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.