As Final Four ends, focus shifts to the law's highest court in NCAA v. Alston.

Baylor capped off an emphatic run through the Final Four on Monday night to secure the university’s first NCAA national championship in men’s basketball. But all is not lost for the other three teams that made the 2021 Final Four. Each team that advanced to the milestone earned for its school an $8.3 Million payout, according to Will Hobson’s report for the Washington Post.

 Meanwhile, a class action antitrust case is before the Supreme Court of the United States that has the potential to shape the future relationship between student-athletes and the NCAA. That’s because a starkly disproportionate and indirect share of the $8.3 Million will reach the hands of the players who earned it. The Sherman Act and related antitrust laws exist to preserve the nation’s free marketplace. United States v. Topco Assocs., Inc., 405 U.S. 596, 610 (1972). Under those laws, “the freedom guaranteed each and every business, no matter how small, is the freedom to compete – to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster.” Id. An antitrust case at its core is to enjoin one market participant from imposing an unreasonable restraint on trade for others in the relevant market.

Courts apply the particular facts of an antitrust case to a three-stage analysis called the Rule of Reason. Pertinent to this dispute, the student-athletes bear the initial burden of showing that the restraint on compensation produces significant anticompetitive effects within a relevant market. Alston v. NCAA (In re NCAA Ath. Grant-In-Aid Cap Antitrust Litig.), 958 F.3d 1239, 2020 U.S. App. LEXIS 15789 (9th Cir. 2020). If the student-athletes meet that burden, then the analysis shifts to the second stage, where the burden is on the NCAA to come forward with evidence of the restraint on competition’s procompetitive effects. Id. If the NCAA is able to present such evidence, then the burden shifts back to the student-athletes in the third stage to show that any such legitimate objectives can be achieved through the implementation of a substantially less restrictive alternative (LRA) to the restraint. Id. Courts strongly defer to the particular expertise of an association, so they will only replace a restraint on compensation with a LRA if the restraint is patently and inexplicably stricter than necessary to accomplish all of its procompetitive objectives. Id.

The 9th Circuit Court of Appeals affirmed the decision of the United States District Court for the Northern District of California, finding that the student-athletes successfully met their burden in the first stage of the Rule of Reason analysis. That’s because elite student athletes lack viable alternatives to division one athletics, requiring them to accept whatever compensation is offered without regard for whether such compensation is an accurate reflection of the competitive value of their athletic success. Id. That’s hardly a rule that allows the student-athletes the ability to ‘assert with vigor, imagination, devotion, and ingenuity whatever economic muscle they can muster.’

At the second stage, the 9th Circuit affirmed that the NCAA compensation limits preserve demand to the extent they prevent unlimited cash payments akin to professional salaries, as that restraint on compensation widens consumer choice by maintaining a distinction between college and professional sports.

That brought the Rule of Reason analysis to the third stage, where the 9th Circuit upheld an injunction on the NCAA to permit certain a viable LRA that is virtually as effective in serving the procompetitive purpose of NCAA’s current rules and without significantly increasing the cost. The LRA created in the district court’s injunction included a prohibition on the NCAA’s ability to restrain above Cost of Attendance (COA) payments that are related to academics. It offers a non-exclusive list of examples in Footnote 17 of decision, a screenshot of which is below:

The NCAA now argues that the decision went too far, while the student-athletes argue it did not go far enough. The NCAA contends that any payments in excess of the COA will blur the line of amateurism and run counter to its members’ broader educational mission. The student-athletes counter with arguments that expose the behemoth nature of the college athletics industry and how unfair it is that above-COA payments to players should be limited to academic-related expenses.  

In other words, it’s hard for elite student-athletes to understand how a multimillion-dollar payout for advancing to the Final Four is pay-for-play for the member institutions of the NCAA but not for the players who achieved the accomplishment. That’s hard for me to reconcile as well.