The National Collegiate Athletic Association (NCAA) is a non-profit organization that has long regulated the manners in which student-athletes may be compensated by their colleges and universities for playing on “amateur” collegiate-level sports teams. The term “student-athlete” was coined in the 1950’s by Walter Byers, the NCAA’s first executive director, and it has been used in the industry and by courts to describe these players ever since. While student-athletes have historically received scholarships, the NCAA has essentially prohibited student-athletes from receiving benefits beyond the cost of education. These restrictions have also included the inability of student-athletes to profit from their name, image, and likeness pursuant to their scholarship agreements. Name, image, and likeness (“NIL”) is an intellectual property right that protects against the misappropriation of an individual’s name, image, and likeness for commercial benefit. Such NIL limitations have been a major source of conflict between the NCAA and student-athletes, with the NCAA maintaining the upper hand over the years. However, the tides just turned.
In NCAA v. Alston, a 2021 antitrust class action lawsuit filed by current and former student-athletes against the NCAA, the U.S. Supreme Court reviewed a challenge to the NCAA’s student-athlete compensation rules. Specifically, the student-athlete class argued that the NCAA’s rules were in violation of § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, which prohibits “contracts, combinations, or conspiracies in restraint of trade or commerce.” A unanimous Court reviewed “only the subset of NCAA rules restricting education-related benefits” and found the NCAA in violation of the Sherman Act on June 21, 2021. Notably, the Court highlighted the “uncontested” fact that the NCAA “enjoys monopsony control in the relevant market–such that it is capable of depressing wages below competitive levels for student-athletes and thereby restricting the quantity of student-athlete labor.”
Even before NCAA v. Alston, however, several states had legislation in the works on the issue of student-athletes profiting in the NIL sphere. For example, California passed the Fair Pay to Play Act in September 2019 and Colorado adopted a similar law in March 2020, both of which were set to become effective in 2023. Florida was the third state to pass NIL legislation, but its bill had a much earlier effective date of July 1, 2021. However, in the wake of NCAA v. Alston, the NCAA announced an “interim” NIL policy on June 30, 2021, allowing student-athletes to “engage in NIL activities that are consistent with the law of the state where [their] school is located.” Now, student-athletes in some states can monetize their social media platforms, sell merchandise and autographs, and enter into endorsement deals subject to certain limitations set by their schools. This will make way for student-athletes to create their own brands by filing trademark applications.
The case referred to herein is NCAA v. Alston, No. 20-512, slip op. (U.S. Jun. 21, 2021)