AGB Policy Alert: Supreme Court Rules against NCAA in Student-Athlete Compensation Case, and the NCAA Votes to Allow Athletes to Benefit from Their Names, Images, and Likenesses

By AGB July 15, 2021 AGB Alerts

On Monday, June 21, 2021, the U.S. Supreme Court ruled that the National Collegiate Athletic Association (NCAA) cannot bar institutions from providing education-related benefits to college athletes. In the 9-0 ruling in favor of a group of current and former college athletes, the Court stated that the NCAA’s restrictions constituted a violation of a federal antitrust law known as the Sherman Act.

Separately but relatedly, on July 1, 2021, the governing bodies of all three divisions of the NCAA voted to adopt an interim policy regarding the extent to which a student-athlete can benefit from their name, image, and likeness (NIL).

What Board Members Need to Know

Regarding the Supreme Court’s ruling

The Supreme Court, with Justice Neil Gorsuch writing the majority opinion, unanimously reaffirmed a federal district court’s ruling that in addition to other already permissible benefits (e.g., tuition, room and board, and books), the NCAA cannot prohibit institutions from providing additional education-related benefits such as:

  • postgraduate scholarships,
  • scientific or technology equipment,
  • study abroad expenses, and
  • academic awards and internships.

For now, the NCAA may still enforce a ban on paying direct salaries to players and providing other non-education-related benefits.

In a concurring opinion, Justice Brett Kavanaugh wrote that while he joined the Court’s “excellent” opinion, he believes that the NCAA’s compensation policies are destined for further legal scrutiny in the future. According to Justice Kavanaugh, the NCAA should not have the right to restrict institutions from offering salaries or any other form of compensation to players. Board members should understand that additional challenges to the NCAA’s remaining restrictions are likely to come forward over the next several years.

Regarding the NCAA’s new interim policy on name, image, and likeness

The NCAA released interim guidance for incoming and current student-athletes. According to the NCAA’s press release:

  • Individuals can engage in NIL activities that are consistent with the law of the state where the school is located. Colleges and universities are responsible for determining whether those activities are consistent with state law.
  • College athletes who attend a school in a state without an NIL law can engage in this type of activity without violating NCAA rules related to name, image, and likeness.
  • Individuals can use a professional services provider for NIL activities.
  • Student-athletes should report NIL activities consistent with state law or school and conference requirements to their school.

The NCAA’s decision was made at least in part in response to an increasing number of states enacting laws governing NIL. So far, some 26 states have enacted laws, or their governors have signed executive orders, establishing athletes’ rights to profit from NIL. However, the scope, details, and implementation dates of these laws or executive orders vary. Some went into effect on July 1.

Several federal legislative proposals intended to maintain a level playing field regarding NIL have been introduced in Congress. So far, none have made much progress, although there is an expectation that since multiple and varied state laws are in effect, Congress will now be more invested in establishing national requirements.

Why This Is Important

Board members are fiduciaries first, and fans second. In keeping with fiduciary duty, and recognizing that boards should delegate administrative responsibility for intercollegiate athletics to the institution’s chief executive officer, institutional governing boards are ultimately accountable for athletic policy at colleges and universities. Boards of institutions that choose to offer these enhanced educational benefits to athletes must accept responsibility for upholding the integrity of the athletics program and ensure that the program continues to advance the institution’s educational mission.

The same is true for institutionally related foundation boards, where the foundation may play a role in fundraising or providing these educational benefits. Alignment and collaboration in this area are critical for institutions and their affiliated foundations.

The AGB Board of Directors’ Statement on Governing Boards’ Responsibilities for Intercollegiate Athletics is a valuable tool for boards to understand their responsibilities for overseeing college athletics. The principles and recommendations in the statement are useful for new and veteran board members alike.

Questions for Board Members

  • What are the implications for the institution or foundation of choosing to offer additional educational benefits to student-athletes? How will this decision affect the budget, enrollment, and institutional strategies?
  • Can the institution’s student-athletes benefit from NIL? Has the state government taken action regarding NIL? If so, when and how will the action go into effect? What policies and practices should the board consider to ensure institution or foundation compliance?
  • What are the current institutional policies regarding student-athletes and does the board need to review and revise them?
  • Have student-athletes requested educational benefits that are not provided?
  • What educational benefits for athletes might contribute to increased student retention and completion?
  • How does the board monitor its members’ engagement related to athletics?
  • Who is responsible for providing the board with information pertaining to college athletics? When and how is that information provided?

Additional Resources

AGB resources:

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