Alston Awards and the Evolving Landscape of NCAA Compensation

The world of college sports is undergoing a dramatic transformation, marked by new terminology and evolving rules regarding athlete compensation. Terms like "NIL" (Name, Image, and Likeness) and "Alston" have become increasingly prevalent, signifying a shift in the long-standing regulations that once governed the NCAA. These changes represent a significant departure from the traditional amateurism model, opening up new opportunities for college athletes to benefit financially.

Understanding NIL: Earning Potential Beyond the Field

NIL, short for Name, Image, and Likeness, refers to the earning opportunities now available to college athletes that were previously prohibited. Before July 1, athletes were restricted from engaging in marketing and endorsement deals, a stark contrast to other college students who could freely profit from their personal brand.

The push for NIL rights gained momentum through legal challenges and state legislation. A lawsuit involving former college athletes, including Oscar Robertson and Bill Russell, challenged the NCAA's restrictions on athlete compensation. While EA Sports and Collegiate Licensing Company settled their part of the suit for $40 million, the NCAA fought on. In 2014, a federal district court in California ruled that the NCAA's practices violated antitrust laws.

The NCAA appealed to the Supreme Court, which upheld the lower court's ruling. The NCAA was ordered to pay the plaintiffs $42.2 million in damages and court fees.

As legal battles unfolded, state legislatures began to challenge the NCAA's authority, introducing bills to allow college athletes in their states to benefit from NIL activities. Faced with mounting pressure and the threat of inconsistent state laws, the NCAA changed its bylaws to permit athletes to receive outside benefits from NIL activities.

Read also: Landmark NCAA Decision

However, certain restrictions remain in place. The NCAA prohibits using NIL benefits as recruiting inducements, and athletes cannot receive compensation directly tied to on-court performance. For instance, promising a payment for enrolling or staying at a particular school is not allowed, nor is offering bonus payments for specific achievements like scoring a certain number of points in a game.

The Alston Case: Education-Related Benefits

The term "Alston" originates from the Supreme Court case NCAA vs. Alston. The case began in 2014 with a lawsuit filed by former West Virginia running back Shawne Alston and former California basketball player Justine Hartman. They argued that the NCAA unfairly limited their earning potential. In 2019, District Judge Claudia Wilken of California, the same judge from the O'Bannon case, ruled that the NCAA's rules restricting education-based compensation violated antitrust laws.

The initial ruling focused on non-cash compensation for educational benefits related to an athlete's field of study, such as computers, science equipment, and musical instruments. It also allowed college athletes to receive payment for summer internships and expanded to include payments up to $5,980 per year based on academic achievement.

The NCAA appealed to the Supreme Court, which unanimously upheld the lower court ruling. This decision made the compensation allowable under NCAA rules, but the implementation is left to the discretion of individual schools. According to ESPN research, only a fraction of Football Bowl Subdivision schools have plans to provide the $5,980 payments.

Alston Awards: A Closer Look

Alston awards are financial awards provided directly by universities to athletes and are related to education. These awards could amount to approximately $24,000 over a four-year college career, with athletes potentially receiving up to $5,980 annually.

Judge Claudia Wilken ruled in Alston v. NCAA that the NCAA could no longer cap the amount of educational benefits a school can reward an athlete. Per her written conclusion, Wilken wrote: "Restricting non-cash education-related benefits and academic awards that can be provided on top of a grant-in-aid has not been proven to be necessary to preserving consumer demand for Division I basketball and FBS football as a product distinct from professional sports. Allowing each conference and its member schools to provide additional education-related benefits without NCAA caps and prohibitions, as well as academic awards, will help ameliorate their anticompetitive effects and may provide some of the compensation student-athletes would have received absent Defendants’ agreement to restrain trade".

Under the ruling, schools - if allowed by their conferences - could give athletes anything furthering their education, such as computers, musical instruments, science instruments and more.

Examples of Schools Providing Alston Awards

Several Division I schools have implemented Alston awards programs with varying criteria and amounts:

Akron: Provides Alston awards to scholarship men’s and women’s basketball players beginning in the fall of 2023.
Clemson: Awards were first available in the spring term in 2022. Athletes who receive at least a 3% athletic scholarship equivalency are eligible.
Colorado: Athletes who are academically eligible and actively participating in a sport can earn up to $2,000 per semester, such that the amount is proportional to an athlete’s scholarship equivalency. Athletes can earn up to $1,980 per year by attending programming events.
Illinois: All athletes, including walk-ons, are potentially eligible to receive Alston awards. However, Illinois’ policy is unique in that it allows its head coaches and sport administrators to determine which athletes on the roster are eligible if a program’s roster size is larger than its Alston awards allotment that’s established by Director of Athletics Josh Whitman. To receive an award, athletes must earn the retention and eligibility points from the calculation of their program’s Academic Progress Rate (APR).
Indiana: Alston awards are proportional to an athlete’s athletic scholarship, although walk-ons can receive $250 per semester.
Iowa: Scholarship athletes’ awards are tied to their scholarship equivalency status, such that full-scholarship athletes can receive up to $2,990 annually. The school’s policy allows athletes, including walk-ons who compete for at least three seasons, to earn up to $2,990 per year in deferred payments that are contingent upon graduation.
Mississippi State: Athletes can earn a variety of awards, including $2,000 per semester by remaining eligible and on a roster from one semester to the next. Athletes who graduate are guaranteed to earn $5,980 for that academic year.
Ole Miss: Alston awards are available to both scholarship and walk-on athletes. They can’t be in the Transfer Portal at the time the checks are issued. The university spent roughly $2.3 million on Alston awards during the 2021-22 school year.
Oregon: More than 97% of Oregon athletes earned Alston awards during the 2021-22 school year, including 71% who earned the maximum annual amount of $5,980. To receive an award, athletes must be an active member of their team’s roster at the beginning of a term and in good academic and student conduct standing at the end of the term.
UCLA: Alston awards are available to athletes who receive at least a 10% scholarship equivalency. Athletes must earn at least six points per quarter through a point system that involves eligibility and retention, plus their GPA, development and service.
UConn: Starting in the 2022-23 academic year, the BIG EAST is mandating the availability of Alston awards for men’s and women’s basketball players. Twenty-seven of UConn’s 28 men’s and women’s basketball players during the 2021-22 season earned the maximum allowable amount of $2,990 in the fall semester. Athletes simply must remain eligible from one semester to the next to receive the awards.
San Jose State: Athletes can receive $50 per event for attending up to four Beyond Sparta or community service events per semester. Teams can establish additional awards up to the maximum allowable amount of $5,980 per year.
Washington: Athletes who receive at least 25-percent athletics aid are eligible to receive Alston awards. They must maintain a 2.0 cumulative GPA, have passed at least six credits the previous quarter and met their percentage-toward-degree requirements.
Wisconsin: All athletes, including walk-ons, are eligible for Alston awards. However, for undergraduate students, the university withholds up to $5,000 of the maximum allowable annual amount of $5,980 until an athlete receives his or her degree. Undergraduate athletes can earn up to $25,000 upon graduation.

Collectives: Facilitating NIL Opportunities

Following the Alston decision, numerous "collectives" emerged to facilitate NIL opportunities for college athletes. These collectives are typically composed of donors, alumni, or investors who pool resources to compensate athletes through NIL deals.

Collectives operate independently of universities, ensuring compliance with NCAA rules that prohibit direct payment to athletes. Instead, these collectives connect athletes with businesses and individuals for endorsement deals, appearances, and marketing activities.

Read also: Eligibility for National Awards

Types of Collectives

Marketplace Collectives: These collectives create a platform for athletes to connect with businesses, acting as intermediaries to facilitate partnerships.
Donor-Driven Collectives: These collectives pool money from donors and create opportunities for athletes to earn money from that pool.
Dual Collectives: These collectives combine elements of both donor-driven and marketplace models.

Legal Structures of Collectives

Collectives typically operate under one of two legal structures:

501(c)(3) Nonprofits: These collectives are designed to operate for charitable purposes and are subject to stricter regulations.
Limited Liability Companies (LLCs): These for-profit collectives have more flexibility in their operations and can engage in a wider range of activities.

The Evolving Legal Landscape

The legal landscape surrounding NCAA athlete compensation continues to evolve. The House v. NCAA settlement, for example, mandates a significant payment to former Division I athletes and establishes a revenue-sharing model for the future. Additionally, the Johnson v. NCAA ruling has opened the door for athletes to be considered employees, potentially entitling them to minimum wage and overtime pay.

These legal challenges reflect a growing recognition of the rights and value of college athletes, pushing the NCAA towards a more equitable compensation model.

Challenges to the NCAA’s Amateurism Model

The Alston case challenged the NCAA's long-standing amateurism model, which prohibits direct payment to athletes beyond scholarships. The court found flaws with the NCAA’s definition of amateurism and found no evidence suggesting the demand for college sports would decrease with more educational benefits.

The Plaintiffs and Court called the NCAA a “monopsony” in the court document. A monopsony is defined as “a market condition in which there is only one buyer.” This differentiates from a monopoly because “a single buyer dominates a monopsonized market while an individual seller controls a monopolized market.”

The Plaintiffs argued the NCAA is a monopsony because athletes are forced to go to a Division I school. There are no other alternatives that combine education, good competition and exposure on television.

The Court accepted this view by the Plaintiffs, writing that “the NCAA’s Division I essentially is the relevant market for elite college football and basketball. And, because elite student-athletes lack any viable alternatives to Division I, they are forced to accept, to the extent they want to attend college and play sports at an elite level after high school, whatever compensation is offered to them by Division I schools, regardless of whether any such compensation is an accurate reflection of the competitive value of their athletic services”.

The NCAA attempted to argue that more compensation for players would result in less consumer demand for their product, but they did so poorly. Much of their argument was based on opinion and theory rather than study.

The NCAA’s experts argued that “amateurism is a key part of demand for college sports” and that “consumers value amateurism”. The NCAA suggested a large draw to the game is because players are viewed as students along with the love for a college and campus experience.

The Court also relied on surveys from the Plaintiffs, which showed that consumer demand has not decreased since 2015, when student-athletes were given greater compensation after the O’Bannon case. The Plaintiffs certainly brought forth a stronger case with their expert testimonies.

Judge Wilken made it clear that the NCAA needs to figure out what “amateurism” means exactly.

“Defendants have not pointed to any NCAA bylaws that define amateurism, pay for play, or pay. In the bylaws, ‘pay’ is defined only indirectly, by way of a list of forms of compensation that the NCAA permits and does not permit. A reading of these bylaws discloses no principled, articulable difference between amateurism and not amateurism, or ‘pay for play’ and not ‘pay for play.’ The only thing that can be inferred is that compensation constitutes ‘pay for play’ or ‘pay’ if the NCAA has decided to forbid it, and compensation is not ‘pay for play’ or ‘pay’ if the NCAA has decided to permit it”.

Integration of Athletes into the University Community

The NCAA doesn’t want student-athletes living luxuriously while other college students live on that “college budget.” On top of its argument that additional compensation would result in less demand and ruin amateurism, the NCAA suggested that athletes’ experience on campus would be different because they would not be integrated well into their environment.

On the surface, the argument seems feasible: The NCAA advocates for the “student experience” of its athletes, and by being paid thousands of dollars, those athletes would potentially stick out from their environment.

But in reality, the Plaintiffs shot that argument down rather easily. The Court agreed with the Plaintiffs. The status quo - a lack of compensation - actually causes student-athletes to be less integrated now because athletics programs spend exorbitant amounts on buildings, dorms and facilities to “wow” recruits.

The integration argument is also weak because there is already an economic separation between college students and a separation between athletes and non-athletes. People of all class levels are on a college campus and can still integrate.

Also, athletes naturally - whether the NCAA wants to accept it or not - are already separated from their non-athlete counterparts. Athletes have such different schedules from a non-athlete that sometimes their paths don’t cross or they simply can’t be involved with the same activities a non-athlete can be involved with.

Hubbard v. NCAA

On Tuesday, Carolina Panthers running back Chuba Hubbard and former Auburn track and field star Keira McCarrell sued the NCAA and the Power Five conferences in an Oakland federal court.

Hubbard v. NCAA draws not only from the Supreme Court’s ruling in Alston but also Judge Claudia Wilken’s 2019 ruling in Alston where she held NCAA rules prohibiting payment for education-related compensation violated antitrust law.

The case is led by a group of attorneys from Hagens Berman and Winston & Strawn, among them Jeffrey Kessler, who successfully argued for Alston before the Supreme Court.

The NCAA will answer Hubbard’s complaint and likely raise several defenses. One is that college athletes knew, and voluntarily accepted as a condition of the NCAA eligibility, the rules in place when they played from 2019 to 2021. Another is that the NCAA exercised its right to appeals during that period and believed it would prevail at the Supreme Court.

Hubbard’s attorneys anticipate the NCAA arguing, in sum and substance, that if college players wanted to be paid, they could have turned pro. That would be a misleading argument, the complaint suggests, since the NFL (three years out of high school), NBA (19 years old plus one year out of high school) and the WNBA (22 years old or college grad) have collectively bargained eligibility rules that bar entry until a period of time after high school has elapsed.

Hubbard v. NCAA joins a growing list of legal challenges for the NCAA and new president Charlie Baker to tackle.

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