The Future of the NCAA’s “Business Model” is in Jeopardy

For over a century, the National Collegiate Athletic Association (“NCAA”) has served as the regulatory body that governs the majority of intercollegiate athletics. The NCAA and its member institutions provide a platform for almost half a million student-athletes to compete in 24 different sports across three divisions. Undoubtedly, the NCAA’s system has provided millions of educational opportunities for student-athletes that would not otherwise exist, but at an enormous cost to those the student-athletes.

The NCAA’s eligibility requirements for student-athletes to compete are based on the principle of “amateurism” – an arbitrary definition created and implemented in the NCAA’s Bylaws. In order to remain eligible, student-athletes must adhere to a laundry list of NCAA Bylaws, including the requirement not to receive any form of payment for their athletic skill. The NCAA has attempted to justify this decision by continuously stating that lack of pay for intercollegiate athletes marks a definitive point of demarcation between “amateur” and professional athletics. On the surface, this seems like a plausible defense: ensuring that student-athletes do not receive pay certainly does make intercollegiate athletics separate and distinct from professional sports. However, if this is indeed what distinguishes the NCAA from other leagues like the National Football League, then why do carve-outs—such as allowing student-athletes to receive pay for Olympic accomplishments or tennis athletes to accept prize money based on place finish or performance—exist?

A simple answer exists: to maintain control of their monopsony enterprise. The NCAA has become a multi-billion-dollar business, raking in lucrative television deals in excess of $8.8 billion. Rather than sharing those profits with the athletes who produce the NCAA’s notable product, the NCAA shares that wealth with the member institutions, including at least 20 schools that already possess endowments north of $5 billion. As a nonprofit organization, like its member institutions, the NCAA currently generates over $1.1 billion in annual revenue. Yet, none of those profits are shared with the individuals who are the lifeblood behind that revenue—the student-athletes.

Despite these shortfalls, there may be light at the end of the tunnel for student-athletes. On March 31, 2021, the United States Supreme Court heard oral arguments in NCAA v. Alston – the first time since 1984 that an antitrust claim against the NCAA reached the nation’s highest court. Stemming from a Ninth Circuit decision that found the NCAA and its member institutions’ limits on education-related benefits was a violation of the Sherman Antitrust Act, the implications of the case before the Supreme Court may further jeopardize the NCAA’s business model.

Although the NCAA v. Alston case surrounds education-related benefits, depending on the Supreme Court’s decision, the landscape for student-athletes and their fight for pay could drastically change. First, suppose the Supreme Court does in fact rule in favor of the NCAA’s position. In that case, there is the potential to create a de facto antitrust exemption for the NCAA, forbidding antitrust scrutiny and challenges brought against its rules and regulations. This decision would derail student-athletes’ aspirations to receive compensation for their athletic skill in the future. Alternatively, if the court rules in favor of the student-athlete side, it could mark the end of the fictitious “amateurism” standard the NCAA is adamant on retaining.

Under the current Ninth Circuit ruling, student-athletes can receive unlimited education-related benefits, including paid post-graduation internships. This decision, alongside the increasingly widespread legislation enacted by states that permits collegiate athletes to profit from their name, image, and likeness, may force the NCAA to change their business model much quicker than they anticipated. What may be a coincidence—or possibly a sign of the impending changes destined to occur—NCAA President, Mark Emmert, met with several NCAA athletes on April 1, 2021, to discuss the athletes’ request for a temporary waiver permitting them to receive compensation from endorsements next academic school year. These attacks on the NCAA’s business principles show no signs of slowing down, and in fact, continue to gain more traction. Depending on the outcome of the NCAA v. Alston case, the NCAA could suffer a devastating blow to its illustrious revenue stream it has fought so hard to keep away from student-athletes.