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ESPN's Dan Murphy goes inside NCAA's settlement with power leagues

May 24, 2024

On Thursday evening, the NCAA and the Power 5 conferences reached a settlement that will allow schools to pay players. With so much unknown about the days and weeks ahead, ESPN staff writer Dan Murphy joined TexAgs Radio on Friday to provide some much-needed context.

Key notes from Dan Murphy interview

  • It has been long overdue. Over the last 20 years, we’ve seen lawsuits, like the one that is in the process of being settled right now, chip away at the amateurism rules that have been a staple of college sports for 100 or so years.
  • Yesterday was a breaking point in that. What we’ve also seen is an explosion in revenue for these schools and conferences as the TV deals and College Football Playoff arrived. It has been exponential and has gotten to a point where there is too much money not to see it as the multi-billion dollar entertainment industry that it is.
  • It took awhile to force the NCAA into the corner to actually treat it like a business. Yesterday was a very significant step in them acknowledging what this is and starting to share revenue with the players.
  • Technically, the guys who are filing this lawsuit, Steve Berman and Jeffery Kessler, are the representatives of the athletes. They’ve sued on behalf of three named athletes — a women’s swimmer, a women’s basketball player and a former Illinois football player.

  • They were granted class-action status, which means they represent the interest of every Division I athlete of that time frame. They are the ones advocating on their behalf, but they’re not polling every football player or basketball player out there. There are groups out there that feel like athletes will still need a bigger voice moving forward in negotiations, and while this settlement is a pretty big step moving forward, it does not eliminate the possibility that athletes might at some point have something that looks like a players’ association.

  • The 2016 deadline is a tough deadline for some folks. The case that this lawsuit settles basically says that the NCAA was illegally restricting the way college athletes were able to make money from their Name, Image & Likeness. The lawsuit was filed in 2020. The way the court system works is that there is a statute of limitations on how far back you can sue for lost money. The statute of limitations is four years, which is how they got to the arbitrary deadline of 2016.
  • The third piece is still to be determined. The third piece is very much up in the air. The biggest piece is the schools want to control NIL collectives better and separate endorsement deals with products vs. the endorsement deals that have been getting over the last few years, which are based on their performance on the field. That remains a huge challenge.
  • There are state laws that make it hard for the NCAA to do anything, so as soon as the settlement paperwork went final last night, you heard the NCAA and conference commissioners immediately start saying that we still need help from Congress. They’ll still need a federal law to have any real teeth to any enforcement mechanisms they want to put in place with all of this. Otherwise, they’ll be challenged. They’re not done being in court. 
  • The Supreme Court decision actually didn’t weigh in on Name, Image & Likeness. It just happened to come at the same time as the state laws made that possible. For the past 30 or 40 years, college sports and the NCAA have operated under the idea that they are a unique industry because they are based in education, and because of that, the normal rules of anti-trust laws haven’t applied.
  • What the Supreme Court said in 2021 was that college sports weren’t special and that the same anti-trust laws still apply to college sports. That’s why we’ve had the explosion of all of these other lawsuits that are gaining traction. The state laws are still in the way of all of this. It will take a literal act of Congress to reel in the spending that is happening now. It won’t happen immediately. This is a big step forward, but it is not a silver bullet that adds stability to college athletics. Even athletic directors are confused on all of this.
  • Title IX is a big one and a huge concern for people in athletic departments right now. The schools are going to be paying this money directly, and Title IX requires schools to provide equal opportunity and equal benefit to men and women in college sports.
  • If the money is coming straight from the schools, there is the belief that you’ll have to spend equal money on men’s and women’s athletes and teams. It’s unclear whether that will be fully applied, but it seems like it will. That $20 million pot will have to be split widely between men and women, which takes the pot down to $10 million for your football and basketball teams. Frankly, that’s not much more than what big-time programs are already funneling into their football programs through their NIL collectives. It would be a great deal for women’s athletics and past athletes that will get a chunk of that $2.8 billion pot of money.
  • Maybe, we will have more answers soon, but it is a big day. In about a year, we will be talking about how rosters are managed based on how schools are spending money on players, which will be a significant difference for college football fans.
Discussion from...

ESPN's Dan Murphy goes inside NCAA's settlement with power leagues

2,998 Views | 3 Replies | Last: 1 mo ago by greg.w.h
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Thanks David. Good to hear multiple viewpoints. The NCAA v. Alston decision was limited by plaintiffs as part of their appeal to SCOTUS to just the matter of competition for educational benefits.

Justice Kavanaugh's concurrence neatly frames the legal risk the NCAA faces because they chose to litigate and lost:

" But this case involves only a narrow subset of the NCAA's compensation rulesnamely, the rules restricting the education-related benefits that student athletes may receive, such as post-eligibility scholarships at graduate or vocational schools. The rest of the NCAA's compensation rules are not at issue here and therefore remain on the books. Those remaining compensation rules generally re strict student athletes from receiving compensation or benefits from their colleges for playing sports. And those rules have also historically restricted student athletes from receiving money from endorsement deals and the like.

I add this concurring opinion to underscore that the NCAA's remaining compensation rules also raise serious questions under the antitrust laws. Three points warrant emphasis.

First, the Court does not address the legality of the NCAA's remaining compensation rules. As the Court says, "the student-athletes do not renew their across-the-board challenge to the NCAA's compensation restrictions. Accordingly, we do not pass on the rules that remain in place or the district court's judgment upholding them. Our review is confined to those restrictions now enjoined." Ante, at 14.

Second, although the Court does not weigh in on the ultimate legality of the NCAA's remaining compensation rules, the Court's decision establishes how any such rules should be analyzed going forward. After today's decision, the NCAA's remaining compensation rules should receive ordinary "rule of reason" scrutiny under the antitrust laws. The Court makes clear that the decades-old "stray comments" about college sports and amateurism made in National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85 (1984), were dicta and have no bearing on whether the NCAA's current compensation rules are lawful. Ante, at 21. And the Court stresses that the NCAA is not otherwise entitled to an exemption from the antitrust laws. Ante, at 2324; see also Radovich v. National Football League, 352 U. S. 445, 449452 (1957). As a result, absent legislation or a negotiated agreement between the NCAA and the student athletes, the NCAA's remaining compensation rules should be subject to ordinary rule of reason scrutiny. See ante, at 1819.

Third, there are serious questions whether the NCAA's remaining compensation rules can pass muster under ordinary rule of reason scrutiny. Under the rule of reason, the NCAA must supply a legally valid procompetitive justification for its remaining compensation rules. As I see it, however, the NCAA may lack such a justification.

The NCAA acknowledges that it controls the market for college athletes. The NCAA concedes that its compensation rules set the price of student athlete labor at a below-market rate. And the NCAA recognizes that student athletes currently have no meaningful ability to negotiate with the NCAA over the compensation rules.

The NCAA nonetheless asserts that its compensation rules are procompetitive because those rules help define the product of college sports. Specifically, the NCAA says that colleges may decline to pay student athletes because the defining feature of college sports, according to the NCAA, is that the student athletes are not paid.

In my view, that argument is circular and unpersuasive. The NCAA couches its arguments for not paying student athletes in innocuous labels. But the labels cannot disguise the reality: The NCAA's business model would be flatly illegal in almost any other industry in America. All of the restaurants in a region cannot come together to cut cooks' wages on the theory that "customers prefer" to eat food from low-paid cooks. Law firms cannot conspire to cabin lawyers' salaries in the name of providing legal services out of a "love of the law." Hospitals cannot agree to cap nurses' income in order to create a "purer" form of helping the sick. News organizations cannot join forces to curtail pay to reporters to preserve a "tradition" of public-minded journalism. Movie studios cannot collude to slash benefits to camera crews to kindle a "spirit of amateurism" in Hollywood.

Price-fixing labor is price-fixing labor. And price-fixing labor is ordinarily a textbook antitrust problem because it extinguishes the free market in which individuals can otherwise obtain fair compensation for their work. See, e.g., Texaco Inc. v. Dagher, 547 U. S. 1, 5 (2006). Businesses like the NCAA cannot avoid the consequences of price-fixing labor by incorporating price-fixed labor into the definition of the product. Or to put it in more doctrinal terms, a monopsony cannot launder its price-fixing of labor by calling it product definition.

The bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year. Those enormous sums of money flow to seemingly everyone except the student athletes. College presidents, athletic directors, coaches, conference commissioners, and NCAA executives take in six- and seven-figure salaries. Colleges build lavish new facilities. But the student athletes who generate the revenues, many of whom are African American and from lower-income backgrounds, end up with little or nothing. See Brief for African American Antitrust Lawyers as Amici Curiae 1317."
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Kavanaugh further notes:

"Of course, those difficult questions could be resolved in ways other than litigation. Legislation would be one option. Or colleges and student athletes could potentially engage in collective bargaining (or seek some other negotiated agreement) to provide student athletes a fairer share of the revenues that they generate for their colleges, akin to how professional football and basketball players have negotiated for a share of league revenues. Cf. Brown v. Pro Football, Inc., 518 U. S. 231, 235237 (1996); Wood v. National Basketball Assn., 809 F. 2d 954, 958963 (CA2 1987) (R. Winter, J.). Regardless of how those issues ultimately would be resolved, however, the NCAA's current compensation regime raises serious questions under the antitrust laws."
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I suspect the NCAA is attempting to use the court to collectively bargain with the class members to avoid broader collective bargaining. It won't succeed unless Congress gives them an immunity token. I doubt that happens.
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