The association argued that the payments were a threat to amateurism and that barring them did not violate the antitrust laws.
WASHINGTON — The Supreme Court unanimously ruled on Monday that the N.C.A.A. could not bar relatively modest payments to student-athletes, a decision that underscored the growing challenges to a college sports system that generates huge sums for schools but provides little or no compensation to the players.
The decision concerned only payments and other benefits related to education. But its logic suggested that the court may be open to a head-on challenge to the ban by the National Collegiate Athletic Association on paying athletes for their participation in sports that bring billions of dollars in revenue to American colleges and universities.
In a concurring opinion, Justice Brett M. Kavanaugh seemed to invite such a challenge.
“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,” Justice Kavanaugh wrote. “And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The N.C.A.A. is not above the law.”
Throughout its 115-year history, the N.C.A.A. has largely defended the principle that students should play sports as amateurs. Even top athletes in high-profile sports like football and basketball are limited to receiving no more than a scholarship, books, room and board and, more recently, other costs of attending college, a figure that can include travel and other living expenses. The organization sets the rules for roughly half a million college athletes in the United States.
But as television rights deals have swelled across the decades, sending billions of dollars into the association and its member conferences each year and fueling arms races for top-notch facilities and big-name coaches, the model has come under increasing legal and political scrutiny.
The case before the Supreme Court did not directly touch on the issue of whether athletes may earn money for the use of their names, images and likenesses, but the decision arrived on Monday with the N.C.A.A. already embroiled in that question as well.
Next week, student-athletes in at least six states are poised to be allowed to make money off their personal fame — not because of action by the N.C.A.A., but because of state officials who grew tired of the industry’s decades-long efforts to limit the rights of players.
Less than two weeks before some of the new laws are scheduled to take effect in Alabama, Florida, Georgia, Mississippi, New Mexico and Texas and allow athletes to make endorsements and monetize their social media presences, the N.C.A.A. has not agreed to extend similar rights to players nationwide. And in a setback last week for the association, senior members of Congress said that they did not expect to strike a deal for a federal standard before July 1.
A powerful N.C.A.A. panel is scheduled to meet this week to discuss how players could profit off their renown, but it is not clear when members will vote, particularly in the wake of Monday’s ruling.
In a statement, the association said the ruling “reaffirms the N.C.A.A.’s authority to adopt reasonable rules and repeatedly notes that the N.C.A.A. remains free to articulate what are and are not truly educational benefits.”
Jeffrey L. Kessler, a lawyer for Shawne Alston, a former West Virginia University running back, and other student-athletes challenging the association’s rules, said the decision could make a meaningful difference to student-athletes, especially those who never go on to play professionally.
“Hopefully, it will also swing the doors open to further change,” he said, “so that we can finally see a fair and competitive compensation system in which these incredible players get to benefit from the economic fruits of their labors and pursue their educational objectives.”
Gabe Feldman, the director of the sports law program at Tulane University in New Orleans, said he saw the ruling as a modest victory for the N.C.A.A.’s critics, in part because the justices “had the opportunity to undercut the N.C.A.A.’s broader amateurism argument and chose not to.”
But he said that the withering concurring opinion by Justice Kavanaugh was “the most anti-N.C.A.A., damning antitrust opinion that has ever been authored” and could amount to a blueprint for future challenges.
“The longer-term concern for the N.C.A.A. is if enough justices and federal judges join with Justice Kavanaugh’s view,” he said. “It could only be a matter of time before all of the N.C.A.A.’s restrictions on compensation are struck down as antitrust violations.”
Justice Neil M. Gorsuch, writing for the court, took a measured approach, saying its task was merely to assess a limited injunction entered by a trial judge, one that allowed payments for things like musical instruments, scientific equipment, postgraduate scholarships, tutoring, study abroad, academic awards and internships. It did not permit the outright payment of salaries.
“Some will think the district court did not go far enough,” Justice Gorsuch wrote. “By permitting colleges and universities to offer enhanced education-related benefits, its decision may encourage scholastic achievement and allow student-athletes a measure of compensation more consistent with the value they bring to their schools. Still, some will see this as a poor substitute for fuller relief.”
“At the same time,” he added, “others will think the district court went too far by undervaluing the social benefits associated with amateur athletics.”
Justice Kavanaugh’s concurring opinion was bolder.
“The N.C.A.A. couches its arguments for not paying student-athletes in innocuous labels,” he wrote. “But the labels cannot disguise the reality: The N.C.A.A.’s business model would be flatly illegal in almost any other industry in America.”
“Price-fixing labor is price-fixing labor,” Justice Kavanaugh wrote. “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.”
Justice Gorsuch took note of the fact that the N.C.A.A. is a “massive business,” one in which “those who run this enterprise profit in a different way than the student-athletes whose activities they oversee.” He cited a salary of nearly $4 million a year for the president of the organization, pay of up to $5 million a year for the commissioners of some conferences and annual salaries for football coaches that approach $11 million.
Compensation for college athletes, by contrast, is strictly limited. Current and former players sued to challenge those limits, and they achieved a partial victory in the lower courts.
Last year, a federal appeals court affirmed the trial judge’s ruling.
The appeals court rejected the N.C.A.A.’s argument that compensating athletes would alienate sports fans who prize students’ amateur status.
“Uncapping certain education-related benefits would preserve consumer demand for college athletics just as well as the challenged rules do,” Chief Judge Sidney R. Thomas wrote for a unanimous three-judge panel of the U.S. Court of Appeals for the Ninth Circuit, in San Francisco.
“Such benefits are easily distinguishable from professional salaries,” he wrote, as they are linked to education and could be provided in kind rather than in cash.
The Supreme Court affirmed that ruling, stressing that it was addressing only a limited set of issues.
The N.C.A.A. had argued that paid internships posed particular hazards because they could involve unlimited sums. But Justice Gorsuch said the association retained “considerable flexibility” that left “room to police phony internships.”
Similarly, he rejected fears that permitting in-kind benefits would allow schools to give students luxury cars to get to class. “Under the current decree,” Justice Gorsuch wrote, “the N.C.A.A. is free to forbid in-kind benefits unrelated to a student’s actual education; nothing stops it from enforcing a ‘no Lamborghini’ rule.”
The Supreme Court last considered how antitrust laws applied to the association in 1984, ruling that its restrictions on television coverage of college football games were unlawful. But the decision, National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma, included an influential passage on student-athletes.
“The N.C.A.A. plays a critical role in the maintenance of a revered tradition of amateurism in college sports,” Justice John Paul Stevens wrote for the majority in that case. “There can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of” the antitrust laws.
That statement was not binding in the new case, Justice Gorsuch wrote. “Given the sensitivity of antitrust analysis to market realities — and how much has changed in this market — we think it would be particularly unwise to treat an aside in Board of Regents as more than that,” he wrote.
The Biden administration filed a brief supporting the athletes in the new case, National Collegiate Athletic Association v. Alston, No. 20-512, saying that the Ninth Circuit had struck the right balance by focusing on educational expenses.
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In April, Mark Emmert, the N.C.A.A. president, said he was looking for “clarity about what the law is, clarity about who has responsibility for what, clarity about how these issues will be decided, whether through congressional processes, through legal processes or through N.C.A.A. decision-making processes.”
Justice Gorsuch wrote that money had played a role in college athletics since its earliest days, before the N.C.A.A. came into existence, noting what many regard as the nation’s first intercollegiate competition — a boat race between Harvard and Yale in 1852 at Lake Winnipesaukee, N.H.
“But this was no pickup match,” Justice Gorsuch wrote. “A railroad executive sponsored the event to promote train travel to the picturesque lake.”