A three-judge panel of the US Court of Appeals for the Ninth Circuit [official website] ruled [opinion, PDF] Wednesday that the National Collegiate Athletic Association (NCAA) [website] violates antitrust laws by limiting what compensation student athletes can receive. The appeals court, however, rejected a proposal to pay students up to $5,000 a year in deferred compensation, finding that the cost of attendance was sufficient compensation. This case arose as a result of college athletes claiming they were not being fairly compensated despite the lucrative business of college football and men’s college basketball, which both generate millions of dollars in revenue through attendance, TV broadcast deals and merchandise sales. The appeals court concluded:

[W]e wish to emphasize the limited scope of the decision we have reached and the remedy we have approved. Today, we reaffirm that NCAA regulations are subject to antitrust scrutiny and must be tested in the crucible of the Rule of Reason. When those regulations truly serve procompetitive purposes, courts should not hesitate to uphold them. But the NCAA is not above the antitrust laws, and courts cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules. In this case, the NCAA’s rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market. The Rule of Reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. It does not require more.

NCAA President Mark Emmert stated [text], “[w]e have not completely reviewed the court’s 73-page decision, but we agree with the court that the injunction ‘allowing students to be paid cash compensation of up to $5,000 per year was erroneous.'”

Last month the National Labor Relations Board (NLRB) [official website] declined to assert jurisdiction [JURIST report] over whether Northwestern University [official website] football players can form a union, overturning its 2014 decision [opinion, PDF] which recognized the players as university employees. The contested decision was made by the Chicago office for the NLRB one month prior, ruling that football players at Northwestern University qualified as employees [JURIST report] and therefore had the right to unionize. Had the players been allowed to unionize, their player union would have been the first in the history of the NCAA and pre-NCAA college athletics.