State Antitrust Lawsuit Challenges NCAA Recruitment Rules

• Published date: 27 February 2024
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Law Firm: Perkins Coie LLP
• Author: Christopher A. Williams, Henry Hauser, Jacinda Stephens and Kahin Gabriel Tong

In January of this year, the attorneys general of Tennessee and Virginia filed a federal antitrust lawsuit against the National Collegiate Athletics Association (NCAA). The lawsuit seeks to prevent the NCAA from enforcing recruiting rules that allegedly "prevent prospective college athletes and transfer candidates from engaging in meaningful . . . discussions prior to enrollment" about opportunities to monetize their name, image, and likeness (NIL).¹ The plaintiffs compare the NCAA's restriction on NIL discussions during student-athlete recruitment to preventing highly desired job applicants that are considering many options from negotiating their salaries until after they have selected an employer. The "depressive effect" on compensation'according to the states'is painfully "obvious." Id. at 4.

A victory for the states would enhance the quality of information available to recruits and forever change the NCAA landscape. It would also serve as a playbook for future NCAA challenges, sending massive ripples across both sports and courts. Of course, this is far from the only antitrust lawsuit pending against the NCAA. Ten states and the U.S. Department of Justice (DOJ) have also filed suit to challenge transfer eligibility rules.² Additional challenges to NCAA transfer and compensation policies are possible, even likely. To evaluate the plaintiffs' chances of prevailing, it is important to understand how the decades-long saga between the NCAA and antitrust law has reshaped both college sports and federal law.

Televising College Football

Before the U.S. Supreme Court's landmark 1984 decision in National Collegiate Athletic Ass'n. v. Board of Regents of the University of Oklahoma, the NCAA restricted the number of football games that could be televised and threatened to "take disciplinary action" against schools that exceeded their quota. Id. Plaintiff universities challenged this restriction under Section 1 of the Sherman Antitrust Act,³ which covers unreasonable restraints of trade. According to the schools, the NCAA was forcing an "artificial limit on the quantity of televised football that is available to broadcasters and consumers." ⁴

The Supreme Court agreed, finding that the NCAA's television plan created a "price structure that is unresponsive to viewer demand and unrelated to the prices that would prevail in a competitive market." Id.

Each of the NCAA's arguments on rebuttal were soundly rejected. First, in response to the defendant's claim that it lacked "market power," the Court highlighted that college football is "uniquely attractive to fans" and therefore constitutes a separate market from other sports and entertainment. Id. (citing International Boxing Club of New York, Inc. v. United States, 358 U. S. 242 (1959). Second, the Court...