The NIL Mess Part One: How Brett Kavanaugh Set The Wheels In Motion With One Concurring Opinion

The Roberts Court, April 23, 2021 Seated from left to right: Justices Samuel A. Alito, Jr. and Clarence Thomas, Chief Justice John G. Roberts, Jr., and Justices Stephen G. Breyer and Sonia Sotomayor Standing from left to right: Justices Brett M. Kavanaugh, Elena Kagan, Neil M. Gorsuch, and Amy Coney Barrett. Photograph by Fred Schilling, Collection of the Supreme Court of the United States

How did we get here?

How did we get to this place where, under the fig leaf of Name, Image, and Likeness rights, sports boosters have organized to effectively pay some star players seven-figure salaries?

To me, it started with Supreme Court Justice Brett Kavanaugh.

You could argue that it started with his Supreme Court colleagues misinterpreting what college athletics are in a 9-0 ruling in Alston vs. NCAA, and ended with him, basically, saying in his concurring opinion, that the NCAA’s ability to enforce anything in terms of student-athlete compensation is dead.

For sure, it was a fight that should have never found its way to the NCAA’s docket. The NCAA, certainly, should have been much smarter.

But they were not, and when the Supreme Court issued their decision, the NCAA was transformed overnight. And it wasn’t really the ruling itself, which involved whether the NCAA could set limits on education-related awards for students.

It was Brett Kavanaugh’s concurring opinion, which shredded any pretense of protection the Supreme Court would be willing to afford the NCAA in a multitude of future matters.

The ruling, oddly enough, had nothing to do with Name, Image or Likeness (NIL). But it had everything to do with the NCAA’s ability to deal with anything related to NIL.

Folks moan and groan and try to blame the NCAA for the current landscape. And for sure, they picked the wrong fight in the Supreme Court and arguably made the most boneheaded defense in Court history of their position. But the NCAA didn’t create this mess. Brett Kavanaugh did.

Charles LeClaire/USA Today Sports

The Alston Case

The earthquake came last summer, when the Supreme Court issued its unanimous 9-0 ruling in the case NCAA vs. Alston.

The lead plaintiff in the class-action suit, former West Virginia RB Shawne Alston, alleged that the NCAA and other conferences “violated antitrust laws by agreeing to cap the value of athletic scholarships below the actual cost of attending school and ‘far below’ what the free market would produce,” according to Jon Solomon of AL.com.

The powerful law firm Hagens Berman, who have been involved in different lawsuits trying to weaken the NCAA for nearly a decade, represented him and consolidated the case with others.

What Alston challenged was something very specific.

Shawne Alston, as a Division I football player, was receiving something in return for his spot on the football team – in 2020 dollars, the cost of a University of West Virginia education, including room and board, is approximately $36,000 a year. However, in Alston’s apparent case as an undergraduate, he had to take out student loans in order to get academic materials he needed to earn his degree.

This, in the suit, led to the claim that the NCAA unfairly capped “student-athlete academic benefits” for student-athletes. Hagen Berman, and several other law firms argued that having limits on reimbursing such items violated Section I of the Sherman Act, an antitrust law. It prohibits any “contract, combination, or conspiracy in restraint of trade or commerce.”

The NCAA’s defense was that these educational benefits could theoretically be abused by boosters or corporations to be de facto payment for playing football at State U. For example, Nike could create a “fictional” $500,000 internship for an athlete that didn’t require the athlete to do any actual work. Over the years this has been an actual way for boosters have attempted to illegally compensate players – for example, Oklahoma players Rhett Bhomar and JD Quinn had no-show jobs at business owned by a booster back in 2014 – so the NCAA didn’t invent this out of thin air – they’ve had to deal with such schemes before.

“The rule changes that the 9th Circuit’s decision requires… will fundamentally transform the century-old institution of NCAA sports, blurring the traditional line between college and professional athletes,” the NCAA said in its Supreme Court filing.

The 9th Circuit agreed with the plaintiffs on their main point – payments towards education-related expenses – but nonetheless acknowledged that the NCAA’s restrictions on athlete pay unrelated to education, and a requirement that athletic scholarships not exceed full cost of attendance, were vital for “preserving amateurism and thus improving consumer choice by maintaining a distinction between college and professional sports.”

Alston’s lawyers, on the other hand, dismissed those concerns. “[They] apply only to NCAA restrictions on education-related benefits that schools may offer Division I basketball and FBS football players benefits such as computers, science equipment, musical instruments, postgraduate scholarships, tutoring, study abroad, academic awards, and internships,” they told the court in their brief.

Amateurism

It’s important to note here that the NCAA, pretty much during its entire existence, has operated in a gray area in terms of whether it is a business or a non-profit organization.

In the infancy of the NCAA’s existence, when it was called the IAAUS and comprised of a bunch of college and university Presidents, they approached the issues of “what is an amateur athlete” and “should students receive compensation and/or benefits to play an intercollegiate sport” from their perspective as educators.

In a world without television, their main goal was to keep sports (and primarily, football) as something that is a part of an educational mission rather than an economic one. Keeping commercialism out of sports and academia were considered to be very important.

The origins of the term “amateur athlete”, as defined by Americans, originated from the British. Harvard, Yale and Princeton were eager to build gymnasiums and athletics at their schools in the 1850s in large part to emulate the culture of the English boarding schools described in Tom Brown’s School Days. That book presented games played in a schoolyard by students, and it was an athletic culture that American institutions of higher learning wanted to emulate.

But the definition of what an amateur athlete is was never really settled upon, even in the early years. “Amateurism in the last analysis is a matter of spirit,” Dr. Charles W. Kennedy, Princeton president and President of the NCAA, presciently said at their annual convention in 1932. “It may be that it will never be completely possible to frame regulatory legislation which can in all details define the application of this spirit in practice. But there will always be a necessity for a rule which will, as fully as possible, express the spirit of amateurism and define the practices which are repugnant to it.”

Despite what you may have read about amateurism, over the last 100 years it has neither been an ideal that has been completely nailed down with a definition – nor has it been a concept that has been dismissed as unimportant. Case after case – even in Supreme Court losses – the importance of preserving this ideal of preserving amateurism rules were repeated. The opinion of the 9th circuit in Alston vs. NCAA even said so explicitly in its notes. (“…preserving amateurism and thus improving consumer choice by maintaining a distinction between college and professional sports.”)

Television and NCAA v. Board of Regents of the University of Oklahoma

Into this grey area came television. Once the act of televising sporting events was born – and a lucrative market sprung to life for those rights – the programs NCAA and its member schools, slowly and gradually, started to look more like for-profit professional athletic organizations instead of the “amateur ideal”. By the 1980s, about the only facts the general public seemed to agree upon were:

  • College sports are a distinct and separate thing than professional, paid sports.
  • College athletes are different than professional athletes.
  • Some sort of national rule-making body needs to exist to enforce rules and prevent cheating.
  • College sports are unbelievably popular, and generate gobs of money.

It is in this that the Supreme Court was asked to weigh in as to whether the NCAA’s method of issuing TV game broadcasts and TV revenue violated antitrust law. And like the rest of America, the Supreme Court struggled with the same questions that have dogged experts for 100 years. What is an amateur athlete? What constitutes fair compensation? What rule-making abilities and enforcement does the NCAA actually have?

For many years, the NCAA benefited by the prevailing belief that sports exhibitions were not interstate commerce (Federal Baseball Club vs. National League, 1922), and thus not subject to antitrust and anti-competitive laws like the Sherman Act. But in 1959 – not coincidentally, after sporting events commonly started to be televised for money – the Supreme Court ruled differently in United States v. International Boxing Club of New York, Inc. In this landmark but sometimes forgotten case, it established that sports contests did, in fact constitute interstate commerce.

Even then, it wasn’t until 1984, when a breakaway faction of the NCAA formed the CFA (College Football Association), comprised of the richest and most powerful athletics programs at the time, sued the NCAA in an effort to break the NCAA’s control over TV rights to college football games in NCAA v. Board of Regents of the University of Oklahoma.

It was the first time the NCAA’s concept of “amateurism” was attempted to be defined in court.

Before 1959, games weren’t considered interstate commerce, and before 1984 college football TV deals were managed by the NCAA for the overall membership for distribution to the TV networks, not any individual school or conference. But now, the Supreme Court was being asked to weigh in on whether the NCAA’s actions violated the Sherman Act.

In a 7-2 decision, the Court decided that by limiting the number of games available to TV broadcasters, the NCAA was acting anticompetitively through “horizontal price-fixing” – in other words, artificially limiting the supply of televised games.

Supreme Court Justice Byron “Whizzer” White, himself a former star football player at Colorado, wrote a very notable dissent.

First, he tackled the market of NCAA football games. “It is one thing to say that “NCAA football is a unique product, that ‘intercollegiate football telecasts generate an audience uniquely attractive to advertisers, and that competitors are unable to offer programming that can attract a similar audience.'”, it reads. “It is quite another, in my view, to say that maintenance or enhancement of the quality of NCAA football telecasts is unnecessary to enable those telecasts to compete effectively against other forms of entertainment. The NCAA has no monopoly power when competing against other types of entertainment.”

But the really interesting part of his dissent talked about amateurism.

“The fact that a restraint operates on nonprofit educational institutions as distinguished from business entities is as ‘relevant in determining whether that particular restraint violates the Sherman Act’ as is the fact that a restraint affects a profession, rather than a business,” he wrote. “The legitimate noneconomic goals of colleges and universities should not be ignored in analyzing restraints imposed by associations of such institutions on their members, and these noneconomic goals ‘”may require that a particular practice, which could properly be viewed as a violation of the Sherman Act in another context, be treated differently.’

“The purpose of antitrust analysis, the Court emphasized, ‘is to form a judgment about the competitive significance of the restraint; it is not to decide whether a policy favoring competition is in the public interest, or in the interest of the members of an industry.’ Broadly read, these statements suggest that noneconomic values like the promotion of amateurism and fundamental educational objectives could not save the television plan from condemnation under the Sherman Act. When these values are factored into the balance, the NCAA’s television plan seems eminently reasonable. Most fundamentally, the plan fosters the goal of amateurism by spreading revenues among various schools and reducing the financial incentives toward professionalism. Although the NCAA does attempt vigorously to enforce these restrictions, the vast potential for abuse suggests that measures, like the television plan, designed to limit the rewards of professionalism are fully consistent with, and essential to the attainment of, the NCAA’s objectives. In short, ‘[t]he restraints upon Oklahoma and Georgia and other colleges and universities with excellent football programs insure that they confine those programs within the principles of amateurism, so that intercollegiate athletics supplement, rather than inhibit, educational achievement.'”

Despite the outcome, NCAA v. Board of Regents of the University of Oklahoma, too, did acknowledge the importance of the NCAA as a keeper of amateurism rules in its notes.

“The NCAA plays a critical role in the maintenance of a revered tradition of amateurism in college sports,” John P. Steven’s ruling reads. “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 Sherman Act. But consistent with the Sherman Act, the role of the NCAA must be to preserve a tradition that might otherwise die; rules that restrict output are hardly consistent with this role. Today we hold only that the record supports the District Court’s conclusion that, by curtailing output and blunting the ability of member institutions to respond to consumer preference, the NCAA has restricted, rather than enhanced, the place of intercollegiate athletics in the Nation’s life.”

Basically, they defended the amateurism ideal, but also ruled that the NCAA was in violation of the Sherman Act in the case of TV game distribution.

Courtesy New York Times

Alston And The NCAA’s Antitrust Exemption

After NCAA v. Board of Regents of the University of Oklahoma, the Supreme Court, gradually, whittled away at the NCAA’s ability to fulfill its educational and competitive missions through enforcement. Law v. NCAA (1998), Worldwide Basketball and Sports Tours Inc. v. NCAA (2004), and especially O’Bannon v. NCAA and EA Sports (2014), the Supreme Court, while still preserving some aspects of the NCAA’s mission, became more and more willing to test out individual practices of the NCAA for anticompetitive practices.

This is why, repeatedly the NCAA has asked for help from Congress to ask for a formal antitrust exemption from Congress – even as early as 2005.

This would allow it to do enforce rules for academic or fairness reasons – for example, restricting regular-season football games to only be contested on Thursdays, Fridays, or Saturdays – without having to deal with an inevitable Sherman Act lawsuit.

For evidence of its need of protection to do its job, all you need to see is that over the last ten years, the NCAA has been challenged or threatened by the Sherman Act in a large number of lawsuits in a large number of contexts.

The NCAA has inhabited a true gray area basically for its entire existence. They never really had a written, codified antitrust exemption written by Congress. Any protections they were afforded to try to set rules to limit cheating – i.e. do their jobs – they relied heavily on the assumption that even in the cases where the NCAA lost in the Supreme Court, the acknowledgement that the NCAA had a special role to play in terms of enforcing rules on intercollegiate athletics would be enough to allow it to operate as if it had an antitrust exemption in enough cases so they could carry on.

And the foundation of that was the definition of what an “amateur athlete” is, something that clearly has changed in definition over the last 100 years. Many schools which had only admitted men in the past not only started to admit women, but an increasing number of minority students as well. Athletics changed. Money flooded the system. Rules and definitions needed to keep up, especially as college education became less of an upper class pursuit and more of a democratized one.

One particularly huge blow to the definition of amateurism came internationally. The Olympics, which for decades had strived to only have the Ancient Greek ideal of amateur athletes compete in their competition, admitted a USA “Dream Team” of NBA Players to destroy the rest of the world’s amateur basketball teams in 1988. If Larry Bird and Magic Johnson were amateurs paid millions of dollars to play basketball, who else could possibly defined as amateurs?

Yet despite the shifting definitions, there has always been this hesitance for the American people to call collegiate sports professional or minor league sport.

Central to that is the educational mission of the institutions, and the idea that at the end, no matter what happens, the athletes have the opportunity to receive a college degree that they, in many cases, otherwise would not have been able to afford.

There is something about that story that bonds every college graduate to the athletes themselves – some plausible narrative of a shared experience, attending the same Eco 1 lecture, visiting the same classrooms or dining halls, and engaging in some of the same shenanigans. One thing that is clear is that it’s a bond that people cherish their whole lives. It also causes some boosters to act irrationally, and sometimes illegally.

While the ability of the NCAA to do its job was challenged, weakened, and gutted over the last 25 years, it took Brett Kavanaugh, in a concurring opinion, to really strip away any hope of the NCAA being able to do anything about something like NIL without a lawsuit landing on their desk the following morning.

Brett Kavanaugh’s Role

The Sherman Act of 1890 hasn’t historically been applied to labor markets. (Most of its history it was used, with brutal efficiency, to aid in breaking up unions.) But in recent years, this has changed.

“Anti-poaching” agreements and the existence of contractor-forward companies like Uber have increasingly seen American courts use the Sherman Act to call out illegal wage fixing schemes to prevent competition with “horizontal employer competitors”.

It is in that spirit that the Alston case landed on the Supreme Court’s desk.

When the Alston ruling went public, I was mad on a multitude of different levels, because in my opinion, the Alston case is founded on principles that are fundamentally incorrect.

From the 9th Circuit Court decision, Supreme Court justice Neil Gorsuch accepts their conclusion that “the ‘most talented athletes are concentrated’ in the ‘markets for Division I basketball and FBS football.’ … There are no “viable substitutes,” as the “NCAA’s Division I essentially is the relevant market for elite college football and basketball.”

To me, this assertion by the 9th Circuit Court is ludicrous. It’s like saying that the only market for hiring “elite” Java programmers is Oracle, or that the only labor market for “elite coal workers” is in West Virginia and not China.

It ignores a very public, and very easily found example – LaVar Ball, who withdrew his sons from UCLA and elected to have them play in Europe instead. Mr. Ball literally yanked his college-aged son (and high school-aged son) and had them compete in a “viable substitute” league in Europe.

The same is true for football. College is not the only place where football players can ply their trade. Internationally, opportunities exist for Americans to play football for compensation in a “viable substitute” league.

Over and over in Gorsuch’s ruling he refers to the NCAA using its “monopsony power in the market for student-athlete services”. But athletes are free to be athletes in their preferred sport overseas. Students are free to be students at any school for which they qualify through admissions. It’s wrong to define the “market” as only the intersection of both – even more unforgivably defining it with the idiotic adjective “elite”. The reality is student-athletes compete for admission slots, and potential athletes have a worldwide market for which they can leverage their athletic talents. Otherwise, who is the NCAA supposedly competing against?

This is a major issue, in my opinion for the ruling, for if you accept that the market for athletes and the market for students are worldwide, the entire case falls apart. The NCAA doesn’t have a monopoly over students, or athletes, no more than Oracle has a monopoly on Java programmers. This also means that their actions to limit academic compensation are not anticompetitive. Gorsuch, or the 9th circuit, doesn’t mention any competitors, because if they did, it would destroy their argument.

But that’s not how the Supreme Court ruled. The Court accepted the 9th Circuit’s definition that the “market” for 18 to 22 year old “elite” athletes is only the NCAA. And unanimously the Court came to the conclusion that the NCAA didn’t present them with a convincing argument, while the plaintiffs were raised on a pedestal, being said that they “[stand] on firm ground—an exhaustive factual record, a thoughtful legal analysis consistent with established antitrust principles, and a healthy dose of judicial humility.”

“For our part, though, we can only agree with the Ninth Circuit: ‘The national debate about amateurism in college sports is important,” Gorsuch added in his ruling. “But our task as appellate judges is not to resolve it. Nor could we. Our task is simply to review the district court judgment through the appropriate lens of antitrust law.’ That review persuades us the district court acted within the law’s bounds.”

But this is a tautology. How can you define whether a labor market is being violated when you, on the one hand, call the market “elite athletes” yet refuse to define the word “amateur”? If you can’t define “amateur”, how can you tell that you’re actually fixing prices? If you can’t include the price and quality of a college education in a student’s “compensation package”, how can you actually figure out what an athlete’s compensation is?

Brett Kavanaugh, in his concurring opinion, then went way further, in my opinion unnecessarily and tragically overreaching to truly stuck a dagger in anything the NCAA can do to regulate anything.

“Although the Court does not weigh in on the ultimate legality of the NCAA’s remaining compensation rules,” it reads, “the Court’s decision establishes how any such rules should be analyzed going forward. After today’s decision, the NCAA’s remaining compensation rules should receive ordinary “rule of reason” scrutiny under the antitrust laws. The Court makes clear that the decades-old “stray comments”
about college sports and amateurism made in Board of Regents of Univ. of Oklahoma were dicta and have no bearing on whether the NCAA’s current compensation rules are lawful. Ante, at 21. And the Court stresses that the NCAA is not otherwise entitled to an exemption from the antitrust laws. As a result, absent legislation or a negotiated agreement between the NCAA and the student athletes, the NCAA’s remaining compensation rules should be subject to ordinary rule of reason scrutiny.”

At a stroke, Kavanaugh decided that not only were the specifics and facts of this case ruled upon in this judgment, he felt the need to go back and invalidate what was essentially three decades of guidance that the NCAA needed some level of independence to perform its role in regulating and defining amateur athletics.

“To be sure, the NCAA and its member colleges maintain important traditions that have become part of the fabric of America,” it continues. “But those traditions alone cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student athletes who are not fairly compensated. 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. And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.”

This is a breathtaking leap to take from the supposed case, which allegedly involved the NCAA trying to prevent possible abuse of educational benefits. Instead, Kavanaugh intimates that under this Supreme Court, almost anything that the NCAA might try to do to limit, well, anything, the Court will apply the Sherman Act to it.

And it suffers from the same issue that was the foundation of a ruling. After Gorsuch and the 9th Circuit go to great pains to shrug their shoulders and claim it’s not the Court’s job to define what an amateur is, Kavanaugh lumbers right in and offers his own – “workers who are not fairly compensated”. It may be that the athletes are undercompensated for their work, but the 9th Circuit, the Supreme Court Justice, and Brett Kavanaugh made no effort to define what types of workers they are. Can a worker be a student, in his world?

Another major exception I have with his opinion is that Kavanaugh treats the act of being a student as commerce.

He calls the athletes unpaid, but the athletes do get lots of compensation – they get free tuition for a college experience that plenty of other students pay for. They additionally get academic and professional benefits that go beyond what most other students enjoy. One can argue that they should have benefits greater than those currently allocated to them – but you have to accept that they are benefits accorded to a student that is expected to take real classes and receive a real degree.

Students are not employees to be hired and fired, which is apparently what Brett Kavanaugh thinks. If someone is running a professional basketball team, they are free to immediately fire a player that misses a game-winning shot, and offer a contract a player to the opposing player that played defense against them. That cannot and should not how the “market for college students” operates – something Kavanaugh didn’t even indicate he thought about at all.

The Aftermath

The end result is that it is Brett Kavanaugh who gutted the NCAA’s ability to regulate anything. By essentially stripping thirty years of simple acknowledgement that the NCAA requires some extra latitude to enforce rules, it has made it Congress’ and state’s business as to how collegiate sports can be run.

And surprisingly to no one, a bitterly divided Congress and radicalized statehouses across the country have found themselves completely unequal to the challenge. There are now 51 different rulebooks about NIL. And the single most effective way to manage NIL abuses has been wrecked by the Supreme Court.

The NCAA gets a lot of criticism when it comes to NIL, with the common refrain that “why didn’t, or doesn’t the NCAA do more to regulate this out-of-control NIL stuff?” The answer is that Brett Kavanaugh saw fit to strip even the smallest antitrust protection the Court had afforded the NCAA the last 30 years. The Wild West that is NIL, and collectives paying players, has as its father Brett Kavanaugh.

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