Supreme Court Speaks on Student Athlete Compensation in Alston v. NCAA

Client Alert

The Supreme Court unanimously ruled against the National Collegiate Athletic Association in Alston v. NCAA, affirming under antitrust law a lower court injunction against NCAA restrictions on education-related benefits made available by schools to student athletes. The Court held that the NCAA’s remaining compensation rules should receive “rule of reason” scrutiny under antitrust law going forward, instead of a deferential “quick look” review or an exemption from antitrust law altogether. Under the rule of reason analysis, the NCAA will need to provide a legally valid pro-competitive justification for compensation rules unless a different standard is defined by legislation or a negotiated agreement with student-athletes. Notably, Justice Kavanaugh’s concurring opinion expressly questioned whether the remaining NCAA compensation rules would survive rule of reason scrutiny. Further, the Court’s decision dismissed statements favorable to NCAA authority in the previous NCAA v. Board of Regents of University of Oklahoma decision as “stray comments” without binding effect.

Why it matters

The Court’s decision is limited to education-related benefits and does not directly address the legality of NCAA rules regarding student-athlete compensation for name, image, likeness (NIL) licenses or commercial endorsements. However, the decision clarifies that such rules will be subject to the higher standard of rule of reason scrutiny and signals that current NIL rules may not survive challenge under antitrust law.

As things currently stand, NCAA prohibitions on NIL compensation will become illegal as a matter of state law in six states as of July 1. The June 21 decision increases the pressure on the NCAA to enact changes to its current rules or seek federal legislation rather than rely on legal strategies involving restraining orders against state laws or antitrust defenses.

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