College sports, as we once knew it, are finished. That’s the clear takeaway from the saga of 19-year-old Jaden Rashada, one of the nation’s top football recruits. Last summer, Rashada reportedly signed a $14 million NIL (“name, image and likeness”) contract with the Gator Collective, an unaffiliated booster club at the University of Florida. But when the club essentially reneged on the deal, Rashada ditched Florida for Arizona State. Until recently, of course, this bizarre recruiting adventure would have been unprecedented, not to mention illegal, under NCAA rules. But college sports have become a legal Wild West ever since players began agitating for compensation. Staggering multi-million dollar commitments and loophole-ridden contracts are just a preview of the chaotic changes to come.
Two years ago, after all, the Supreme Court delivered an earthquake when the justices unanimously ruled in NCAA v. Alston that the billion-dollar NCAA isn’t immune to antitrust laws just because of some cherished tradition around “amateurism.” The justices shut down the NCAA’s justification for limiting education-related benefits that if schools began compensating athletes, the public could lose interest in its product. Afterwards, taking the hint that student-athletes would inevitably be paid, the NCAA issued tentative guidelines for athletes to accept sponsorship deals without blatant pay-for-play arrangements. But the awkward reality is that it’s nearly impossible to distinguish between legitimate and illegitimate payments, especially when the NCAA, soon to be led by former Massachusetts Governor Charlie Baker, suddenly seems hesitant to enforce standards. In short, this won’t stave off the revolution.
As Brett Kavanaugh noted in a fiery concurrence in Alston, antitrust laws could knock down all of the NCAA’s remaining pay restrictions. “The NCAA’s business model would be flatly illegal in almost any other industry in America,” he wrote, noting that paying market wages could imperil everything from non-revenue-generating sports to Title IX. There are, after all, some 180,000 Division I student-athletes in the U.S., and there’s no way that every college will have the funds to compensate them fairly. Will new legislation be needed? How about collective bargaining? Kavanaugh put it all on the table.
In the end, the high court stopped short of ruling on student-athlete pay, but such determinations are nevertheless coming soon. Here’s the current legal state of play.
Black Swan Paradigm
On Wednesday, the Third Circuit Court of Appeals will hear oral arguments in Johnson v. NCAA, an important case that addresses whether college athletes, who are supervised for long hours and sometimes disciplined, qualify as “employees” under the Fair Labor Standards Act. If so, they may be entitled to minimum wage and overtime pay.
This dispute picks up right where Alston left off, and gets to the core of the relationship between colleges and their athletes: Who is the primary beneficiary? The answer may hinge on a legal test established a decade ago, when a group of interns sued Fox Searchlight over unpaid work on the Oscar-winning film, Black Swan. In short, the test asks things like whether the supposed employee receives educational training and/or college credit, and whether the experience accommodates other academic commitments.
In Johnson, the student-athletes argue that schools are profiting by forcing young men and women to prioritize athletics over other commitments. A federal judge agreed that this was plausible enough to warrant a trial to determine if their situations fit the definition of “employment.” The NCAA, now appealing that decision, counters that student-athletes participate without any real expectation of earning an income and there are health and social benefits of being involved in sports.
The stakes here are seismic. If schools are forced to treat athletes as employees, that would also mean tracking work hours, withholding taxes, and paying into unemployment programs. Doing so, they say, “could make most sports cost-prohibitive.” (Would that mean the end of, say, fencing or rowing?) The suing athletes respond that the solution is to change the rules so that schools are not exercising sufficient control over them. As for compensation, the athletes jab at how, in the wake of Alston, the NCAA’s definition of an “amateur” seems to have switched from “a student-athlete who isn’t getting paid” to “a student-athlete who is getting paid, so long as the money is not coming from [schools] directly.”
That definition may change again, one way or another. The National Labor Relations Board, which is now swinging to the left thanks to President Biden’s appointments, appears on the verge of recognizing unions among college athletes. That could open up a path for athletes in top revenue-generating sports to collectively negotiate a portion of NCAA revenues. Lawmakers are also getting involved. The California legislature, for example, is considering a bill that would force public universities to split sports revenue with student-athletes, and other states are taking steps to ensure that students can exploit NIL deals.
More litigation could also lead schools to begin apportioning TV money to athletes. The big case to watch is House v. NCAA. Led by legendary sports attorney Jeffrey Kessler, this one takes aim at the NCAA’s broadcast revenue on antitrust grounds. The NCAA, in response, has argued that athletes haven’t shown any legal injury because a broadcaster needn’t license anyone’s likeness to show a game. Claudia Wilken, the same federal judge in Oakland who presided over Alston, has already rejected that argument as missing the point. She said the key allegation is not that athletes have any direct right to be compensated for what’s broadcast on television, but that absent the NCAA’s restrictions, schools would be competing for talent by allowing athletes to share broadcast revenue. That’s sufficient, she ruled, and the NCAA hasn’t justified its pay rules on competition grounds just yet either. She will soon take up a bid to certify a class action. A trial wouldn’t take place before 2025.
So, are college sports doomed? That’s the question I’ve been throwing to knowledgeable insiders the last few weeks. It’s hard not to read the briefs, see the Rashada saga, and not wonder whether it’s over. College programs could indeed become vastly more expensive to maintain, and some—especially less popular men’s sports, like tennis and wrestling—could be on the chopping block thanks to everything from minimum wage laws to Title IX. As for football and basketball, will they remain popular if they are played mostly by a small group of rich schools that no longer prize regional rivalries and treat recruitment like free agency? Will resentment begin to foment?
Everyone I’ve spoken to agrees that things are fundamentally changing and there’s no turning back. Nearly all believe there’s not enough political will for Congress to intervene, either. “The product is still delivering,” one media executive told me. Indeed, January’s college football playoff pulled sensational ratings, even if the championship, a Georgia blowout, lost viewers. “There’s definitely some trouble on the horizon,” cautioned another exec, referencing recruitment scandals. “If there’s blame, it belongs to the NCAA which did nothing despite everyone seeing this coming.”
Marc Edelman, a sports law professor who has been one of the leading scholars on the subject, believes that once the NCAA is forced to lift compensation restraints, the “pretend endorsements will go away and deal-making will just take place over the table.” Yes, to the chagrin of Varsity Blues parents hunting for scholarships, some sports like squash, fencing, and golf may be endangered, he told me, but that’s “not a good reason to deny pay to a workforce that’s predominately African American.” He also thinks most schools will still be able to afford premier sports given the outsized salaries now enjoyed by coaches and athletic administrators. Echoing Kavanaugh, he added, “There’s really nothing else that parallels the college football and basketball system in the United States. It’s about time.”