Supreme Court Ruling Will Spur New College Sports Compliance Requirements, Compensation Opportunities

Publication
June 22, 2021
ImageA unanimous United States Supreme Court ruled on June 21 that National Collegiate Athletics Association (NCAA) restrictions on colleges offering education-related perks to compensate student-athletes
 violate antitrust law. The NCAA had contested a ruling from the Ninth Circuit Court of Appeals that would allow colleges to offer greater academic-related perks to Division I football and men’s and women’s basketball players.

The benefits could include things such as scholarships for graduate degrees, paid postgraduate internships, study-abroad programs, and computers, musical instruments, and other types of equipment related to education.

Though the case presented one of the biggest tests in many years to the NCAA‘s limits on compensation for athletes, even this landmark Supreme Court decision is not expected, by itself, to open the floodgates to unrestricted compensation for top student-athletes. That is because the Court’s opinion is limited to perks specifically tied to education. Nevertheless, it could fundamentally change college sports by essentially requiring universities that wish to be highly competitive in high-revenue sports to ensure that they are doing whatever they can to offer top recruits (and current players) some of the best available education-related perks and deals. The pressure to do so may, in turn, spur those institutions of higher learning to find ever more creative means of characterizing compensation as education-related.

The Court’s decision is a victory for a group of former NCAA Division One football and basketball players who challenged the NCAA’s existing $5000 cap on the value of education-related perks beyond university scholarships. It comes on the heels of new legislation in many states permitting college athletes to be paid for companies’ use of their names, images, and likenesses. State laws of this type (most of which are slated to come into effect on July 1st) are not uniform but generally derive from a common motivation — a desire to ensure that the state’s colleges do not fall behind in their ability to compete with schools from other states in which college athletes may profit from endorsement deals or similar opportunities for compensation.

Perhaps what is most evident legally at this point is that NCAA member institutions now have a new and rapidly evolving subject to which to devote significant compliance attention.
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Philip R. Stein
Practice Group Leader, Litigation
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