Is there such a thing as competitive amateurism?

Speaking of not ending well, if you’re looking for the Cliffs Notes version of the Jenkins v. NCAA litigation (aka Jeffrey Kessler’s lawsuit) that is bubbling to the surface between now and year’s end, here’s a good summary of what’s at stake.

It starts with O’Bannon.

Four years ago, the NCAA’s system of amateurism was brought to trial in Ed O’Bannon’s class action lawsuit. The case centered on whether Division I men’s basketball and football players ought to be compensated for the commercial use of their names, images and likenesses.

O’Bannon defeated the NCAA. Judge Wilken, and later three judges on the U.S. Court of Appeals for the Ninth Circuit, concluded that the NCAA and its nearly 1,300 members violated antitrust law by unlawfully conspiring to prevent players from negotiating the monetary value of their names, images and likenesses.

It was a landmark decision. For the first time, NCAA amateurism rules were found to have violated federal antitrust laws. It is a decision that will remain a problem for the NCAA. Indeed, other players who litigate against the NCAA —including Jenkins, who played defensive back at Clemson from 2010 to 2014, and his co-plaintiff, Sacramento Kings forward Nigel Hayes—can cite the O’Bannon decision as favorable precedent. While the O’Bannon precedent is influential in most of the country, it is fully binding in federal districts governed by the Ninth Circuit (which includes federal district courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington).

But while it embraces the core ruling from that case, it seeks a far different remedy.

If the NCAA thought its legal troubles with amateurism were over with the O’Bannon case, they were wrong. The Jenkins case and its associated litigations, including Shawne Alston v. NCAA, utilize the O’Bannon ruling to advance a related, but distinct antitrust theory: the NCAA and its members have unlawfully conspired to suppress the monetary value of athletic scholarships. As noted above, NCAA rules limit the value of athletic scholarships to reimbursement for tuition, room, board, fees and course-related books.

On a practical level, the Jenkins case asks what would be the value of an athletic scholarship if colleges could increase that value as a recruiting inducement? If the value would exceed the grant-in-aid, then NCAA rules have denied the player the marginal value between the grant-in-aid and the amount of money the player would have received. On behalf of Jenkins, attorneys Jeffrey Kessler and David Greenspan contend that such a practice is plainly anti-competitive and inconsistent with basic tenets of American capitalism.

There’s also that whole pesky thing with common sense and reality.

Jenkins’s attorneys also insist that NCAA’s scholarship rules are contradicted by how colleges otherwise recruit top athletes. To that end, colleges already compete for star recruits in an assortment of ways. They build expensive stadia and training facilities to create the image of a professional team. They also pay big-name coaches millions of dollars of year, at least in part based on those coaches’ ability to recruit high school students. Further, schools hire various staff in hopes that it will give their programs a competitive advantage. In a sense, colleges spend a considerable amount of money on what is around the athlete. To some degree they do so because NCAA rules deny those colleges an opportunity to spend money directly on the athletes.

A win for the plaintiffs doesn’t mean we’ll see the Wild West, though.

At the start of this article you were asked to consider what a free market would lead to if top recruits were the beneficiaries of bidding wars for their services. While Jenkins and many other players would embrace such a world, it is not one that is likely to emerge. This is because Judge Wilken has defined the relevant antitrust “market” not as the business of college athletics. Instead, she classifies it as the market for student-athletes’ athletic services, alternatively described as the market for a college education combined with athletics. In other words, college education and academic integrity still matter in assessing how colleges could compete with one another in offering athletic scholarships.

With that in mind, the players suggest to Judge Wilken a couple of alternative ways athletic scholarships could be regulated. First, they propose a model that empowers Division I conferences to make choices that reflect their unique qualities. In this decentralized model, conferences, rather than the NCAA, would determine how colleges could compete with another in offering athletic scholarships.

The decentralized model is not without logic. Conferences vary in terms of size and location. Each has different values and prioritizing in balancing academics and athletics. The powerhouse Southeastern Conference, for example, might focus on the fact their member schools generate so much revenue through college sports. With that in mind, the SEC might allow member institutions the chance to offer athletic scholarships that are twice or three times the size of academic scholarships. In contrast, the less economically prosperous Colonial Athletic Conference might continue to limit athletic scholarships to the value of academic scholarships. Keep in mind, Jenkins winning would not force any school to pay more in an athletic scholarship—a victory would only provide eligible schools an opportunity to pay more.

As a second alternative, Jenkins proposes that Judge Wilken simply abolish NCAA restraints on payments or non-cash benefits that are “tethered to educational expenses” or “incidental to athletic participation.” This viewpoint stresses that it would not betray NCAA amateurism if student athletes were compensated more for educational expenses or other aspects of their college experience that are not directly about athletics.

You would think this case is ripe for settlement if for no other reason than to keep Mark Emmert from testifying under oath in discovery.  But as we’ve seen, the NCAA often acts in mysterious ways.  It’s a long way to December, though.  Stay tuned.

12 Comments

Filed under See You In Court, The NCAA

12 responses to “Is there such a thing as competitive amateurism?

  1. Derek

    Does the fact that the costs differ depending on the school help the NCAA here? Obviously a Stanford education is objectively more costly and subjectively more valuable than an Arizona State education and they reside in the same conference.

    Obviously the counter to that is that in real terms the cost of scholly is negligible to the school, but I still think it makes it hard to say there’s a cartel when you’ve got so many choices out there with both subjective and objective differences in the value of what the school is offering. For me a Stanford offer is just not the same as an offer from Troy and an argument that suggests that they are artificially made the equivalent of each other is laughable, at least to me.

    I also wonder how far you can stretch the argument. For example is it anti-competitive to cap schollies at 85? Alabama could make the argument that they’d give out more if they could and that there would be a demand whereas Georgia Tech fills up just because they’re sitting there offering free educations not because too many are excited about the opportunity.

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    • Cojones

      Agreed. While reading the Senator’s offering, the same thing occurred to me, but, rather than display my possible lack of comprehension, I was deferring to future posts. You solved that with your post and it brings up further actions that can go beyond the scholarship value.

      A small former football championship school, the U of Chicago, can offer nearby IIT and other science technical references for additional help using the U of C’s library card for access. Yep, that’s stretching it, but the valuation is what the school can put on the area access that benefits the student; USC and JPL, etc (I need more time to compound the differing possibilities of selling the area with the school’s scholarship, but as you can see, the offering is only limited by the imagination of the school selling(!) the position to a player. We are speaking of student edumacation price value, aren’t we?

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    • Obviously the counter to that is that in real terms the cost of scholly is negligible to the school, but I still think it makes it hard to say there’s a cartel when you’ve got so many choices out there with both subjective and objective differences in the value of what the school is offering.

      It’s cute how some of y’all keep ignoring the obvious question: what would happen to the overall level of student-athlete compensation if the NCAA abandoned amateurism?

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      • Derek

        I’m not ignoring it. Obviously, the market would bear A LOT for some. I’m just asking the initial clearing house question. Not every artificial barrier to compensation rises to the level of an antitrust violation.

        For example, how many industries write their own industries’ regulations making them too cumbersome and costly to comply with unless you’re already one if the big boys. It’s a problem. It’s anticompetitive, but with any justifiable rationale, they get away with it.

        In short there’s a gap between EA Sports and this litigation and I think it’s too broad for Kessler to bridge.

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      • BrooklynDawg

        FWIW, economists agree that according to classical economics principles, the NCAA functions as a cartel: http://www.igmchicago.org/surveys/the-ncaa

        For more information, this has much of interest: https://link.springer.com/journal/11151/52/2/page/1

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        • Is it an actionable cartel under the law as it relates to “compensation?”

          That’s the legal question. Definitions are of minor concern.

          It seems to me that there are a lot of hoops to jump through to get to a judicial finding that amateurism/eligibility rules create an actionable antitrust case.

          There are LOTS of cartels. The cable TV industry for about 30 years is an example. You can’t successfully sue them all. If you don’t believe me, try suing OPEC.

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  2. PharmDawg

    The average FBS college football player should be compensated as much as the average minor league baseball player.

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  3. steve

    Nick Saban to his Coke bottle: “I’m getting too old for this shit” …..”Medigap is sounding better and better”…..”Dabo, you looking to buy in Tuscaloosa? It will be ready to show after the 2019 season”….Tick-Tock

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  4. 209

    Jenkins proposes that Judge Wilken simply abolish NCAA restraints on payments or non-cash benefits that are “tethered to educational expenses” or “incidental to athletic participation.” This viewpoint stresses that it would not betray NCAA amateurism if student athletes were compensated more for educational expenses or other aspects of their college experience that are not directly about athletics…SI
    That is the court case. Jenkins would like for Judge Wilken to rule that players should be compensated for “other aspects of their college experience that are not directly about athletics”. That is also called paying players.
    Senator you state,” A win for the plaintiffs doesn’t mean we’ll see the Wild West”. I am afraid you are mistaken. When Nick Chubb is being is being paid $250,000.00 per year, the next case will be, why do I have to go to class (make certain grades)? This is a NCAA rule not a UGA rule. Also, why do I only get to play 4 years at $250,000.00 per year, another NCAA rule, I wish to play as many years as possible as long as I make $250,000.00. If Judge Wilken rules for Jenkins how could she possible rule against Chubb in his cases concerning having to go to that pesky school and having a time limit on his ability to make a living?

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    • Gaskilldawg

      209, if you read the O’Bannon opinions (both Wlikens and the Ninth Circuit) the answers to your questions will be on the pages.

      Both the trial court and the appellate court found that college sports were part of the educational framework and anti-trust laws permitted reasonable rules regulating students playing sports.

      Requiring Chubb to make acceptable academic progress to remain eligible would be a permissible rule under O’Bannon. Limiting Chubb to 4 year’s eligibility would be a permissible rule under O’Bannon.

      O’Bannon courts agreed with the NCAA argument that college sports can regulate themselves differently from the NBA and NFL.

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