Antitrust law applies to NCAA, but payments to college athletes may be banned, 9th Circuit rules
A federal appeals court has reversed an injunction that allowed schools to pay college athletes up to $5,000 per year in deferred compensation, saying the lower court decision was based on “threadbare evidence.”
The decision (PDF) on Wednesday by the San Francisco-based 9th U.S. Circuit Court of Appeals reverses an August 2014 injunction by U.S. District Judge Claudia Wilken of Oakland, California, who found that the NCAA’s amateurism rules were an unlawful restraint of trade.
The panel decision, written by Judge Jay Bybee, agreed that the NCAA’s amateurism rules are subject to antitrust scrutiny, but said Wilken erred when she allowed cash compensation. The district judge had “ignored that not paying student athletes is precisely what makes them amateurs,” Bybee said.
The appeals court upheld another alternative, however, that allows member schools to give scholarships to athletes that cover the full costs of college attendance.
Bybee said NCAA amateurism rules serve two procompetitive purposes: integrating academics with athletics and increasing the appeal of college athletics to consumers. But those rules must be reviewed under antitrust laws to determine whether there are less restrictive alternatives.
Its decision allowing full scholarships is “not declaring that courts are free to micromanage organizational rules or to strike down largely beneficial market restraints with impunity,” the appeals court said. Instead, the finding means an antitrust court can invalidate a restriction when a restraint “is patently and inexplicably stricter than is necessary to accomplish all of its procompetitive objectives.”
A dissenter, Chief Judge Sidney Thomas, would have allowed the $5,000 payments. Among the publications covering the decision are the New York Times (in stories here and here) and the Hollywood Reporter. The case is O’Bannon v. NCAA.
