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The Supreme Court’s NCAA ruling will turn sports upside down. Here’s how.

Billions of dollars are at stake

Fans rush the field after Auburn defeated Alabama in 2017. Money from college football has driven NCAA sports, but a new Supreme Court ruling could change the entire setup. (Brynn Anderson/AP)
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“The NCAA is not above the law.”

Those words, written by Justice Brett M. Kavanaugh in Monday’s landmark unanimous Supreme Court ruling in Alston v. NCAA, signals the end of the NCAA’s long con. For far too long, everyone in this country — including the United States government on both sides of the aisle — has let the NCAA and its member institutions ruthlessly exploit generations of talented young athletes, particularly football players.

The ruling will revolutionize the American sports industry, and in turn, it’s going to positively affect a lot of lives.

Supreme Court rules against NCAA restrictions on colleges offering educational perks to compensate student-athletes

Alston, for the moment, is a narrow legal opinion that applies antitrust law to the NCAA’s fixed-sum educational benefits offered to scholarship athletes. Basically, the NCAA set the amount of educational benefits member schools could offer scholarship athletes; that meant that, for example, the University of Alabama, in pursuit of a star high school football player, couldn’t offer any more benefits (such as additional tuition for graduate or vocational school, paid internships or tutoring fees) to that player than any other school, even if Alabama wanted to do so, and even if the player’s talent justified it.

“Price-fixing labor is price-fixing labor,” 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.”

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The court went even further, with Kavanaugh writing that “the NCAA couches its arguments for not paying student athletes in innocuous labels.” He continued: “But the labels cannot disguise the reality: The NCAA’s business model would be flatly illegal in almost any other industry in America.” (Personally, I would have liked the ruling beyond that, too — and as I’ve previously noted, the NCAA model isn’t used in any developed country in the world.)

The opinion, and the rare 9-0 vote, taken together, forcefully indicate that the Supreme Court simply isn’t buying the NCAA model anymore. Neither is Congress: Legislators in both parties have rare unity that things have to change with college sports.

The political inclination for change will have sports industry executives, financiers and media executives working overtime in the coming months. Alston signals that the breakup of the NCAA is coming, in one fashion or another, and there will be many billions of dollars at stake as a new sports-world order is created in this country. This may sound hyperbolic, but for the sports industry, it’s akin to what the invention of the Internet meant for the tech industry.

Today, the NCAA operates as the hub of a wheel. The major spokes of the wheel would be the lifestyles of many coaches and college and NCAA administrators, the NFL, the U.S. Olympic program, Title IX sports, major media conglomerates, academia at all levels and the entire youth sports industry nationwide, among others. There also smaller spokes, such as Major League Baseball, the PGA Tour, etc.

College football, and the revenue it generates, provides virtually all the energy to the hub. And of course, college football is nothing without young men willing to sacrifice their bodies to generate that revenue.

In ways direct and indirect, the labor of these young men makes the entire wheel turn — and it has for generations. All for absolutely no share of the money in return. It’s pretty easy to see why so many coaches, administrators, sports television executives, etc. could make such big salaries. When the labor costs virtually nothing, making money isn’t an issue; the bigger problem is that the revenue is so large that it’s hard to find ways to spend it all.

Antitrust law is the key to making the NCAA pay student-athletes

Alston will change everything, slowly at first; but within three years, I fully expect a completely different American sports business landscape. Here are some of the changes I foresee:

The biggest football schools will immediately explore leaving the NCAA altogether and forming a new league that pays players. I believe these discussions have been happening for a long time, but now, they will accelerate. The NCAA FBS football (a.k.a. Division I) includes 130 schools, but the reality is that perhaps only 25 or 30 have the budget and resources to play at the absolute highest level; the rest are schedule-fillers, notwithstanding the rare upset now and then. Alabama, Auburn, Ohio State, Clemson, USC, Michigan, Texas, Texas A&M, Oklahoma and the like will explore a Super League similar to the effort made by Europe’s top professional soccer clubs this spring. This new Super League of College Football will explore direct salary compensation of players, but probably only if they can get other “special” legislation that no other industry gets, such as exemption from workers’ compensation liability.

Schools that don’t have major football programs will explore eliminating the sport. These schools know big programs don’t care about them, and they also know the majors are looking at programs that require more capital. Deploying a football team is enormously expensive, and the vast majority of non-majors simply shouldn’t be fielding one — if the players aren’t properly trained and equipped, it’s too dangerous. Many universities have ignored this, however, and gone ahead anyway. But Alston is going to supercharge the recruiting wars for talent, and many schools won’t, and shouldn’t, keep up.

U.S. Olympic teams will wind up needing major support from the federal government. College football revenue has driven Olympic success for a long time. The popular U.S. women’s national soccer team? Nearly all of its players were trained by highly paid coaches at top-level facilities at major football-playing schools. Those coaches and facilities were largely paid for with money generated by the efforts of football players.

This dynamic plays out with the U.S. national volleyball team, many American track and field stars, and many other athletes in other disciplines. Football money largely pays for college coaches and top facilities, travel and resources. But if more of that cash goes to paying football players, the subsidies for Olympic sports will slow to a trickle. The federal government will have to make a choice about whether to use taxpayer dollars to fund Olympic sports, as many other countries do.

Enormous battles over Title IX will come. Over the last generation, many men’s sports in college have been eliminated or drained of resources, and administrators often blamed Title IX compliance rules. At football-playing schools, the football team accounts for about 80 scholarships. That’s a lot for one sport. Title IX essentially mandates equal treatment and opportunity for female athletes, so many schools have founded and supported sports for women over the last generation to balance out football, while eliminating many men’s sports.

Alston could play out one of two ways with respect to Title IX. If the major football schools opt out of the NCAA system completely, and their new model doesn’t rely on university funds or scholarships at all, they could eliminate many women’s sports because they won’t need to provide an equivalent number of women’s scholarships to match football scholarships. If non-major football schools drop their football programs, they might also drop women’s sports, for the same reason. Other schools may decide instead to deploy any funds that would have been spent on football to create even more opportunity for women.

Sports investors will come up with new opportunities for college athletes. Rapid change already is happening in this space, and it will accelerate. First, entrepreneurs, including me, have tried and will continue to try to develop an alternative, or supplemental league, for college football. Every other sport has such an alternative (like the NBA G League, or minor leagues in baseball, hockey and soccer), but football doesn’t — at least not yet. Players will finally have choices, outside the NCAA system. If these new efforts are successful, it could cause schools to drop other nonrevenue sports, such as volleyball, gymnastics and track and field. If this happens, however, private sports investors will look into creating new opportunities outside the NCAA system for athletes who play those sports, too. In a post-Alston world, the pie will grow larger.

The sports TV streaming wars will accelerate. Disney, NBC, Hulu, Netflix, Amazon, etc., all are engaged in titanic battles for eyeballs, with billions of dollars at stake, as well as dominance of the future of American entertainment. (Amazon CEO Jeff Bezos owns The Washington Post.)

If Alston results in a significant breakup of the NCAA model in any way, the content providers, ever hungry for new content, could become involved in providing the capital for the creation of new sports entities and entertainment. For example, imagine a new Super League of College Football. Such an entity would command an enormous media rights fee, far greater than even the nearly $3 billion dollars the five biggest football conferences made in 2019, most as a result of football TV deals.

For now, Alston is a narrow legal ruling, but the justices left enough material breadcrumbs to clearly indicate that the NCAA model is broken. If a system that holds billions of dollars breaks apart, the money has to flow somewhere. And with so much at stake, you can bet the people hoping to grab some of it are already maneuvering to shape the future.