Student-Athletes Strike at Heart|of NCAA Scholarship Restrictions

SAN FRANCISCO (CN) – In a federal antitrust class action, college athletes claim the NCAA and its member colleges “unlawfully conspired to maintain the price of bachelor’s degrees for NCAA student-athletes at artificially high levels,” by agreeing never to offer multi-year athletics scholarships, and capping the number of athletics scholarships that schools can offer.

      “These prohibitions are not necessary to protect the amateur status of the NCAA student-athletes; rather, they only serve the selfish interests of the NCAA and its member institutions,” and cost student athletes “tens of millions” of dollars, the students say.
     The complaint states: “This suit arises out of a blatant price-fixing agreement between member institutions of the National Collegiate Athletics Association (‘NCAA’). For years, NCAA member institutions have unlawfully conspired to maintain the price of bachelor’s degrees for NCAA student-athletes at artificially high levels by (i) agreeing never to offer student-athletes a multi-year discount on the price of a bachelor’s degree and (ii) artificially reducing the total number of available athletics-based discounts [scholarships] by imposing artificial caps on the number of athletics-based discounts that it’s member institutions can offer. These athletics-based discounts are referred to as ‘grants-in-aid’ by the NCAA or ‘athletic scholarships.
     “These prohibitions are not necessary to protect the amateur status of the NCAA student-athletes; rather, they only serve the selfish interests of the NCAA and its member institutions. The NCAA and its member institutions know that in a competitive market, they would be forced to offer multi-year athletics-based discounts to student-athletes and would be forced to dramatically increase the overall supply of athletics-based discounts. …
     “By unlawfully agreeing to limit the number of athletics-based discounts that a member institution can grant in any given year, the NCAA and its member institutions have ensured that student-athletes in the class pay tens of millions more for bachelor’s degrees than they would pay in a competitive market.”
Because the NCAA limits the number of athletics scholarships that colleges can offer, many athletes have to pay full or partial tuition to attend a top university, “or are forced to sign with lower-caliber programs that have not reached their ‘scholarship limits,'” the players claim.
     Lead plaintiff Joe Agnew says he chose to play football at Rice University “in large part as a result of the sizeable athletics-based discount promised to him by the university. Specifically, Rice University promised him 100% discount on the price of one year’s tuition for a bachelor’s degree.”
     But Agnew’s scholarship was not renewed for his junior year after he suffered shoulder and ankle injuries during games. He appealed the nonrenewal and won another full year of tuition, but had to pay for his senior year out of pocket.
     “In order to receive his degree, Mr. Agnew will be forced to continue to pay tuition and room and board. In a competitive market, Mr. Agnew would not have incurred these tuition and room and board payments because he would have received a multi-year athletic discount sufficient to cover the entire cost of his bachelor’s degree,” the complaint states.
     “NCAA rules permit Division I and Division II schools to offer athletics-based discounts but these discounts are governed by a Byzantine set of rules that govern everything from how to account for ‘Sunday evening meals’ that are not provided by the ‘regular eating facility used by a student-athlete’ to how to account for ‘benefits’ received by student-athletes who participate in the AmeriCorps,” according to the complaint.
     “Most notably, the NCAA imposes highly restrictive caps on the total amount of athletics-based discounts that can be granted to student-athletes. Specifically, the NCAA limits the number of 100% athletics-based discounts that a school can grant each year. The precise number varies by division and sport. For example, the NCAA prohibits a Division I institution from offering more than 13 basketball related 100% yearly discounts or 11.7 baseball related yearly discounts.
     “In some sports, the NCAA permits these 100% discounts to be distributed among more than one student. For example, in any given year, a Division I institution could offer 11 baseball players a ‘free’ year towards their bachelors degree or it could offer 22 baseball players a one-year 50% discount.”
     The complaint adds: “Contrary to the NCAA’s self-serving reports, the bottom line is that the NCAA and its member institutions make millions of dollars from collegiate athletes.” For instance, the class cites reports that former NCAA President Myles Brand was paid $935,000 in 2007.
     The college athletes demand treble damages and punitive damages for violation of the Sherman Act, and a court order enjoining the NCAA from capping the number of multi-year scholarships available to players.
     They are represented by Shana Scarlett with Hagens Berman of Berkeley.

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