Home Ethics Legal Lawsuit challenges NCAA rules capping the value of athletic scholarships

Lawsuit challenges NCAA rules capping the value of athletic scholarships


Lawyers representing a former West Virginia running back have filed a proposed class-action suit against the NCAA and its five most powerful conferences, alleging they violated antitrust laws by agreeing to cap the value of athletic scholarships below the actual cost of attending school and “far below” what the free market would produce.

The suit by former West Virginia football player Shawne Alston names, the NCAA, SEC, ACC, Big 12, Pac-12 and Big Ten as defendants. The case seeks to represent former Football Bowl Subdivision scholarship football players who have played within those conferences since February 2010.

Universities annually list a higher actual cost of attending their college based on miscellaneous expenses than the amount covered by an athletic scholarship. A 2012 study found that out-of-pocket expenses for a full-scholarship FBS athlete in 20111-12 ranged from $1,000 a year to $6,904 a year, depending on the school.

The complaint, filed in federal court in Northern California, alleges the SEC, ACC, Big 12, Pac-12 and Big Ten are colluding because they have stated they would implement the cost-of-attendance stipend if they were not bound by collusive agreements with smaller, cash-strapped Division I schools.

The NCAA has so far been unable to pass a rule allowing schools to provide a $2,000 cost-of-attendance stipend. At the NCAA convention in January, the dialogue focused on giving the five major conferences autonomy to provide more benefits to athletes, including the stipend beyond the traditional athletic scholarship value of tuition, room and board, and books.

Alston’s suit seeks an injunction that enjoins the NCAA and the five major conferences from maintaining the present NCAA bylaw limiting financial aid to the currently-defined grant-in-aid value. The suit also seeks damages for the difference between the grants-in-aid awarded and the cost of attendance. Damages under antitrust law would triple, meaning this case could be worth more than $200 million.

The suit alleges the NCAA first imposed a collusive cap on grants-in-aid in 1956 and then again by removing a cost of attendance stipend in 1973.

“Ever since, the NCAA has periodically been ‘working’ on the issue, with no significant changes to the capped grant-in-aid limitations,” the suit states. “Despite the NCAA’s public comments concerning the needs of college athletes, the collusive cap on grants-in-aid remains in place.”

In 2008, the NCAA settled a federal antitrust lawsuit over the same issue of miscellaneous expenses. White v. NCAA saw the NCAA agree to make available $10 million above the standard athletic scholarship to athletes who played Division I-A football and in 16 Division I men’s basketball conferences between 2002 and 2008.

The settlement called for $10 million to be available over three years to qualifying athletes for reimbursement of “bona fide educational expenses” such as tuition, books, supplies and equipment. Also, the NCAA expanded the criteria it uses to provide money to athletes from a $218 million assistance fund.

National College Players Association Executive Director Ramogi Huma, who helped bring the lawsuit that ended in 2008, always regretted settling. He has said more substantial change could have occurred then if legal costs had not added up for the plaintiffs.

The Alston complaint, in many ways, picks up where White v. NCAA left off. The latest suit cites the NCAA Board of Directors’ 2011 approval of the cost-of-attendance stipend, only to see NCAA members override the proposal and reject it.

“The NCAA stated that members rejected the proposal because of a desire to control costs, and not for a pro-competitive objective,” the suit says. “However, under antitrust laws, a defendant’s desire to save costs — and thereby increase profits at the expense of other participants in the market — is not a legitimate justification for the grant-in-aid cap or any other horizontal agreement to restrict price or output.”

The Pac-12 could be especially impacted by the suit, which alleges the NCAA’s rules violate “the policy and spirit of the California’s Student Athlete Bill of Rights, as well as the policy and spirit of federal and California antitrust law.” The suit says the defendants are “directly at odds with California’s policy of protecting the well-being of California’s college athletes.”

The suit was filed by the law firm Hagens Berman Sobol Shapiro, which has been in settlement talks with the NCAA over concussions. The firm also represents former Nebraska and Arizona State quarterback Sam Keller in a lawsuit against the NCAA, Electronic Arts Sports and Collegiate Licensing Company over athletes’ names, images and likenesses that’s part of the Ed O’Bannon case. Alston previously filed a suit over the alleged use of his name and likeness.

“This new case gets at a fundamental issue having nothing to do with image rights, but everything to do with basic economic rights,” Steve Berman, one of the lead attorneys, said in a statement. “FBS football players should no longer be treated as second class citizens. They generate massive amounts of money for the schools and the NCAA, and these players should not have to struggle to make ends meet while they are surrounded by multi-millionaire coaches.”

The suit says that Alston, who played at West Virginia from 2009 until 2012, had to take out a $5,500 loan to cover the difference between his grant-in-aid and the actual costs of attendance. Alston signed a free-agent contract with the New Orleans Saints after college in 2013 and was released.

The difference in 2010-11 between a football team’s scholarship value and its university’s actual cost of attendance ranged from $80,920 to more than $520,795, according to the suit. Some coaches’ bonuses alone surpassed those shortfalls.

Then-Florida coach Urban Meyer could have financed the total scholarship shortfall for his entire team ($271,150) with only half of his $575,000 maximum bonus that year, leaving his $4 million salary intact. Taking just the increase in pay that Alabama coach Nick Saban received after the 2013 season would be enough to pay each Alabama scholarship football player $17,000 per year.

The complaint often cites the own words of NCAA President Mark Emmert, conference commissioners and college coaches who support the stipend. For instance, Emmert is quoted several times as saying there is little chance that cost-of-attendance payments provided by some schools would generate a competitive advantage.

“When you look at a student who’s being recruited by heavily funded institutions, those kids are rarely asking, ‘Do I go here, or do I go to an institution that has less money?'” Emmert said in 2011. “If students have the opportunity to go to that dominant athletic program, they’re going to go.”

The suit also cites arguments made by smaller-resourced universities that opposed the stipend in 2011. Boise State put it this way: “That tough decision [where to attend college] becomes more complicated when the student and his/her family have to factor in what school ‘offers the best deal’ versus where they may want to attend if all offers were for one year without the enticement of $2,000.”

An NCAA press release in December 2011 said the stipend rule was suspended because other schools “who objected to the legislation stated they can’t afford the additional expense but feel it will be necessary to find the money to pay for it in order to compete for recruits.” Those comments, the suit says, shows the primary motivation of NCAA schools in repealing the stipend rule was to reduce price competition and hold down their labor costs.

Said NCAA chief legal officer Donald Remy in a statement: “We just received a copy of the complaint and are evaluating it as it relates to similar cases filed by the very same plaintiffs’ counsel.”

The SEC, Big Ten, ACC, Pac-12 and Big 12 each declined to comment.

This article is republished with the permission of Jon Solomon and Al.com.


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