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NIL: The Legal Predicament

By Ryan Godbold '26

 

Since 1906, millions of athletes have competed in collegiate sports under the authority of the National Collegiate Athletic Association, or NCAA. These athletes help generate the NCAA and its member universities over 1.3 billion dollars per year across 24 different sports. (1) Given the immense revenue generated by collegiate athletes, how they get compensated has always been an issue. For most of the NCAA’s history, athletes were solely compensated through scholarships and grants that pay for the costs of schooling; however, for the past two decades, many people have pushed for athletes to get paid directly for their services. This push for greater compensation resulted in the NCAA allowing student-athletes to make money from their name, image, and likeness.


In June 2021, the NCAA adopted an interim policy to allow student-athletes to receive compensation for their name, image, and likeness, hereafter referred to as “NIL.” This policy was adopted under pressure from states that had NIL legislation set to go into effect on July 1st, 2021. Given this foreboding legislation from influential states such as Florida, Texas, and Georgia, the NCAA found it best to defer regulations on NIL to individual state law. In their interim policy, the NCAA explained that students may engage in NIL activities that are “consistent with and protected by a valid and enforceable law of the state in which the institution at which such individual enrolls is located.” (2)


In addition to the interim policy and state laws, court cases have expanded student-athlete rights to receive compensation. The most influential of these is NCAA v. Alston, a Supreme Court case decided in June 2021 that held the NCAA is violating federal antitrust laws by limiting education-related benefits that schools can offer students. (3) The Supreme Court’s decision is built off the Sherman Act. Enacted on July 2, 1890, the Sherman Antitrust Act protects trade and commerce against “unlawful restraints”. (4) Applying the Sherman Act, the Supreme Court found that the NCAA’s compensation rules were more restrictive than necessary to maintain consumer demand and maintain a “pre-competitive advantage,” and therefore found that the NCAA’s compensation policies were a violation of the Sherman Act. (5)


In NCAA v. Alston, many lines of reasoning were used in the opinions that expanded on the court’s ruling against the NCAA. In the majority opinion, Justice Gorsuch explained that the court used a rule of reason analysis, meaning that the court would look at the NCAA’s policy and determine whether the anti-competitive effects outweighed the pro-competitive effects. Using this rule of reason analysis, Gorsuch highlighted several anti-competitive effects that led to the Supreme Court striking down the NCAA’s current policies. Gorsuch wrote, “the NCAA enjoys ‘near complete dominance of, and exercises monopsony power in, the relevant market- which it defined as the market for ‘athletic services in men’s and women’s Division I basketball and FBS football.” (6) Given their complete market dominance, the Supreme Court found that Division I basketball and FBS football have no “viable substitutes”; therefore, the NCAA having the power to limit student-athlete compensation at any time, and in any way they wish, produces substantial anti-competitive effects. In a separate, concurring opinion, Justice Kavanaugh summarized the court’s sentiments, stating that “Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.” (7)


Despite athletes’ rights to compensation being greatly expanded, there remains one group of schools criticized for not compensating their athletes fairly: the Ivy League. The Ivy League, founded in 1954, is a conference of the most prestigious research universities in the United States. Being made up of academic juggernauts like Harvard, Yale, and Princeton, the conference has always focused more on academics than sports. Since its inception, the Ivy League has not offered its student-athletes athletic scholarships, instead opting to offer them academic and need-based scholarships. (8) The lack of athletic scholarships offered has formed the grounds for a groundbreaking lawsuit against the Ivy League, Choh v. Brown University. Filed on March 7, 2023, the lawsuit argues that the “Ivy League Agreement,” the collective decision to not offer athletic scholarships, has substantial anti-competitive effects and improperly suppresses compensation for student-athletes. The case cites NCAA v. Alston and the Sherman Act as major sources of law supporting the judgment that the “Ivy League Agreement” should be struck down. (9)

    

The plaintiffs, Tamenang Choh and Grace Kirk, are current and former Division I basketball players for Brown University, and they represent a larger class of Ivy League athletes who did not receive athletic scholarships. In their complaint, the plaintiffs seek an injunction that bars the Ivy League from upholding the “Ivy League Agreement” and forces them to offer competitive compensation packages for student-athletes. To support their request for an injunction, the plaintiffs provide a plethora of arguments consistent with legal precedent from NCAA v. Alston and the Sherman Act. (10) To set the foundation for their argument, the plaintiffs first established that the Ivy League was an economic entity subject to provisions of the Sherman Act. In Section 83, the complaint establishes that the Ivy League engages in interstate commerce. The section explains that the defendants “all work to arrange athletic competitions for the University Defendants’ athletic teams throughout the United States.” (11) The complaint continues, explaining that tuition payments, grants, scholarships, and applications are all transferred across state lines often and that the Ivy League thus engages in interstate commerce and is bound by the Sherman Act.

    

Having established the Ivy League as a business bound by the Sherman Act, the complaint argues that the “Ivy League Agreement” is per se illegal. An action that is per se illegal requires no analysis of its economic effects on the market and is instead illegal based on nature alone. Several actions constitute per se violations of the Sherman Act, and price fixing is the most preeminent form. (12) The plaintiffs contend that the “Ivy League Agreement” is a form of price fixing and is therefore per se illegal. Given this claim, the plaintiffs spend a considerable amount of time arguing that the “Ivy League Agreement” is price fixing, and they accomplish this by discussing the current economic structures of Ivy League athletics and previous interpretations of the Sherman Act. (13)

    

The complaint illustrates that Ivy League universities compete for professors, staff, and graduate students by offering different salaries, bonus packages, scholarships, or grants; however, the Ivy League does not compete on price for athletes through an express agreement. In Section 134, the plaintiffs explain that the “Ivy League Agreement” was reaffirmed in 2017 and state how “All the Ivy League institutions follow the common policy that any financial aid for student-athletes will be awarded and renewed on the sole basis of economic need with no differentiation in amount or kind (e.g., packaging) based on athletic ability or participation.” (14) This type of agreement reduces price by hindering competition for scholarships awarded and is horizontal in nature, meaning the agreement is a form of price fixing and bolsters the plaintiff’s request for an injunction.

    

NIL has long been a difficult issue to handle in sports, and recent legal challenges to current economic structures do not make it easier to find a compelling solution. With cases such as Choh v. Brown University still developing, the future landscape of collegiate sports is still up in the air. However, the Supreme Court has shown to be sympathetic to athletes' rights in NCAA v. Alston; if the courts hold the same sentiment that the “NCAA is not above the law,” judgment will likely be granted in favor of Choh and Kirk and strike down current structures of the “Ivy League Agreement.” Regardless of the outcome, Choh v. Brown University is not the first legal challenge to NIL, nor will it be the last, but it certainly will leave a lasting impact on the future of NIL within collegiate sports.


Endnotes

  1. “NCAA generates nearly $1.3 billion in revenue for 2022-23” ESPN, Associated Press, 1. Feb, 2024, https://www.espn.com/college-sports/story/_/id/39439274/ncaa-generates-nearly-13-billion-revenue-2022-23

  2. “The Dawn of NIL Era: The NCAA’s Interim Policy and What it Means for Brands.” Wiley Rein LLP, 29. June 2021, https://www.wiley.law/alert-The-Dawn-of-the-NIL-Era-The-NCAAs-Interim-Policy-and-What-it-Means-for-Brands

  3. NCAA v. Alston, 141 S. Ct. 2141, 210 L. Ed. 2d 314, 2021 U.S. LEXIS 3123, 28 Fla. L. Weekly Fed. S 915, 2021 WL 2519036 (Supreme Court of the United States June 21, 2021, Decided). https://advance.lexis.com/api/document?collection=cases&id=urn:contentItem:62YT-SVD1-FCCX-6216-00000-00&context=1516831.

  4. Anti-trust act., 26 Stat. 209, 51 Cong. Ch. 647 (July 2, 1890). https://advance.lexis.com/api/document?collection=statutes-legislation&id=urn:contentItem:5C7R-8160-01XN-S2VV-00000-00&context=1516831.

  5. NCAA v. Alston, 141 S. Ct. 2141, 210 L. Ed. 2d 314, 2021 U.S. LEXIS 3123, 28 Fla. L. Weekly Fed. S 915, 2021 WL 2519036 (Supreme Court of the United States June 21, 2021, Decided). https://advance.lexis.com/api/document?collection=cases&id=urn:contentItem:62YT-SVD1-FCCX-6216-00000-00&context=1516831.

  6. Ibid.

  7. Ibid.

  8. Choh v. Brown University, 3:23-cv-00305 (United States District Court for the District of Connecticut, undecided). https://www.courthousenews.com/wp-content/uploads/2023/03/choh-brown-university-complaint-usdc-ct.pdf.

  9. Ibid.

  10. Ibid.

  11. Ibid.

  12. Anti-trust act., 26 Stat. 209, 51 Cong. Ch. 647 (July 2, 1890). https://advance.lexis.com/api/document?collection=statutes-legislation&id=urn:contentItem:5C7R-8160-01XN-S2VV-00000-00&context=1516831.

  13. Choh v. Brown University, 3:23-cv-00305 (United States District Court for the District of Connecticut, undecided). https://www.courthousenews.com/wp-content/uploads/2023/03/choh-brown-university-complaint-usdc-ct.pdf.

  14. Ibid.

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