Should Division I Schools Vote to Overturn the NCAA’s Multi-Year Scholarship Measure?

Today, NCAA Division I institutions will begin voting to decide whether Division I schools can offer student-athletes multi-year scholarships.  In October, the NCAA’s Division I board of directors voted to allow schools the option to grant their student-athletes multi-year scholarships.  Previously, coaches and athletic departments could only offer student-athletes one-year renewable scholarships.  This practice was criticized by student-athletes and some members of the general public, after some student-athletes’ scholarships were not renewed for the course of their entire education.  However, the NCAA has frequently defended the practice, arguing that athletic scholarships are merit-based scholarships, and If a student-athlete doesn’t perform at the level expected, then the school should have the option to not renew the scholarship.

Numerous schools voiced disapproval of the multi-year scholarship measure.  Largely, this disapproval was based upon these schools’ findings that the measure would provide athletics departments with bigger budgets with an additional bargaining chip to sway recruits’ commitments.  Essentially, dissenters argue that the measure would create an unfair balance of power, since some schools would be able to offer multi-year scholarship offers, whereas schools with smaller budgets would be unable to present the same multi-year scholarship offer.  Opponents argue that this would create a recruiting windfall for wealthier athletic departments, as a recruit would be more likely to sign a National Letter of Intent with a school offering a multi-year scholarship, as opposed to a school offering a renewable one-year scholarship.  The strong opposition to the measure ultimately led to this week’s vote.  If 5/8 of Division I members vote to overturn the proposal, Division I schools will return to the single-year scholarship rule and will not be allowed to offer multi-year scholarships. 

The NCAA board of director’s initial approval of the multi-year scholarship plan arguably was put into motion by a 2010 Department of Justice antitrust investigation into the single-year scholarship rule.  However, neither substantial legal movement nor recommendations were made by the Department of Justice is this regard.

Also in 2010, the NCAA faced an antitrust lawsuit filed by former Rice football player, Joseph Agnew, after his football scholarship was not renewed.  The lawsuit filed by Agnew against the NCAA was ultimately dismissed with prejudice (meaning that he cannot refile it) in September 2011 by the United States District Court for the Southern District of Indiana.  The court granted the NCAA’s motion to dismiss the case, because Agnew’s amended complaint “. . . failed to allege anti-competitive effects on a discernable market.”  

Given the court’s rationale for dismissing Agnew’s amended complaint, proponents of multi-year scholarships may say that the lawsuit only failed because of pleading errors on the part of Agnew’s attorney.  Thus, they would argue that single-year scholarships in fact violate antitrust law, and a properly plead complaint would demonstrate such. 

While that argument may be raised by future plaintiffs seeking to prove that single-year scholarships violate antitrust law, future plaintiffs were arguably given another tool when the NCAA granted Division I institutions the right to offer multi-year scholarships.  Previously, the NCAA dictated that schools could only offer single-year scholarships.  Thus, even though it had the resources to, School A’s top football program could not offer a student-athlete a multi-year scholarship.  Similarly, School B, a regional school with lesser resources, only offered a renewable single-year scholarships during the recruiting process.  Thus, because the former rule was applied equally across the board, it was arguably more difficult for student-athletes to assert their opportunities for receiving the most competitive scholarship offer were thwarted by the single-year scholarship rule.  This is due to the fact, that under the rule, the only “compensation” available to student-athletes was single-year, renewable scholarships.

With the adoption of the multi-year scholarship plan by the NCAA board of directors last fall, that argument likely flew out of the window.  This is due to the fact, that some Division I football coaches made multi-year scholarships part of their recruiting package this year.  Reports indicate that top football programs, including, Auburn and Ohio State, offered recruits from the class of 2012 multi-year scholarships.  In offering multi-year scholarships, the point has been proven that there is competition for student-athletes’ on-field performance outside of single-year, renewable scholarships.  Namely, student-athletes this year found that they could also receive multi-year scholarships in exchange for signing a National Letter of Intent with a given school. 

Should Division I members vote to rescind the NCAA’s multi-year scholarship plan, the multi-year scholarship offerings which have transpired may be used by future plaintiffs to argue that a single-year scholarship rule violates federal antitrust law.  Because multi-year scholarships have now been rewarded, if the NCAA membership revokes the multi-year scholarship plan, potential plaintiffs have a factual basis to argue that their ability to compete for the best scholarships available to them has been harmed.  Now, future plaintiffs can point to instances where certain schools were willing to offer multi-year scholarships over single-year scholarships.  Clearly, a multi-year scholarship is of greater benefit to a student-athlete.  As such, if a school is willing to offer multi-year scholarships, but is not allowed to because NCAA membership decides to revoke the multi-year scholarship plan, future plaintiffs may potentially assert successful antitrust claims.

When determining whether to rescind the NCAA’s multi-year scholarship plan, voting Division I members should consider how the legal nature of the conversation has changed as a result of some member institutions offering multi-year scholarships this year, with the approval of an NCAA measure.  These schools must consider if this factual basis is such that in the future, plaintiffs may be able to successfully assert antitrust claims against the NCAA for a single-year scholarship rule.  If they find that it is, Division I membership should think twice before voting to overturn the NCAA board of director’s measure.

5 thoughts on “Should Division I Schools Vote to Overturn the NCAA’s Multi-Year Scholarship Measure?”

  1. When the NCAA and various colleges point to “getting a degree” as the primary compensation for athletes, how in the world can they say a scholarship is “performance based” if the performance they reference is on field performance. If you want to cut athletes because they did not live up to “your” performance standards on the field, you must compensate them for “your” mistake just as is done with fired coaches. The NCAA and colleges will then have to admit athletes are employees and they are indeed running a business. That will lead to me…
    As for smaller, less endowed, institutions claiming a multi-year scholarship gives other better financed instructions a recruiting advantage, this only further points to the business aspect of sports (football, basketball) in which players can be cut for non-performance on the field/court. Scholastic standing has not been discussed in terms of performance because even with a multi-year scholarship (misnomer, it should be financial package) if an athlete fails in school, the scholarship is rescinded. That’s also the way it is on the field/court but to so say would be a tacit admission of the athletes being employees and the schools and NCAA primarily focused on making money, not on the welfare of the athlete.
    The ball is rapidly unraveling! The die is cast and the battle will soon begin publicly. Truth won’t remain in the darkness forever, it must come to light!!!

  2. Stone, you make an provocative argument. I just wish I knew what it was. The employee element, though, is the key to the “ball unraveling.” Alicia is concentrating on the antitrust aspect and how the multi-year scholarship rule has “let the cat out of the bag.”

    What goes unexplained is how single year scholarships,in and of themselves, violate antitrust law. Many, if not most athletes, believe they are receiving a four year ride when signing their letter of intent. It would seem there are also issues that fall under contract law. If the single year limitation is not fully disclosed and understood, the principle of “good faith” may be violated. I’m surprised no one has followed this avenue of litigation as opposed to more complicated antitrust cases.

    But even if the multi-year plan stands, will the school stil not have the same leverage as under the single year one? Poor athletic or scholastic performance would still be grounds for termination I would think. Career ending injuries may have implications under the multi-year plan as opposed to year by year renewal. Alicia, are there any resources available that would clarify these situations?

  3. Jeff,

    I don’t know how “anti-trust” is a specific issue here although college football is a monopoly for athletes between 18 and 20 years of age. The point I was trying to make (unsuccessfully says you) is that the employee vs. amateur argument is front and center, not anti-trust. Anti-trust will come into play later.

    The only reason colleges can get away with “firing” athletes for poor performance without consequence is because they are not considered employees and essentially have limited or no rights to negotiate. If they were considered employees then standards which determine success and failure would have to be in place as well as multi-year contracts (agreements including scholarships). However, like any other professional sports organization, it’s not a question of competence when it comes to athletic talent; it’s who is more competent according to coaches.

    On the academic side, if a player’s academic performance falls below the levels of remaining eligible or successfully progressing towards a degree (in 6 years according to NCAA measures) he can be cut. How does one measure this on the athletic side? Would a multi-year scholarship guarantee a player rights? Would it be the material for a lawsuit?

    So, Jeff, a player can be cut after his freshman, sophomore, junior or senior years if a team decides they have someone they like better. What about the school trading his “skills” for his education (which takes at least 3 to 5 years)? That’s what they are saying is his compensation. Shouldn’t one school be responsible for making sure he gets his benefit from his pledging his skillset? If he gets injured, the school still should pay for that “education” they are promising these kids. But they will also have to “pay” the football player for his role in helping the school make millions.

    What I’m ultimately saying is that, for football, a union is inevitable and will happen in college football within the next two years. I’m arguing for player advocacy, without this colleges may decide whether players will be cut without compensation or other consideration of any kind. Players are employees, it’s not even a well kept secret. The unions will serve football first and shortly after, basketball. It matters less which colleges and universities are “making a profit” in their calculations or which will be disadvantaged when football players begin getting paid for their work.

    The end result will be that those teams that can pay will get the best players, those that can’t won’t. But isn’t that how it is today?

    You might see this as a question of anti-trust or some other concern for the haves and have-nots but I see it as it really is…a play for money and football players are getting short changed!

  4. Jeff,

    Single year scholarships are the front end of a potential “penalty” if they are exercised. When a player is cut for whatever reason from a D1A program, s/he will not be eligible at another D1A program for at least a year and in some cases two years(Intra-conference). This is restraint of trade since the player would have been given their release (cut, fired etc).

    That may be part of what Alicia is saying.

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