The FBI Has Inadvertently Backed The NCAA Into An Antitrust Corner

The powers-that-be in college sports celebrated the FBI crackdown on basketball... but they could have been making their antitrust case a lot worse.

When federal prosecutors and the FBI announced last September that they were investigating the not-so-secret black market that funnels money to premier college basketball recruits, the National Collegiate Athletic Association responded with earnest approval.

“These allegations, if true, point to systematic failures that must be fixed and fixed now if we want college sports in America,” NCAA president Mark Emmert said in a statement. “Simply put, people who engage in this kind of behavior have no place in college sports. They are an affront to all those who play by the rules.”

Now that many top players have reportedly been implicated, the NCAA is leaning in. But whatever the merits from a public relations perspective, the association faces a conundrum: its PR strategy creates a major problem for its legal strategy.

The NCAA will be back in court this December to defend its “amateur” athletics system against an antitrust lawsuit that challenges the legality of the NCAA’s rules capping athlete pay at so-called “cost-of-attendance” scholarships. Judge Claudia Wilken of the Northern District of California denied summary judgment for the NCAA in the case — In Re: NCAA Athletic Grant-In-Aid Cap Antitrust Litigation (4:14-cv-02758). As Above the Law’s Steve Silver explained, Wilken backed the NCAA into a corner. That the NCAA’s model is anticompetitive is not really up for debate. The bulk of the analysis, as Wilken lays out, will consider whether the NCAA’s pro-competitive justifications are legitimate, and if so, whether less restrictive alternatives can reach similar results. From the decision:

Plaintiffs bear the initial burden of showing that the challenged restraints produce significant anticompetitive effects within a relevant market. If Plaintiffs meet this burden, Defendants must come forward with evidence of the restraints’ procompetitive effects. Plaintiffs must then show that any legitimate objectives can be achieved in a substantially less restrictive manner.

Wilken also presided over the O’Bannon v. NCAA trial, which ended in a 9th Circuit decision that held that the NCAA is subject to antitrust scrutiny, but Wilken’s injunction — a $5,000 annual cap on compensation put into a trust — was improper. Those trials indicate what the NCAA’s two main pro-competitive justifications will likely be:

  • Fans won’t watch if athletes are paid.
  • If athletes are paid, they can’t integrate into the student experience.

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The 9th Circuit gave some weight to the fact that some people said they would be less likely to watch college sports if athletes were paid, even though that claim has very weak historical and statistical standing. The NCAA also faces the problem that public perception is changing. (Gauging public support is tough, since questions are often worded different ways, but Washington Post polls showed percentage point differences supporting the proposition of straight payments at minus-33 in 2014 and minus-14 in 2017. In the latter survey, a majority favored allowing athletes to profit off their name, image, and likeness).

Wilken was more explicitly persuaded by the point that if athletes earned too much money, they might cease to be students. There are logical issues with this, too — why was I able to get paid for writing about college sports and still go to class, while an athlete couldn’t? — but it’s in part why Wilken chose a seemingly arbitrary $5,000 cap.

Here lies the NCAA’s problem: Its two most persuasive justifications — and explanations for why no less-restrictive alternatives would work — are premised on the fact that fans wouldn’t watch and athletes wouldn’t be students if they weren’t paid. But the more the FBI shows that athletes were getting paid, while athletic departments continued to rake in money and those players still showed up for class, the more the NCAA will struggle to argue that such strict rules are necessary to preserve college sports.

Before the FBI investigation, and during the O’Bannon trial, the plaintiffs relied on showing that athletes weren’t primarily students in a lot of cases. The academic scandal at the University of North Carolina, in which athletes were getting degrees for taking fake classes and weren’t allowed to pursue their desired coursework, was an instructive example. The plaintiffs will certainly bring up that point again — especially after the NCAA arguably failed to substantially punish UNC for its widespread academic fraud — but in O’Bannon, Wilken clearly saw the potential for payments to hurt the academic experience of athletes. Specifically, she worried that if athletes made too much money, they “might also be inclined to separate themselves from the broader campus community by living and socializing off campus.”

Not only can the plaintiffs now show that schools themselves separate athletes from the rest of campus, they can also show that the system didn’t come crumbling down when players did get paid. For instance, Marvin Bagley, whose family went from bankruptcy to a pristine house due to allegedly “illicit” payments, made the Atlantic Coast Conference’s All-Academic team while starring at Duke. Michigan State star Miles Bridges and his family were implicated in the scandal, but Bridges opted to return to school last year when he could have gone to the NBA, because “he really likes being in college.” Known for mingling with students on campus, his coach, Tom Izzo, praised his academic ability and said that he “loved being part of this community.” How were these star players able to be “non-amateurs,” according to the NCAA, but still embrace their roles as students?

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Moreover, if people were truly so turned off by the fact that athletes are getting paid, why were they still watching “March Madness?” This time, the plaintiffs’ evidence on this point — that people are terrible at predicting their consumption habits — will have actual evidence from college basketball to back it up.

Even the NCAA’s own recommendations, from a team led by Condoleezza Rice, will likely be harmful to the legal case. The association changes the definition of amateurism all the time, adding nuances about what does and does not count as “pay” for eligibility purposes. What if Rice suggests allowing players to have agents, to avoid under-the-table deals? Or what if she suggests allowing them to take bonuses, in the form of a trust, from shoe companies? The NCAA might adopt those suggestions, but then it will have to explain why those less restrictive alternatives do not ruin this amorphous concept of amateurism, but the plaintiffs’ suggestions do. The 9th Circuit acknowledged that the NCAA has “ample latitude” to supervise college athletics, but at some point, the less restrictive alternatives will look less like abominations of some sacred principle, and more like, as Wilken suggested when Emmert tried to explain the evils of athlete pay in O’Bannon, “something you don’t want to happen.” The latter, the 9th Circuit made clear, is not enough to withstand antitrust scrutiny.

The NCAA will continue to claim that the FBI investigation is good for college basketball, and the more names that come out, the more Emmert will celebrate the evils of market rate pay being purged from the NCAA system. But as December looms, the association will have to face a question that does not have a good answer: If strict amateurism rules are all that hold college sports together, why is a league that’s full of amateurism violators still thriving?


Kevin Trahan is a former sports journalist and is now a student at The University of Texas School of Law. You can reach him at ktrahan@utexas.edu or on Twitter @k_trahan.