NCAA Asks Supreme Court to Review Scholarship Cash Limits
In an expected but unpromising move, the NCAA and 11 conferences last week petitioned the U.S. Supreme Court to grant review of the grant-in-aid class action led by former West Virginia running back Shawne Alston and former Cal center Justine Hartman.
The case concerns the argument, brought under antitrust law, that the NCAA and its members have conspired to unlawfully cap the value of athletic scholarships. In May, the U.S. Court of Appeals for the Ninth Circuit affirmed a 2019 ruling by U.S. District Judge Claudia Wilken in favor of the players.
The case poses a simple question: Does the law compel the NCAA to allow member schools to compete for recruits by offering financial benefits that reflect recruits’ actual value?
For decades, the NCAA has imposed strict restrictions on how schools compete in the context of compensating athletes. The NCAA doesn’t permit payments and limits grants-in-aid to tuition, fees, room, board, books and other expenses up to the value of the full cost of attendance. The organization maintains that any activities that resemble “pay-for-play” would morph college sports into professional sports.
Meanwhile, the NCAA has allowed schools to entice recruits in ways that lavishly compensate others. Many top programs pay prominent football and men’s basketball coaches millions of dollars in salary. They also hire companies to design and construct state-of-the art stadiums and training facilities— all with an eye towards athlete recruitment.
Imagine a world where Clemson, Alabama, Georgia and LSU could have competed in their recruitment of then-high school phenom Trevor Lawrence by offering him athletic scholarships that reflected his value to those schools. The dollar amounts would have far exceeded a full ride. The competition might have sparked a bidding war.
The possibility of this world surfaced when the grant-in-aid litigation began seven years ago. Yet that possibility has since dimmed. While Judge Wilken, and later the Ninth Circuit, ruled that the NCAA must revise grant-in-aid rules to allow for more competition among schools and conferences, the court-ordered remedy underwhelmed NCAA critics who clamor for more transformative change.
Specifically, the ruling enjoins the NCAA from limiting most types of compensation that are “related to education” but maintains the NCAA’s authority to ban other types of compensation. The key phrase is therefore “related to education,” which other courts have coined “tethered to education.” Under the ruling, projections that a top recruit would generate millions of dollars for a university would not authorize a school to offer him or her a higher-value scholarship. The recruit could only be offered more if the benefit was “related to education.”
According to court rulings, benefits that are “related to education” include “computers, science equipment, musical instruments and other tangible items not included in the cost of attendance calculation but nonetheless related to the pursuit of academic studies.” The rulings also enable the NCAA to cap cash graduation and academic awards to, under current figures, $5,600. However, the rulings bar the NCAA from limiting paid post-eligibility internships and other benefits that college athletes could receive after they are no longer eligible to play NCAA sports.
The court-ordered mandate went into effect on Aug. 11, though the NCAA and the conferences have requested instruction from Judge Wilken regarding the manner in which they must comply. Given the deliberative pace of the NCAA and the unusual state of college sports due to the COVID-19 pandemic, it’s unclear when the impact of grant-in-aid litigation will become widely apparent.
While the grant-in-aid litigation is not as revolutionary as some initially forecasted, the NCAA still has motivation to defeat the players’ case.
First, the NCAA insists that the mandate undermines the amateurism model. The NCAA warns that the “related to education” safeguard is hardly clear and the mandate “will unquestionably turn student-athletes into professionals, ending a century-long tradition of amateurism in college sports.” Such an outcome, the NCAA insists, will lead to harmful economic effects for member programs, who could lose their appeal to fans if college athletes are seen as quasi-pro players. “Many consumers,” the NCAA writes, will “lose interest as college sports are perceived as just another minor league.”
Second, a court finding of illegal conduct can be relied on as precedent in future cases. To that point, the success (thus far) of the grant-in-litigation in part reflects the success of Ed O’Bannon in his Ninth Circuit antitrust case against the NCAA. The former UCLA basketball player sued over the use of players’ names, images and likenesses in video games, classic broadcasts, player jerseys and other products. He successfully argued that the NCAA and its member conferences and schools had unlawfully conspired to exclude college players from third-party compensation. The grant-in-aid plaintiffs relied on O’Bannon in crafting arguments.
In early August, the NCAA and 11 conferences petitioned the Supreme Court to stay the issuance of the mandate until no earlier than when they petition for a writ of certiorari, wherein a higher court reviews a lower court’s opinion. Justice Elena Katan, the Circuit Justice for the Ninth Circuit, denied the petition.
The NCAA now hopes for better luck with the Court as a whole. At least four justices must vote to grant certiorari. Seldom does that occur; cert is ordinarily granted about 1% to 2% of the time. A Harvard Law Review study in 2017 showed that in the preceding Supreme Court term, the justices considered 6,289 petitions and granted cert in only 75 cases (1.2%).
In the rare instances where the Supreme Court grants cert, it often occurs in one of two situations.
The first is when two or more federal circuits rule differently on important questions of federal law. This is the so-called “circuit split.” The NCAA cites cases from other federal circuits that support amateurism. Those cases, however, are arguably not directly on-point and may not establish a split.
The second situation is when a case is of paramount interest to the country. The most cited example is George Bush v. Al Gore, which concerned the recount of Florida’s vote in the 2000 presidential election. Although the matter of whether college athletes can receive additional compensation for education-related expenses pales in comparison to the outcome of a presidential election, tens of thousands of athletes and their colleges across the country could be impacted by the grant-in-aid litigation.
The Supreme Court will likely not take action on the NCAA’s petition until next year. In the meantime, the NCAA and its members will need to comply with the grant-in-aid mandate. They will do so while attempting to resolve the related topic of NIL.
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