In the midst of March Madness, the Supreme Court recently heard oral argument in NCAA v. Alston. The case is an antitrust challenge to the NCAA’s rules on compensation for athletes, brought by college basketball and football players including Shawne Alston, a former West Virginia University running back who argues that college athletes are being exploited. The NCAA argues that maintaining the amateur status of college athletes actually fosters consumer choice between amateur and professional sports. Thomas Nachbar, professor of law at the University of Virginia School of Law who authored a brief in support of the NCAA, and Sandeep Vaheesan, legal director at the Open Markets Institute who co-authored a brief on behalf of Shawne Alston, join host Jeffrey Rosen to explore both sides of the case. They also explore the case's potential implication for the future of antitrust across industries, detail past Supreme Court decisions involving the NCAA, and more.
FULL PODCAST
PARTICIPANTS
Sandeep Vaheesan is legal director at the Open Markets Institute. He co-authored an amicus brief in this case on behalf of respondent Shawne Alston.
Thomas Nachbar is professor of law and senior fellow at the Center for National Security Law at the University of Virginia School of Law. He filed an amicus brief in this case in support of the NCAA.
Jeffrey Rosen is the president and CEO of the National Constitution Center, a nonpartisan nonprofit organization devoted to educating the public about the U.S. Constitution. Rosen is also professor of law at The George Washington University Law School and a contributing editor of The Atlantic.
ADDITIONAL RESOURCES
- NCAA v. Alston:
- Related cases:
This episode was produced by Jackie McDermott and engineered by David Stotz. Research was provided by Alexandra "Mac" Taylor, Paige Britton, Jackie McDermott, and Lana Ulrich.
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TRANSCRIPT
This transcript may not be in its final form, accuracy may vary, and it may be updated or revised in the future.
Jeffrey Rosen: [00:00:00] I'm Jeffrey Rosen, president and CEO of the National Constitution Center, and welcome to We the People, a weekly show of constitutional debate. The National Constitution Center is a nonpartisan, nonprofit, chartered by Congress to increase awareness and understanding of the constitution among the American people. In the middle of March madness, the Supreme court heard oral arguments this week in NCAA versus Alston. The case is an antitrust challenge to the NCAA's rules about compensation for student athletes, it's brought by college basketball and football players. Today we'll explore the constitutional and legal dimensions of the case with two of America's leading experts on antitrust and the constitution. Thomas Nachbar, is professor of law at the University of Virginia School of Law. He filed a brief in support of the NCAA, which is argued that maintaining the amateur status of college athletes fosters consumer choice between amateur and professional sports. Tom, it is wonderful to have you with us.
Thomas Nachbar: [00:01:06] Jeff, thanks so much. And thanks for having me here
Jeffrey Rosen: [00:01:08] And Sandeep Vaheesan, is legal director at the Open Markets Institute. He co-authored a brief on behalf of respondent, Sean Alston, a former West Virginia University running-back who argues the college athletes are being exploited. Sandeep, thank you so much for joining.
Sandeep Vaheesan: [00:01:24] Thanks so much, Jeff. Delighted to be here.
Jeffrey Rosen: [00:01:27] Tom, why is this case important and what are the constitutional stakes?
Thomas Nachbar: [00:01:33] So this case is a follow on to an earlier case, in a sense it's a follow on to two earlier cases. there was an earlier case a, a few years ago, ago called O'Bannon, which addressed student compensation for the use of names, images, and likenesses, for NCAA student athletes, as opposed to a compensation for playing their sports. in that case, the lower court had ruled that the NCAA could not limit compensation below the full cost of attendance. but it did not have to pay cash compensation to students because that would defeat the NCAA's concept of amateurism. In Alston, this case, a different set of student athletes have attacked the NCAA's compensation scheme more generally, arguing that NCAA caps on compensation are an antitrust violation.
The district court distinguished between non-cash educational benefits like computers, or even post eligibility scholarships to other schools and cash payments. And it struck the NCAA limits on non-cash educational benefits entirely, but it actually allowed individual conferences to cap those benefits, conferences like the, Atlantic Coast Conference or the Big 10. With regard to, cash payments, it turns out that the NCAA had actually been allowing both cash academic and graduation awards and cash athletic participation awards for things like participating in conference championships. And so the district court ruled that the NCAA could not prohibit cash awards up to the amount they previously allowed. I think this case is important in a couple of different ways.
There are really two different ways you could look at it at least, I think what most people will pay the most attention to is about the NCAA itself, which is really an exceptional organization in a variety of ways. It provides a unique mixture of producing what is essentially an entertainment product, athletics, right, and education. And, as it came out today, it has a lot of market power or as was repeatedly stated, monopsony power in the market for college athletes. In the end, a lot of people, today, several of the justices and I think all three of the attorneys who argued the case talked to the, about the possibility of legislation that might actually address this problem. And, and we can certainly talk about that, as we go.
and then the second way I would look at this case is that it has what I think is the potential to make some pretty significant antitrust law on both sides. if the NCAA wins there is this idea that a joint venture with a lot of market power might be free to define its own product, even if that means, even at that product means that it pays its players, nothing. That was a big part of the NCAA's argument and it certainly is a possibility if the NCAA wins, depending on how broad the holding is. If the plaintiffs win and sets the potential that district courts all over the country will now will be open to cases challenging, not just the NCAA restraints, but pretty much any agreed to industry practice, to make sure that it is the, least restrictive one that is available to serve a particular, justification.
my, my brief in this case was really about the test that the Ninth Circuit applied in a specific part of the test that is not less restrictive alternatives portion of it. the Ninth Circuit approach asks whether the NCAA could achieve its competitive goals with some less restrictive alternative. And the problem of course, is that there's always a less restrictive alternative. On the margin, every alternative you can find some less restrictive one. And so there's not a great deal of guidance about how to apply a test like this. And it would also represent a major shift in how the Supreme Court has traditionally applied the rule of reason. it has not previously applied anything like a lesser shook of alternatives test and so if the court were to apply one in this case, I think it'd be a pretty substantial shift.
Jeffrey Rosen: [00:05:44] Thank you so much for that. Sandeep, how would you introduce to people, listeners to what this case is about and what the constitutional stakes are? And, and picking up on some of the things that Tom said, explain to us where this rule of reason comes from in antitrust law, how it was not applied in this case, and what you think the proper test should be?
Sandeep Vaheesan: [00:06:06] Thanks, Jeff. So this case involves a challenge to maybe the most open and notorious employer cartel in the United States. So collegiate basketball and football is a very large commercial enterprise. division one sports in the United States generate more annual revenue than the NBA. So this is sports, these are sports on par with professional sports. But the players who fans go to see in person and watch on TV get a relatively small fraction of these annual revenues. And the reason is for decades, the NCAA has established rules restricting the compensation for players. So at present colleges cannot pay a players more than a scholarship, equaling the cost of attendance. They cannot pay players salaries and wages and compensate them in a way that NBA or NFL teams compensate their players. And so that means that the players get a relatively small fraction of the wealth that's generated by the NCAA every year.
So in professional sports about one in $2 goes to the players. In college basketball and football in contrast, only about one in $5 goes to the players. So where does that 80% go? a significant chu- chunk of it goes to coaches and administrators. So for instance, a Kentucky head basketball coach, John Calipari, and Alabama's had football coach, Nick Saban make nearly $10 million a year. And athletic directors commonly make six or seven figures as well. And in 39 states, the highest paid public employee is either a college basketball coach or a college football coach. So how does the NCAA justify this open collusion against players? It says that, "We have to do this to preserve amateurism. there's something distinctive about our sports vis-a-vis professional sports." But amateurism doesn't really have a stable or even settled definition, and NCAA president Mark Emmert has admitted as much and said that it constantly evolves and changes.
And so it often seems like amateurism is simply a benign way of describing employer collusion. The NCAA wouldn't be able to simply say, "We don't want to play the... Pay the players because we'd rather channel the spoils to John Calipari and Nick Saban." Instead, amateurism has this... Has positive connotations. People think of it as something noble and worthwhile. And that's something, some of the justices, mentioned at oral argument today, they noted that amateurism simply seems like a cover for a collusive exploitation. So that's really what the players are challenging here. And this case is also interesting for anti-trust reasons. So the players at trial and on appeal won a limited victory and the courts applied something called the rule of reason. The, the court said that the players have established that these collusive restraints harm them. Their, their compensation is less than it would be if colleges freely competed for their talents and services.
But the courts allowed the NCAA to introduce justifications, including justifications pertaining to college sports fans, so consumers in a separate market, and accredited one of the justifications offered by the NCAA. It said that, the courts said that, college sports fans, at least some fraction of color sports fans, watch basketball and football played by Duke UNC, Kentucky, and others because the players are not paid like professionals. They value the fact that the players are, exploited, they're, they're not paid a fair competitive salary. And so the court said, "We're not gonna strike down the entire NCAA system of restraints, we're going to simply strike down the restraints pertaining to compensation tied to education." So for instance, payments for books, payments for scholarships for future graduate study. So the lower courts kept the bulk of the NCAA system intact and struck down one piece of it, namely the piece concerning education related payments.
So I think this articulation application of the rule of reason could be very harmful, not just for the players, but for all workers and producers in our society going forward. So for instance, under the so-called cross-market balancing, Uber could impose a restraint of trade on its drivers and then defend itself by saying, "Sure, these restraints hurt the drivers, but here are some benefits to passengers and other groups." So this cross- cross-marketing balance, balancing really opens up the possibility for broad judicial cost benefit analysis under which the courts are saying, "Yes, we recognize harm to one group, but we're gonna offset that by recognizing benefits to another group." And in this case, the benefits are fairly theoretical that the courts rejected the survey evidence that the NCAA used to support this argument. But nonetheless said, "Yeah, we think there is something special about college sports because the players are not fairly paid. And so we're going to recognize that justification and accordingly fashion a very tailored remedy." And, you know, the NCAA also has important racial justice implications and that's something I can talk a little bit more about over the course of our conversation.
Jeffrey Rosen: [00:11:35] Many thanks for, for that. Tom, justices across the courts, seemed skeptical about the NCAA's argument that it can... It could ban these modest payments to student athletes in the name of amateurism. justice Thomas noted, as Sandeep did that he said it just strikes me as odd that coach's salaries have ballooned. Justice Kavanaugh said the antitrust laws shouldn't be a cover for the exploitation of student athletes. But the justices, although they seem to concede that these, education-related payments should be allowed, because of the cap, of about $5,000 was incredibly low, there was no consensus about what the alternative would be, and there was a concern that there'd be a lot of other challenges that might destroy, the game as an amateur sports game. So tell us, as you read the oral argument, what the justices seem to be converging around as they expressed skepticism about the, caps, but were unsure about the alternatives.
Thomas Nachbar: [00:12:43] Well, this goes a little bit to the other follow-on case, that I mentioned. So in 1984, there was an, there was an earlier antitrust challenge to, the NCAA with regard to restrictions on television broadcasting. And the NCAA lost that case. but from, the jaws of defeat, they snatched, a, what they've been using as their justification for restraints over time, which is the amateurism justification that the court mentioned in that case. And I think the, the members of the court have a... Had a hard time with really either extreme, in the case. So if you take the NCAA's position to its extreme, they could really impose any restraint they wanted to, as long as they could argue that it is justified in defining their product. and I think that the justices were quite concerned about such a broad, justification, in large part, I think because of the market power that the NCAA has.
And that really... That came up repeatedly that, several of the justices were concerned about how much market power the NCAA has. It wasn't really an issue in the case, below because it's conceded. You know, when you think about college sports, there really is one choice and that's the NCAA. There are actually other, collegiate athletic associations that are out there, but the NCAA dominates. And I think that degree of market power clearly weighed on the justices' minds. and, and market power is an aspect of the rule of reason. The rule of reason, ostensibly seeks to balance the anti-competitive effects of a restraint with its pro competitive justifications. And this test, and this formulation of the test has been around for a long, long time, really since the Chicago Board of Trade case.
and a number of people I think have raised over time concerns about the ability to balance pro-competitive effects with anti-competitive, effects, sometimes they're incommensurable. and there's a lot substantial amount of scholarship written about the difficulty in doing so. Certainly market power features into that. So the court previously articulated, a form of the rule of reason that says, "Take a look at the, anti-competitive effects, try to balance them against the pro-competitive justifications and ask if there's enough market power to make a difference." And in this case, there was a lot of market power. And I think that that aspect of it weighed heavily on the justices' minds when they were looking at it today.
alternatively, I think they were concerned about the use of antitrust to solve this particular problem, in part, because it's a, it's a complex product, and, again, because the Ninth Circuit test would essentially allow, and a few of the justices mentioned this as well, the ability, of athletes to come back and say, "Well, we did another survey," right? So, as Sandeep points out right, the concept of amateurism, especially if you go by consumer perception is a fluid one in a few years, perhaps the plaintiffs are able to come back with a survey that shows, oh, well now, instead of being able to pay, $6,000, it's okay to pay 10,000. And in fact there was substantial disagreement among the expert witnesses in this case.
And so I think the justices were really concerned about that possibility that if you do tie this conception of amateurism, really explicitly to a consumer perception using this particular test, that you could have repeated re litigation of this issue in turn the district coordinator essentially into a form of price regulator, which the court is pretty hesitant to do. So I think that, there's a lot of tension there. And again, a lot of folks mentioned, and pointed to the possibility of getting legislation. There's been legislation, adopted and proposed in states, and there's talk about it happening, in Congress as well.
Jeffrey Rosen: [00:16:44] Sandeep, Tom mentioned the Chicago Board of Trade case that was as early as 1918, and, it was really, it was the progressive era of The Standard Oil case in 1911. We, we begun to have this rule of reason in antitrust cases, which seems to give courts tremendous discretion in balancing costs and benefits. when it comes to the college sports, what are the constraints on that balance, which you expressed concern about, and what formulation of that balancing test did you see the court seeming to convert around, if any?
Sandeep Vaheesan: [00:17:21] Yeah. So the rule of reason has been with us for a long time, famously articulated by Justice Brandeis in Chicago Board of Trade. But what's really peculiar about Alston as well as the O'Bannon cases, they involve conduct that would typically be per se, illegal or presumptively illegal. Courts wouldn't have to engage in this, this type of balancing. They wouldn't even get to the question of what are the benefits that we can consider against the harms? But this is really one of the consequences of Board of Regents. So Tom mentioned that in Board of Regents, the NCAA really, snatched a victory out of the jaws of defeat. So that was a case where the NCAA lost, the court struck down restrictions concerning TV broadcast by elite football programs, but had a throw away line about the social benefits of amateurism.
And so the NCAA since then has said, "Sure, we lost, but using this dicta, the court actually granted us as broad antitrust immunity that protects our rules are on player compensation from antitrust scrutiny." So they were successful with that argument for a number of years, but starting with O'Bannon and now with Alston, the lower courts have said, "No, that is dicta. Your rules on compensation are subject to antitrust scrutiny." But Board of Regents also set a second point that I think has been widely accepted. The court said, you know, "Sports, including college sports require some level of collaboration, cooperation, therefore all rules and restraints adopted by the relevant leagues and conferences should be subject to the rule of reason." And so since then even conduct that would otherwise be per se, illegal has been subject to the rule of reason.
so I would argue that, you know, in this case, the plaintiff should have pled a per se case because, you know, I think Board of Regents has been read to broadly. It didn't necessarily immunize all forms of, restraints. And, you know, collusion has been called the supreme evil of antitrust by the Supreme Court. And so I think they should have argued here for a per se or presumptive illegality standard. But since they did and were in rule of reason world and yeah, the lower courts formulation of the rule of reason is, is very troubling in that it invites judicial cost benefit analysis and allows judges to weigh harms to one group against benefits to another group, and compare fundamentally unlike quantities and qualities. So I worry that if the standard is adopted and applied to all rule of reason cases, it puts judges in the position of super legislators where they're deciding questions that should be reserved for Congress and state legislatures.
Jeffrey Rosen: [00:20:03] Tom, Justice Alito expressed a similar question. He said, "Is this a per se violation of the antitrust laws? And if so, should the restrictions here get," what he called a quick look. And a bunch of justices asked whether the quick look standard should apply. Tell us what that is. It sounds like that means you don't, do an elaborate balancing test, but just quickly see whether there's anti-competitive behavior. and then, address, if you will, Justice Alito's other question which other justices shared about the exploitation of student athletes. He said, "I'm concerned about the exploitation of students because coaches get a lot of money. How can this be defended in the name of amateurism and where my justice leader on the court go with that concern?"
Thomas Nachbar: [00:20:47] so the quick look, as you said, right, the quick look is, an abbreviated form, of antitrust review. So, the, in sort of the theoretical sense on the one end, there's the per se rule where you look at a restraint and you just, you can know right away it's illegal. So price fixing is, is illegal. Two competitors get together and they fix prices. It's a per se violation. In Chicago board of trade itself, actually, the competitors literally did fix prices. They kept the price of grain, a particular kind of, grain from fluctuating over time. And the court said, "Oh, well, that's not what we meant by price fixing." So really right from the beginning, there's been some indeterminacy about the way that the per se rules apply.
and then on the other end, there's sort of wide open rule of reason balancing, which is what, is commonly attributed to, Justice Brandeis's Board of Trade. and then somewhere in the middle, really to some extent had its genesis in the original NCAA cases, this idea of the quick look where you can look at a restraint and someone with even a rudimentary understanding about, economics, could understand that, that even though it doesn't fit in the category of per se illegal cases, it's going to, it's going to be illegal. the case after that, the court actually limited, I think the application of the rule of reason and sort of shifted to more of a sliding scale of rule of reason scrutiny and, and avoided categories like per se, quick look, in full rule of reason.
And just like, as I said, described this sliding scale. but the idea of the quick look is definitely out there. the NCAA in this case has argued a quick look in a little bit different way. They've argued that the quick look can be applied to upholder restraint. And, I think that that view got considerable questioning today. I think there were some of the back and forth, among the justices and between the justices and the lawyers was about that use of the term quick look and, and it resulted in it being used maybe a little bit more than it would've otherwise been. but, but generally the quick look is this idea that you can look at a restraint quickly and make a decision about it. And previously, it's largely been used to invalidate restraints.
with regard to exploitation, I definite, I also heard the justice is talking about that, and it's a little hard to figure out how they think that works here. So, you know, because it's such a complex market, I think there's a lot of concern about, it's again, this goes back to the bargaining power point. There's a lot of concern about the market power that the NCAA has, in this, in this market. And the NCAA is, some of the NCAA's arguments are that many of the rules that they've adopted are to avoid the exploitation of players. So, and they made that argument today that the NCAA itself was born, of an attempt to roll back abuses and, exploitation of players. And then of course, over time there've been concerns about whether or not this is the right level of compensation for players.
I think one of the, you know, as I heard those questions today, it did make me think about, well, how would you set the appropriate level of compensation and whether or not the court is interested in doing that in an antitrust context. Usually antitrust courts don't do that kind of thing. That's not a, that's not a sort of a typical, antitrust remedy. And, and it, it would be, I think it would be something of an extension for the court to want to do that in an antitrust case. It's not inconceivable though. but that usually is the kind of thing that happens with regulation. And so commonly what will happen in markets that don't work in which a party has a substantial amount of market power, like a natural monopoly, like utility, they will go and get regulation.
Aand they'll have their rates regulated by some kind of public entity, like a legislature, or there'll be a public utility commission. and that's a more, much more typical approach than using the antitrust laws to set levels of compensation, to, to avoid some kind of bargaining power problem.
Jeffrey Rosen: [00:25:11] Sandeep, you argued that the rule of reason in this case had a clear disparate impact, injuries largely black workforces were tolerated in large part in the name of catering to the preferences of white sports fans. Tell us more about that, argument about exploitation of, of black players, which many of the justices seem to share and how do you think it should be avoided? What, what rules should be applied and what should the result be?
Sandeep Vaheesan: [00:25:37] Sure. So the NCAA system is racialized in, in at least two ways. So as I mentioned earlier, the, the lower courts credited this idea that college sports fans value amateur players or players who aren't paid by professionals. And research has found that there are significant racial divisions about how whites and blacks view the prospect of paying college athletes like professionals. So a majority of black Americans believe that college athletes should be paid, whereas only about 20% of whites believe that college athletes should be paid. And the study further found that opposition to paying college athletes among whites is positively correlated with the degree of anti-black animus that they expressed. So there is a clear racial component to the, public preference for maintaining the system of amateurism. Whites generally pre-, prefer the status quo. The most racist whites are committed most strongly to the status quo, whereas blacks favor a system where colleges compete for players by paying them wages and salaries.
So the court said, "You know, we're willing to sacrifice the interests of black athletes to cater to, a racist public. so I think it's racialized from that perspective. And I think at a more fundamental level, if you see about this, look at how the spoils are divided among players, coaches, and administrators, you're seeing a mostly white group of coaches and administrators making a lot of money, sometimes millions of dollars a year. And on the other hand, profiting off the labor of mostly black athletes. So in college basketball last, we call it Men's College Basketball last year, roughly 55% of the players are black. And college football and Women's Basketball, it was about half the players, about half the players were black. So there is a racial injustice element to it and it's, and it's abundantly clear. And I think what the players want is they want the courts to strike down these restraints.
They want the same fair competitive market that the coaches enjoy. so to respond to Tom a little bit, the players, aren't saying, "You know, Supreme Court please pay Jared Butler $200,000 a year." What they're saying is, "Give us the same open competitive market that Roy Williams and Mike Krzyzewski enjoy." And they want the courts to strike down the restraints, not to engage in price regulation, or price setting. They just want the same free open market that the coaches and administrators enjoy. So I think the idea that the players are asking for public utility regulation is a straw man.
Jeffrey Rosen: [00:28:08] Thank you for that. Tom might any of the justices, several of whom were concerned about exploitation, be moved to, eliminate all of the constraints as Sandeep suggests. And why do you think that's a bad idea? And, and what test are you proposing that the court should apply instead?
Thomas Nachbar: [00:28:30] so I did meet a suggest that the players were, asking for some kind of public utility regulation. What I was trying to suggest was that, the... So the district court in this case set a cap basically, it set a dollar amount. And so the point that I was trying to make was that typically, over, over time, and interest courts try to get out of the business of doing that in that when you have a business like that, when you have a industry like the NCAA, where there's a lot of market power, to the extent that you get that kind of price specific regulation, you get it from public utility regulation. I wasn't trying to suggest that that's what the players were looking for at all.
With regard to the specific test, the way the court has looked at this before is whether or not the restraint is reasonably necessary in order to serve the pro-competitive justification. I actually think that that's the right approach to this case. And it's entirely possible that the district court could decide that these restraints don't actually serve the pro-competitive justification. They did that in a couple of cases. And I actually don't think that that's a problem in terms of the antitrust law, nor do I have a view on facts as to whether or not the restraints actually serve these pro-competitive justifications. My concern really is about the rule that the district court came up with, which was not to make a general determination about whether the restraints served the pro-competitive justification, but to ask whether that justification could be served by some less restrictive restraint.
And that's what I think, the problem is with the district court. And that actually, I think is the problem that the justice has keyed upon, this... During the oral argument, which is this concern that if you take this less restrictive alternative approach that you're inviting, re litigation of the question, every time someone comes up with some less restrictive alternative, as opposed to making a categorical determination. I actually think that the less restrictive alternatives test in one sense was to, deferential to the schools and the conferences, which is that the district court concluded that the limit on edu, on non-cash educational, benefits was not related to the amateurism justification, but then allowed the conferences to impose limits on non-cash educational benefits, because it was less restrictive than, having the NCAA do so.
But if it's not related to the justification at all, then there's no reason to allow the conferences to do it either. But I think the court was... It invited itself basically to make that mistake by trying to focus on something that would be less restrictive instead of focusing on whether or not the pro-competitive justification was actually served by the restraint.
Jeffrey Rosen: [00:31:16] So just to recap, where we were, the, the lower court found that the NCAA's restraints, were justified by the pro-competitive results of preserving amateur sports, and they allowed the NCAA to cap non-athletic graduation and academic awards at basically around $6,000. Tom said he didn't have a problem with lifting that cap, but he was concerned about the test the lower court applied, which looked for less restrictive alternatives. Are you arguing for a, elimination of all caps on, student compensation? And if so, how would you respond to Justice Sotomayor's question that this might, destroy, how amateur college sports?
Sandeep Vaheesan: [00:32:03] Yeah, so that's, that's my position. I think the court should strike down all the restraints on player compensation and create a fair competitive market for their services for the first time, or at least the first time in a very long time. And so that would address the problem of courts functioning as quasi regulators and periodically rev- revisiting where to draw the line, is $7,000 too much? Should we raise it to $10,000 based on changes in customer perception? I think it would be administratively much simpler than the remedy that the district court imposed. And it would address some of the administrative concerns that Tom raised, which I happened to share.
On the question of whether this would destroy college sports, you know, the NCAA has been predicting a parade of horribles for decades. So the system has been reformed over the years in large measure through litigation. And before every change NCAA said, you know, "This would lead to a loss of viewer interest. This would fundamentally disrupt the system. We wouldn't have college sports." And lo and behold college sports have thrived. College sports are more popular and more lucrative than ever before. So I think we should look at the history when the NCAA and others say that, you know, ruling in favor of the players and granting them a full victory would, and college sports as we know it.
And, you know, to the extent that the NCAA wants special treatment, wants a special dispensation, it should go to Congress. Congress can carve out certain aspects of NCAA collaboration and say that, you know, "This is protected from antitrust, or we will allow the NCAA to engage in revenue sharing, established salary caps." So even if the NCAA is handed a complete defeat here, it's not out of options, it can take concrete steps toward preserving, you know, system, beneficial aspects of its system.
Jeffrey Rosen: [00:34:08] Tom, your brief argues that although this case presents hard questions of the NCAA's unique position and the specific restrictions, the court hasn't... Doesn't have to reach those questions because the lower court just applied the wrong standard. And you say the court should reverse and tell the lower courts to apply the rule of reason, which is the right standard as previously described in the court's antitrust jurisprudence. Did you hear support for that position during the oral argument, which might allow the court to duck the hard questions of the future of, college sports and, do you think that they might take that route?
Thomas Nachbar: [00:34:47] So I do think that the repeated questions that the court had about future litigants revisiting the question and coming back every time they identify a slightly less restrictive alternative, I think that those questions really go to exactly that point, in that that would be one avenue for the court to avoid trying to figure out as an original matter what the NCAA is, and really what the NCAA is today and tomorrow, and in 10 years. Because I think Sandeep makes a great point, which is that it's changed over time. to some extent, this case, is the result of the lifting of the television restrictions in the earlier Board of Regents case.
So, in the earlier, you know, when the, in 1983, the NCAA, televised 80 games. In 2019, I'm sorry, just football. In 2019, they televise 392 games. now part of that are, lifts on the, or the elimination of the limits on, broadcasting, and part of that is just the change in the nature of broadcasting. There are just many other outlets these days, as a matter of technology and markets. it's a very different market than it was in 1983 for a variety of reasons. And to some extent, a lot of the disparities and a lot of the money that are resulting, are the product of that growth.
So thinking that the NCAA is going to be the same thing 20 years from now that it is today, doesn't that doesn't seem likely to me. I think it's going to evolve over time, regardless of what happens in this case. and so one way to, try to avoid, entrenching a view of what the NCAA is in the US reports is for the court to adopt a narrower approach and, reverse the case for the application of the rule of reason, and to see what happens under the rule of reason more generally. I do think that as a practical matter, the likelihood of legislation goes up pretty quickly over time. And so it's entirely possible.
And, I tend to agree with Sandeep, but I don't think it would be inappropriate at all for Congress to step in here and do something, given the, both the, I think unique nature of what the NCAA is doing in combining, education with athletics in the way that it does, and really a host of other products, right? Universities, provide a host of other products all in combination. and the trend is, market concentration through the NCAA that it has. I mean, in many ways the NCAA acts like a, a private, almost quasi governmental agency, among the schools. And so, in that sense, it's, it's not a legislature, but it really does, they adopt rules that govern the way the schools operate and the way the schools deal with their athletes that go far beyond things like compensation.
And of course, these are, these are young people who are entering school. they're not likely to be as sophisticated about, the transactions that they're entering into. And you see a lot of regulation in this space, things like, regulation with regard to, financial transparency for schools in order to make it easier for people to make decisions about where to go to school. And I think it's possible, if not likely that we'll see some kind of regulation in this space, regardless of the way this case comes out.
Jeffrey Rosen: [00:38:21] Thank you for that. Sandeep, you argue that courts shouldn't sacrifice competition in one market in the name of promoting competition in another, and these questions of social policy should be reserved for Congress in the state legislatures. what's your reaction to the, to this narrower possibility that the Supreme Court might reverse, send it back to the lower courts to apply the rule of reason, and then Congress would have the opportunity to legislate? is, is legislation a realistic possibility and what might legislation look like?
Sandeep Vaheesan: [00:38:51] Yeah, so this really is the big question, the case, what is the rule of reason? How should courts apply it? And, you know, unless the court here grants some clear guidance to the lower courts, I worry that the Ninth Circuit and the district court will apply some version of the rule of reason they already applied, that is open-ended, broad, allows them to sacrifice competition in one market, the labor market for player services in the name of promoting competition in another that's the competition for, sports fans. And I think the Supreme Court would do the public, a great service if it offered some guidance and set some clear parameters on what falls within the rule of reason analysis and what doesn't belong in a rule of reason analysis.
And it's worth remembering that for more than a century that court has pretty consistently held that workers and other sellers are equally entitled anti-trust protection as consumers and other purchasers are. So the lower courts formulation of the rule of reason here, really flies in the face of that well-established principle. So that gets to the question of, you know, what might reform look like in this area? And I think professional sports offer a model, you know, the leagues have, I believe all the leagues are at least three out of the four leagues, have some form of salary cap and revenue sharing.
And I think a system like that would be equitable and fair and probably more equitable and fair than the current system of college sports, where players are both not fairly paid, and, you know, the, the schools at the top, the, the Dukes, the Kentucky's, the Kansases engage in all sorts of competition that smaller schools can't meet. So for example, a smaller school cannot afford to pay a weight coach $500,000 a year, whereas Duke and, Kansas can afford to do things like that. So some type of revenue sharing would actually soften the inequities we see in the system right now.
And, you know, one, the interesting possibility here that isn't often talked about is, you know, the NCAA could do a lot of these things by allowing the players to unionize and putting these provisions into collective bargaining agreements. So in the late 1970s, the DC Circuit actually struck down the NFL draft and said, "This is a former, this is an illegal restraint of trade." And what subsequently happened is the draft is incorporated into the collective bargaining agreement between the NFL and the NFLPA. So in theory, that's another option here for the NCAA in the event of loses. It can simply say, "Okay, we're not going to get legislation, but we can actually get many of the things we want by recognizing the unionization efforts of players and putting these terms into collective bargaining agreements.
Jeffrey Rosen: [00:41:42] Tom, let us talk now about the potential of this case to change antitrust law more generally. you said it's a Ninth Circuit test, the less restrictive alternatives test has the potential to invite courts to make very fine grained inquiries into the validity of business practices. Tell us more about that concern, how it could affect other areas of antitrust law, and whether or not you think the Supreme court will try to avoid that by fashioning a test that doesn't change other areas in antitrust law?
Thomas Nachbar: [00:42:13] So, I think that the case, the litigation below really demonstrates just how much additional detail can be required, if one applies a test like this. So the, district court took a tremendous amount of evidence, both on what consumer perception, how consumer perception would be effected by starting to pay players, but down to the level of trying to figure out how much extra you could pay them. and so, there were, different surveys were presented. Some suggested that you could pay them as much as $10,000 a year, and it wouldn't really alter consumer perception of amateurism very much. And I, I, and as a result, you get not only an inquiry into whether or not the restraint serves the interest, you get an inquiry into just how much the restraints serves the interest.
Now that's an interesting problem when it comes to things like dollars. So another thing that the NCAA does for instance, is it limits the number of hours that student athletes can spend practicing. Well, that's a really substantial limitation on the ability of a student athlete to develop, right? Maybe they want to spend more time, with the team. but that kind of restriction, again, you could measure in the number of hours and you could see a similar consumer survey saying, "Oh, well, you know, if, if teams are allowed to practice more or less," I mean, especially as you try to change the meaning of amateurism, by, compensating players a little bit over time.
But I think the more general concern for antitrust actually goes way beyond things like the NCAA. So for instance, there's a lot of talking in- these days about the role of platforms like Facebook or, Google operates a platform and Amazon's a platform. And one of the interesting things about a lot of these platforms is that they're online. And when you take a platform or you take any product and you, instantiated in computer code, there really is no natural limitation to the definition of that product. If you wanted to change Facebook a little bit, you change code and you change it a little bit.
And so if you really do take this less restrictive alternatives test, seriously, and you take products like online platforms, which really have no natural or physical definition, you open up the possibility that you could make, again, really fine grain changes in those products, both because they're amenable to those kinds of fine grain changes because they don't have a natural definition, but also because firms in this platform space also tend to have an awful lot of market power. So I think that that's probably the most... That's one of the major concerns that I have about this rule is not even how it applies in this space, although I think when you start... Once you start talking about dollars, it gets very fine-grained, but when you take it and you try to apply it in other industries, ones that are dynamic and ones that, don't have a physical product, but have sort of a notional product, then there really aren't a lot of boundaries on the limitations that any trust might impose.
Jeffrey Rosen: [00:45:27] Sandeep, I'd like to ask you too about the effects of this ruling on other cases. You too expressed concern that, competitive tools that other employers use against workers might be judged under this sort of a hard look, least restrictive rule of reason that the Ninth Circuit, corrupted, as you say, and you, you gave the Uber example, you say in your brief, Uber uses a combination of low base pay and bonuses to drivers who they've classified as independent contractors to encourage them to use only the Uber app to obtain passengers, does Alston or mean that Uber can point to consumer benefits and defending itself against a potential driver lawsuit over exclusivity? Tell us more about that concern and how you think the court should avoid it.
Sandeep Vaheesan: [00:46:11] Yeah. So I think in this case the, the rule of reason should have been cabined. So once the players showed that the NCAA's restraints inflicted an injury on them, the possible justification should have been related only to the players themselves, where they're offsetting benefits from this restraint. So the NCAA pointed to better integration of athletics and education. The court rejected the justifications pertaining to the players, and that should have been the end of the inquiry. The court shouldn't have looked at benefits to consumers and other groups. And I think it raises the possibility that the courts have become super legislators, super regulators. You know, they shouldn't have reached the least restrictive, analysis stage that Tom mentioned, this case should have been decided much earlier in favor of the players.
And so now we have a system where if this rule of reason formulation is adopted generally, other powerful employers can say, "Yeah, the restraint injured, injured the relevant workers, it led to depressed wages, but we also want you to look at the enhanced consumer convenience, maybe lower prices to consumers." And I think that undercuts the Sherman Act's longstanding protection of workers and other producers, and then really asks the courts to function as super regulators. The courts are not well-positioned to make these types of, broad social judgments. They don't have relevant and industrial expertise. They certainly don't have popular accountability. So to the extent that we want someone making these types of determinations, it should be popularly accountable actors like Congress and state legislatures.
Jeffrey Rosen: [00:47:51] Well, it's time for closing arguments in this fascinating and rich discussion. And Tom, the first one is to you, why is the Alston Case important, why should we, the people, listeners care about it, and how should the Supreme Court decide it?
Thomas Nachbar: [00:48:09] So I think the Alston case is really important because both this industry I think is it's an enormous industry. and because the Supreme Court has some background in dealing with it, it's got a baseline to act off of. And what the court is gonna do in this case, regardless of what it does, is it's going to wind up either affirming that background that it has, the, language out of a Board of Regents, or it's going to have to repudiate that background at some level, if it winds up having to rule on the NCAA's, amateurism arguments. I think that a much better way to go about doing it is to, recognize the difficulty for any trust that's presented by the Ninth Circuit's approach and to decide the case based on the Ninth Circuits, application of what I think is the wrong rule in this case, and really a rule that doesn't have any precedent in the Supreme Court as well.
And in, so doing, I think the Supreme court can actually open up some space for the kind of legislative solution, that Sandeep is talking about. But that if it goes down the road of either, ratifying the NCAA system writ large or striking it down entirely, the consequences I think are largely unforeseeable, but they are going to be pretty fixed because changing the antitrust law in the face of a Supreme Court interpretation of the rule of reason is, is a hard thing to do. It happens very gradually, and it happens over time, in part because there's so much discretion that's built into the rule of reason. So the court needs to be particularly careful about how it's being applied in, in different industries.
Jeffrey Rosen: [00:49:49] Sandeep, the last word is to you, why is the Alston case important, why should we, the people, listeners care about it, and how should the Supreme Court decide it?
Sandeep Vaheesan: [00:49:57] So the Alston case involves a direct challenge to a racialized cartel, a group of mostly white colleges and administrators are profiting off the labor of mostly black athletes. This conduct would ordinarily be per se, illegal, thanks to some peculiar history, it isn't. But not withstanding decisions like Board of Regents, the court should strike down the NCAA's restraints in full because they harm the players and the NCAA presented no offsetting justifications that benefited the players. But I think this case extends beyond the NCAA and has important implications for antitrust law and working people going forward. if the Supreme Court grants, the players, a full victory, that means that the Sherman Act could be a powerful tool to ensure that all workers in the United States, not only college basketball and football players, but Uber drivers and countless other workers have the right to participate in fair competitive markets.
Jeffrey Rosen: [00:50:57] Thank you so much, Tom Nachbar and Sandeep Vaheesan for a rich illuminating and, really, educational discussion of the important antitrust issues involved in the Alston case. Tom, Sandeep, thank you so much for joining.
Thomas Nachbar: [00:51:14] Jeff, thanks so much for having me. I really enjoyed it. Sandeep, I enjoyed the conversation.
Sandeep Vaheesan: [00:51:18] Likewise, thanks so much, Tom. Thanks so much Jeff.
Jeffrey Rosen: [00:51:24] Today's show was engineered by David Stotz and produced by Jackie McDermott. Research was provided by Mac Taylor, Paige Britton, Lana Ulrich, and Jackie McDermott. Please rate, review, and subscribe to We the People on apple podcast and continue to recommend the show to friends, colleagues, or anyone who is hungry for thoughtful civil constitutional debate. And always remember The National Constitution Center is a private nonprofit. We rely on the generosity, the passion, the engagement, the devotion to lifelong learning of people from across the country who were inspired by our non-partisan mission of constitutional education and debate. You can support the mission by sending me an email and saying you like the show or, sending a donation of any amount, a dollar, $5, just to signal your support or becoming a member at constitutioncenter.org/membership. On behalf of the National Constitution Center, I'm Jeffrey Rosen.
