expenses or items that could be above full cost of attendance. The trial court s order, and the appellate court s affirming opinion, does not address items in addition to expenses tethered to academics, which was upheld by the Ninth Circuit in O Bannon. The US Supreme Court denied cert in O Bannon.

As recently as a January 11, 2021[9] , the NCAA Division I Council tabled votes on proposed legislation surrounding rule changes regarding student-athletes ability to transfer and to make money from the use of their name, image, and likeness. This comes after a letter from Justice Department s Antitrust division leader Makan Delrahim[10] warned the NCAA about the potential antitrust violations the proposed rules might have for the NCAA.

Pursuing a goal of promoting amateurism does not insulate the NCAA s rules from scrutiny under the antitrust laws. … The antitrust laws limit the NCAA s ability to restrict competition among college athletes, coaches, and schools. For example, if the NCAA adopted a rule that fixes the price at which students can license their NIL, e.g., based on what the NCAA determines to be a fair market value, such a rule may raise concerns under the antitrust laws.” – Justice Department s antitrust division leader sent a letter to NCAA President Mark Emmert, a copy of which was obtained by USA TODAY Sports[11] .

As the SCOTUS prepares to hear National Collegiate Athletic Association v. Alston, many speculate on the decision. As a reminder, Chief Justice Roberts represented the NCAA before SCOTUS in Smith v. National Collegiate Athletic Association in the early 2000s and thus, he will likely have to recuse himself.

The current NCAA model is not working for the student-athletes nor for the NCAA. Something must change fundamentally. Do not be surprised if SCOTUS finds that the NCAA eligibility rules regarding compensation of student-athletes violate federal antitrust law. The sports world has seen unprecedented changes in the past five years, and this will likely be one more.

 

Alex graduated from Texas A&M University School of Law and has worked in-house for a private family, a multinational company, and most recently, a professional sports team. She works for USA TODAY SMG’s NFL Wire sites as a journalist and sits on the Esports Trade Association Board of Directors and chairs the Legal & Governance Committee. She hosts a podcast, Your Potential for Everything, and has a book series to supplement it. Alex assesses company policies to help them negotiate and set internal metrics in a more strategic and effective way. Email her at yourpotentialforeverything@gmail.com to schedule a consultation.
Books: https://amzn.to/34QeETc
Podcast: https://bit.ly/YPFEapple

[1] http://www.ncaa.org/about/resources/media-center/ncaa-101/what-ncaa
[2] https://www.scotusblog.com/case-files/cases/national-collegiate-athletic-association-v-alston/
[3] http://www.ncaa.org/student-athletes/future/amateurism
[4] https://www.ncaapublications.com/productdownloads/D121.pdf
[5] https://web3.ncaa.org/lsdbi/bylaw?ruleId=327&refDate=20200807
[6] https://www.ncaa.org/sites/default/files/Charts.pdf
[7] https://bgsfirm.com/jenkins-v-ncaa-another-antitrust-lawsuit-challenging-the-athletic-scholarship/
[8] https://bgsfirm.com/attorney-profiles-christian-s-dennie/
[9] https://www.usatoday.com/story/sports/ncaaf/2021/01/11/ncaa-voted-delayed-transfer-rules-name-image-and-likeness/6629391002/
[10] https://www.usatoday.com/story/sports/ncaaf/2021/01/08/justice-department-warns-ncaa-over-transfer-and-money-making-rules/6599747002/
[11] Ibid.

References

https://www.usatoday.com/story/sports/college/2020/12/16/supreme-court-hear-case-ncaa-athlete-compensation/3894835001/

https://www.usatoday.com/story/sports/columnist/dan-wolken/2020/12/16/supreme-court-decision-take-ncaa-case-one-reason-2021-looms-large/3930158001/

https://www.altiussportspartners.com/post/3-considerations-for-athletic-directors-with-upcoming-nil-changes

https://www.accdocket.com/ethical-evolution-ncaa

https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1393&context=sportslaw

https://www.businessinsider.com/ncaa-college-athletes-march-madness-basketball-football-sports-not-paid-2019-3

http://www.ncaa.org/about/resources/media-center/ncaa-101/what-ncaa

https://www.usatoday.com/story/sports/college/2019/10/10/ncaa-amateurism-model-being-pushed-change-legislation/3928243002/

 

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