NCAA ‘NIL’ Guidance Places Association At Renewed Antitrust Risk

The National Collegiate Athletic Association is once again heading down a perilous path that could place the college sports trade association in heavy, antitrust trouble. Earlier this week, the NCAA announced new “guidance” to prohibit member colleges from using “collectives … to funnel name, image and likeness deals to prospective student-athletes.” In doing so, the NCAA may have again chilled the free market for compensating revenue-generating college athletes.

While the NCAA’s latest effort to limit payment to college athletes has never been tested in any court, the NCAA’s latest wage-limiting restraint is tantamount to the kind of restraints that many courts already disallow. Notably, just last year, the U.S. Supreme Court held in National Collegiate Athletic Association v. Alston that the NCAA’s rules prohibiting colleges from providing direct, in-kind educational benefits to their athletes ran afoul to federal antitrust law.

By passing new “guidance” to limit third-party payments to college athletes, NCAA leaders are again placing themselves at legal peril—even despite there being far safer legal alternatives to address NIL policy. Among these safer legal alternatives, the NCAA could have simply acknowledged itself as a joint employer of college athletes and attempted to eventually enter into collective bargaining negotiations with their athletes over the terms of NIL compensation. This would have insulated any collectively bargained NIL rules from antitrust scrutiny under what is known as the non-statutory labor exemption.

Alternatively, the NCAA could have taken a more hands-off approach and allowed individual conferences to regulate third-party payments. Indeed, conference-specific restraints on NIL collectives are far more likely to withstand antitrust scrutiny because individual member conference reasonably may lack “market power.” Yet, the NCAA failed to adopt this legal alternative either.

In his concurring opinion in Alston, U.S. Supreme Court Justice Brett Kavanaugh issued a strong foreboding against the NCAA passing new rules to limit college athlete pay—explicitly stating that even many of the NCAA’s current compensation rules “raise serious questions under the antitrust laws.”

In failing to take heed of Justice Kavanaugh’s warning, NCAA leaders seem destined to find themselves in antitrust hot water once again. Indeed, what NCAA leaders are now describing as “NIL guidance” may very well serve as the substance of the next class-action antitrust lawsuit against America’s monopolist college sports trade association.

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Marc Edelman ([email protected]) is a Professor of Law at Baruch College’s Zicklin School of Business, Sports Ethics Director of the Robert Zicklin Center on Corporate Integrity, and the founder of Edelman Law. He is the author of “A Short Treatise on Amateurism and Antitrust Law” and A Short Treatise on College-Athlete Name, Image and Likeness Rights.”