Weekly Column: What an NCAA Antitrust Exemption Means

In this week’s column, California Sports Lawyer® CEO and Managing Attorney Jeremy M. Evans examines two pathways forward on college sports moving out of the Wild West and into a sustainable model that is fair and successful.

NCAA’s legal challenge is that they have lost every major case going back to O’Bannon, Alston, and now House.

You can read the full column below. (Past columns can be found, here).

The NCAA has long sought control and stability of college sports. Name, image, and likeness (NIL) was a challenge to the financial model for college sports that was initially meant as a market-based solution to college athletes getting paid. That market-based solution has turned into a university and conference controlled financial system that is paid through a share of television dollars (e.g., the House settlement agreement) and funds raised from brands, donors, and alumni.

NCAA’s legal challenge is that they have lost every major case going back to O’Bannon, Alston, and now House. The lower courts and the Supreme Court have been increasingly limiting NCAA’s ability to manage college sports. It is without question that college sports are within the purview of the NCAA’s jurisdiction. However, the NCAA cannot govern if every decision it makes is challenged and lost by a lawsuit. Either NCAA is no longer the governing body or an antitrust exemption is in place to help reign in the Wild West of college sports.

The NCAA is currently and has been seeking an antitrust exemption from Congress. The White House has also organized a sports council with Nick Saban and others to discuss and come up with solutions to the Wild West of college sports. College sports are currently enjoying the benefits of professional sports, but without its protections (no standardized contracts, no limitation on funding, lack of competitiveness, unlimited transfers, and no salary cap or luxury taxes, etc.). If the NCAA is without antitrust protection through an exemption it will be nearly impossible to govern college sports because every decision they make could violate antitrust law and subject them to more lawsuits (likely losing endeavors based on legal precedent).

If the NCAA is provided an antitrust exemption, even a limited one, it could regulation NIL nationally. It could place limits on compensation or revenue sharing across the country. There could also be uniform recruiting and transfer rules. Players and coaches could also be held accountable to contracts and financial gains when leaving for another team.

The concern is that an antitrust exemption would allow schools to place a cap on athlete earnings. There is further concern that an exemption would reverse the effect of past lawsuits challenging the NCAA’s authority. However, the larger concern is that the NCAA cannot govern without some guidance or protection. A business model cannot sustain itself if governed by the courts or Congress. It needs to govern itself through the NCAA.

It should be remembered that the issue with previous lawsuits was getting student-athletes paid. Now that the door has been opened and athletes are getting paid well beyond personal NIL deals, there needs to guidance around payments, contracts, and transfer to impact fairness or at least consistency in the system. An antitrust exemption would change college sports forever, but it may also be the only way to sustain itself.

U.S. District Judge Claudia Ann Wilken from California struggled with this issue in the House case because a settlement only covers a certain period of time and players as they move on in their lives and careers. How can a player not yet playing be subject to a settlement they were not a part of? It is mentally perplexing and legal questionable without some level of an antitrust exemption for the NCAA. Another solution would be the complete privatization of college sports without limitations, but is that something educational institutions, fans, and alumni want to see as a product on the field? Maybe something has to give. Maybe the system will work out the kinks in time.

About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. An award-winning attorney and industry leader, Evans is based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.