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9th Circuit: NCAA Cannot Cap Education-Related Payments to Student Athletes

SOUTH BEND, IN - OCTOBER 19:  A general view of the mural known as "Touchdown Jesus" on the campus of Notre Dame University before the Notre Dame Fighting Irish take on the University of Southern California Trojans at Notre Dame Stadium on October 19, 2013 in South Bend, Indiana.  (Photo by Jonathan Daniel/Getty Images) This mural at the University of Notre Dame is known as 'Touchdown Jesus"
By Joseph Fawbush, Esq. on May 21, 2020 4:54 PM

The National Collegiate Athletic Association (NCAA) cannot cap compensation for athletes' educational expenses, according to the Ninth Circuit Court of Appeals. In a recent decision, a Ninth Circuit panel held that such a cap violates the Sherman Act. However, the NCAA can limit other payments. The Ninth Circuit's decision upholds a lower courts ruling, and could lead to athletes being compensated more for attending certain schools.

NCAA Seeks to Preserve Amateur Status

The NCAA had argued that limits on educational expenses for student-athletes is necessary to preserve the amateur status of collegiate sports. Currently, student athletes in the “Power Five" conferences can receive stipends and compensation for the “cost of attendance," which encompasses tuition, fees, room and board, books and other attendance costs. In addition, without losing eligibility, student-athletes can receive a per diem, medical insurance, unlimited meals and snacks, and certain limited cash stipends to use as they see fit. Student-athletes can also receive awards that involve Visa gift cards, which act like cash.

This can add up to a significant cash value, and that has not hurt the amateur status of collegiate athletes so far, Chief Judge Sidney Thomas wrote for the majority. Removing the cap on educational expenses is more of the same.

Keeping the Floodgates Closed?

Student-athletes did not get a complete win, however. They had asked for an unlimited cap on compensation regardless of purpose. This was too much, the Ninth Circuit held, writing that the District Court's decision balanced the anti-competitive impact on student-athletes with the NCAA's need to preserve the amateur status of its Division I football and basketball programs. So, while students will not have a cap on educational expenses, in theory the Ninth Circuit's decision will not result in student-athletes being compensated lavishly directly from the universities they attend. However, without a cap on educational expenses, it is likely that there will be a lot of wiggle room to give collegiate athletes more money.

Star Student Athletes Have Money Coming

In April of this year, the NCAA Board of Governors approved a plan to allow players to be compensated for their name, image, and likeness (NIL) when doing endorsements and signings, for example. California also enacted the Fair Pay to Play Act in 2019, which allows collegiate athletes in public universities in California to similarly capitalize on their NIL rights without losing eligibility.

Related Resources

Pay College Athletes? Is California Serious? (FindLaw's Tarnished Twenty)

How Difficult Is It for Sports Stars to Get Trademarks? (FindLaw's Tarnished Twenty)

Can College Athletes Unionize? (FindLaw's Learn About the Law)

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