Leveling the Playing Field or Limiting It? Antitrust Challenges to NCAA’s Proposed Revenue Sharing Cap

In recent years, the landscape of collegiate athletics has undergone unprecedented transformation. After decades of rigid restrictions on athlete compensation, legal challenges have forced the National Collegiate Athletic Association (NCAA) to reevaluate its long-standing model of amateurism. One of the most significant of these challenges occurred in 2020, when two collegiate athletes filed House v. NCAA, alleging that the NCAA’s NIL restrictions violated Section 1 of the Sherman Act by fixing prices and engaging in a group boycott. Just a month after House v. NCAA, two additional antitrust cases — Hubbard v. NCAA, and Carter v. NCAA — were filed, with plaintiffs similarly arguing that the NCAA’s restrictions on performance-related benefits violated Section 1 of the Sherman Act, constituting an unlawful restraint of trade. The plaintiffs contended that these limitations on athletes' compensation for their athletic performance were anti-competitive, as they unfairly prevented athletes from receiving financial rewards tied to their success in collegiate sports. During that same time period, Alston reached the Supreme Court where it was ruled that the NCAA’s restrictions on education-related benefits for student-athletes violated antitrust law under Section 1 of the Sherman Act [1]. Justice Kavanaugh’s concurring opinion questioned the legality of the NCAA’s justification for limiting athlete pay, stating that "the NCAA is not above the law.” [2] He signaled that other NCAA-imposed pay restrictions—such as those on direct compensation—may warrant future antitrust challenges. In 2023, House, Carter, and Hubbard were consolidated into In re College Athlete NIL Litigation. On May 23, 2024, the parties agreed to settle, which led to a settlement agreement to resolve the claims. The settlement introduced a 10-year revenue-sharing model that allows NCAA member institutions to share up to 22% of annual Power Five conference revenue with athletes, which could amount to $21 million annually by 2025–2026 [3]. Schools that choose to participate will receive a portion of this conference revenue to distribute to their athletes, with discretion over how payments are allocated, but total payouts across all schools cannot exceed the 22% cap. The proposed settlement allows student-athletes, starting in the fall of 2025, to opt into the settlement agreement where they can receive a portion of the revenues generated by their universities and be subject to NIL review. On November 3, 2024, the proposed settlement received preliminary approval from Judge Claudia Wilken in the U.S. District Court for the Northern District of California and now awaits final approval under the Ninth Circuit’s jurisdiction [4]. As of today, Judge Wilken has granted final approval of the House v. NCAA settlement, allowing revenue-sharing to begin on July 1, 2025, with schools now able to distribute up to $20.5 million annually to student-athletes under the new model for this 2025-2026 academic year. At first glance, the settlement may appear to mark a meaningful advancement in the movement toward athlete compensation. However, its structural design raises novel and significant antitrust concerns. By embedding a fixed revenue-sharing ceiling across all participating schools, the agreement introduces a coordinated compensation limit that is categorically distinct from the NIL and education-related restrictions previously considered by the courts. Rather than prohibiting discrete categories of benefits, the settlement imposes a uniform cap on aggregate compensation, functioning as a de facto salary cap, without collective bargaining or union representation. This horizontal restraint is not merely regulatory but contractual and structural, embedded into a binding settlement agreement across competitors in a labor market. Importantly, while the Supreme Court in Alston applied the Rule of Reason to invalidate education-related restrictions, it did so in the absence of a formalized, market-wide pay ceiling. The 22% cap represents a different kind of restraint: one that eliminates price competition altogether by fixing the upper limit of athlete pay across all institutions. This cap operates not through passive regulatory policy but through active coordination among the largest market participants, backed by judicial enforcement. This article argues that the 22% cap is not simply an extension of prior NCAA restrictions but a distinct form of coordinated price-fixing that warrants separate antitrust scrutiny. Unlike the education-related limits addressed in Alston, this cap imposes a uniform, cross-market ceiling on athlete compensation without collective bargaining. Under the Rule of Reason framework—requiring courts to evaluate anticompetitive effects, procompetitive justifications, and less restrictive alternatives—such horizontal restraints are subject to heightened scrutiny. As this article contends, the 22% cap may ultimately function as an unreasonable restraint of trade that suppresses competition in the college athlete labor market.

Section 1 of the Sherman Act prohibits “every contract, combination... or conspiracy, in restraint of trade or commerce among the several States.” [5] While courts have recognized that not all agreements in restraint of trade are automatically unlawful, those that suppress competition in a meaningful way remain subject to antitrust scrutiny. Settlement agreements, even if court-approved, are still subject to antitrust scrutiny if they result in anticompetitive effects. In United States v. Singer Manufacturing Co., the Supreme Court ruled that settlement agreements designed to monopolize a market violated the Sherman Act [6]. Similarly, in FTC v. Actavis, Inc., the Court made clear that even court-approved settlements—such as pay-for-delay agreements—are not immune from antitrust review if they produce anticompetitive effects [7]. The House v. NCAA settlement is no exception. Although it seeks to resolve pending litigation, its core provision, a 22% cap on athlete revenue sharing, functions as a horizontal agreement among competitors to limit compensation. In Catalano, Inc. v. Target Sales, Inc., the Supreme Court defined price-fixing to include agreements among competitors to fix maximum prices, noting that such restraints are “just as much an illegal restraint of trade as one fixing minimum prices.” [8] The 22% cap, by restricting the amount any school may allocate to athletes, may fall within this category. However, in the context of the NCAA, courts have declined to apply the per se rule. In NCAA v. Board of Regents, the Supreme Court recognized that certain horizontal agreements among NCAA members may be necessary to preserve the unique character of intercollegiate athletics. As a result, restraints imposed by the NCAA are generally evaluated under the Rule of Reason rather than condemned automatically. This flexibility, though, does not place the NCAA beyond the reach of antitrust law. While certain professional sports leagues have historically benefited from limited antitrust exemptions—such as Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs and Brown v. Pro Football, Inc.—those precedents do not shield the NCAA from antitrust scrutiny, particularly when it comes to the college athlete labor market. Unlike professional sports leagues, where collective bargaining agreements between players’ unions and leagues govern salary structures, the NCAA operates without any form of collective representation for athletes. Student-athletes lack a union and have no formal say in the terms of compensation imposed by member schools. As the Supreme Court reaffirmed in Alston, the NCAA remains subject to traditional antitrust scrutiny, particularly when its rules impact the college athlete labor market. The 22% cap introduced in the House settlement is not simply a continuation of past NCAA restrictions. It is a structurally distinct, enforceable ceiling on compensation that spans the entire Power Five. It is also not the product of collective bargaining. While framed as a progressive reform, the cap operates as a coordinated limitation on how much schools can pay athletes, thereby eliminating price competition in a multi-billion-dollar labor market. Given this structure and the absence of any collectively negotiated agreement on the part of athletes, a Rule of Reason analysis is more appropriate. Under the Rule of Reason, Courts conduct a structured, burden-shifting analysis to determine whether a particular restraint promotes or suppresses competition. In Ohio v. American Express Co., the Supreme Court articulated the modern framework, requiring courts to first assess whether the restraint has a substantial anticompetitive effect in a relevant market; if so, the burden shifts to the defendant to offer procompetitive justifications [9]. The plaintiff may then rebut those justifications by showing that the same objectives could be achieved through less restrictive means or that the harm to competition outweighs any asserted benefits. This approach reflects the Court’s long-standing view that not all horizontal restraints are inherently unlawful, particularly when they may generate efficiency or consumer benefits. However, such benefits must be proven, not presumed. While some restraints may warrant per se condemnation, others, like joint ventures or coordinated conduct in complex markets, must be evaluated in their full competitive context. In Texaco Inc. v. Dagher, the Court emphasized that even agreements among competitors can be lawful if they represent a legitimate integration of economic activity rather than a naked price-fixing scheme [10]. Accordingly, the Rule of Reason provides the appropriate lens to evaluate complex arrangements like the NCAA’s 22% cap, which operates as a horizontal agreement among competitors but is asserted to serve broader institutional goals. Within this framework, the NCAA’s regulations can sometimes promote competition among member institutions. As a result, a thorough review of the justifications for the 22% revenue-sharing cap is essential to determine whether it encourages or hinders competition. Under the Rule of Reason, courts apply a three-step, burden-shifting framework to determine whether a restraint violates Section 1 of the Sherman Act. As the Supreme Court articulated in Ohio v. American Express Co., the plaintiff “has the initial burden to prove that the challenged restraint has a substantial anticompetitive effect that harms consumers in the relevant market. If the plaintiff carries its burden, then the burden shifts to the defendant to show a procompetitive rationale for the restraint. If the defendant makes this showing, then the burden shifts back to the plaintiff to demonstrate that the procompetitive efficiencies could be reasonably achieved through less anticompetitive means.” [11] The Rule of Reason framework begins with the plaintiff’s burden to establish that the challenged restraint produces a substantial anticompetitive effect. In this case, the 22% revenue-sharing cap is likely to satisfy that threshold. By setting a fixed maximum on how much compensation schools can provide to athletes, the cap functions as a form of price-fixing, suppressing wages across the entire Power Five labor market. This type of horizontal restraint restricts price competition and artificially depresses athlete compensation, which courts have long recognized as a hallmark of anticompetitive conduct under the Sherman Act. Price-fixing, as established in Catalano, Inc. v. Target Sales, Inc., refers to agreements that set maximum, minimum, or uniform prices, which are per se illegal under the Sherman Act because they artificially suppress market forces [12]. While most price-fixing agreements are treated as per se violations, the Supreme Court in NCAA v. Board of Regents determined that the NCAA’s unique structure requires the application of the Rule of Reason. The plaintiffs will argue that this revenue-sharing model closely mirrors salary caps found in professional sports, which have historically reduced compensation and stifled competition. In Mackey v. NFL, the court struck down the NFL's Rozelle Rule, finding that it artificially restrained player mobility and compensation, making it harder for players to secure competitive salaries [13]. Similarly, the 22% revenue-sharing cap places an artificial ceiling on what universities can offer athletes, stifling competition and limiting what athletes can earn for their contributions. Ultimately, the plaintiffs are likely to establish that the 22% revenue-sharing model functions as a form of price-fixing, reducing both athlete compensation and competition between schools. Courts next consider whether the defendant can offer a legitimate procompetitive justification for the restraint. The NCAA has historically defended its compensation limits by appealing to the preservation of amateurism and the promotion of academic integrity. While these justifications have been credited in the past, they are unlikely to be sufficient to support the 22% revenue-sharing cap. The NCAA is expected to argue that the 22% revenue-sharing cap promotes competition in the market for amateur college athletics. Its position, consistent with its arguments in NCAA v. Alston, is that salary caps are necessary to preserve the defining feature of college sports: the amateur status of its athletes. In doing so, the NCAA claims to offer a product that is distinct from professional sports and that this distinction is a key driver of consumer interest. Framed this way, the 22% cap is not simply a wage restriction. It is a mechanism to preserve the competitive appeal of the NCAA’s product. This argument draws historical support from NCAA v. Board of Regents, where the Court stated that “[t]he preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act.” [14] And in Alston, the NCAA again emphasized that certain compensation limits are necessary to maintain the character of college sports as a unique market offering [15]. However, the Court in Alston placed clear limits on the NCAA’s reliance on amateurism as a catch-all defense. While it acknowledged that the NCAA may pursue product differentiation, the Court made clear that restraints still require evidentiary support and cannot be justified by tradition or branding alone. More importantly, the Court rejected the idea that competition in one market can excuse anticompetitive conduct in another. This principle is rooted in United States v. Philadelphia National Bank, where the Court held that “anticompetitive effects in one market [cannot] be justified by procompetitive consequences in another.” [16] The Court reaffirmed this rule in United States v. Topco Associates, applying it squarely within the Sherman Act context. Even if the NCAA asserts that the cap enhances consumer demand in the “amateurism” market, this justification cannot excuse wage suppression in the athlete labor market. The two markets, if treated as distinct, must be evaluated independently. And if they are not distinct, then the NCAA’s argument collapses into a form of self-referential price-fixing. Moreover, the 22% revenue-sharing cap is categorically different from the education-related benefit restrictions upheld in part in Alston. While the restrictions in Alston involved in-kind academic aid, the 22% cap directly limits cash compensation from media revenue, one of the most valuable sources of institutional athletic income. The structural form of the cap also matters: it is a uniform ceiling imposed across competitors, not a category-based limitation subject to individual school discretion. This transforms the restraint from a regulatory guideline into a horizontal wage-fixing agreement that fundamentally alters how schools compete for athlete services. In short, the NCAA’s procompetitive justification for the 22% cap is unlikely to withstand scrutiny. It either relies on impermissible cross-market reasoning or fails to demonstrate that the cap directly enhances competition in any relevant market. Without concrete evidence linking the restraint to a legitimate competitive benefit, the NCAA’s defense is unlikely to meet the burden required under the Rule of Reason. Next, the NCAA may contend that the 22% revenue-sharing cap is necessary to preserve competitive balance in college athletics. By limiting how much revenue institutions may share with athletes, the cap ostensibly prevents wealthier schools from dominating recruitment through financial incentives. This justification draws support from Board of Regents, where the Supreme Court recognized that maintaining competitive balance is a legitimate goal that distinguishes college sports from professional leagues. But that reasoning fails to withstand scrutiny in the current landscape. Competitive balance in college sports is already deeply compromised by disparities in institutional wealth, recruiting resources, donor networks, and facilities. Revenue gaps between Power Five schools and smaller Division I programs are substantial and expanding. In O’Bannon v. NCAA, the Ninth Circuit questioned whether compensation restrictions like these truly promote balance, observing that “the NCAA’s restrictions on compensation had not been shown to promote competitive balance.” [17] The Court emphasized that the NCAA presented no meaningful evidence linking pay limits to improved parity among institutions. More fundamentally, the analogy between NCAA-imposed compensation caps and professional sports salary caps is flawed. In the professional context, salary caps are the product of collective bargaining agreements (CBAs), negotiated between unions and league ownership to balance labor rights with league-wide stability. In Brown v. Pro Football, Inc., the Supreme Court upheld such salary caps only because they arose out of the collective bargaining process [18]. No such process exists in the NCAA. College athletes have no union representation and no opportunity to negotiate compensation structures. Without a CBA, the 22% cap resembles unilateral wage suppression rather than a mutually agreed-upon competitive safeguard. Moreover, even assuming that some compensation limits might promote consumer interest in balanced competition, the NCAA must substantiate that claim with evidence. In Alston, the Supreme Court made clear that broad appeals to fairness or amateurism are insufficient: “[T]he NCAA must provide a factual basis for its procompetitive justifications.” [19] The decision signaled that unsupported assertions—especially those contradicted by market realities—cannot justify anticompetitive restraints under the Rule of Reason. While Alston addressed restrictions on education-related benefits and limited forms of non-cash aid, the 22% revenue-sharing cap is categorically different in both form and function. The Alston restrictions concerned discrete benefits tied directly to academic performance, such as post-eligibility scholarships and computers. By contrast, the 22% cap operates as a fixed, cross-market compensation ceiling applied to institutional revenue sharing from media rights—the most valuable commercial asset in modern college athletics. This is not a marginal policy tweak; it is a structural restraint that eliminates the possibility of price competition across the most powerful segment of NCAA athletics. Furthermore, the 22% cap did not emerge through internal NCAA rulemaking but through a litigation settlement designed to preempt judicial review. That procedural distinction matters. The Court in Alston reviewed a record developed at trial and evaluated actual evidence regarding the NCAA’s restraints. In contrast, the House settlement imposes a fixed compensation limit through a negotiated resolution, without the benefit of a trial record or full adversarial testing of its justifications. As a result, this cap demands independent antitrust scrutiny, particularly given its sweeping application and its potential to entrench horizontal wage coordination across the most lucrative schools in college sports. If the NCAA hopes to treat the 22% cap as analogous to the Alston restrictions, it must show that the restraint is narrowly tailored, grounded in evidence, and directly tied to procompetitive outcomes in a relevant market. In the absence of those showings, there is strong reason to believe that this cap warrants—and fails—its own Rule of Reason analysis. With the NCAA’s procompetitive justifications examined, the final prong of the Rule of Reason analysis considers whether those objectives could be achieved through substantially less restrictive alternatives. As the Supreme Court explained in Ohio v. American Express Co., once a defendant establishes a procompetitive rationale for the restraint, the burden shifts back to the plaintiff “to demonstrate that the procompetitive efficiencies could be reasonably achieved through less anticompetitive means.” This inquiry does not require plaintiffs to propose a perfect alternative—only a substantially less restrictive one that achieves the same competitive benefits without suppressing compensation to the same degree. To satisfy the final prong of the Rule of Reason framework, plaintiffs must demonstrate that the NCAA’s procompetitive objectives—such as preserving amateurism or competitive balance—can be achieved through substantially less restrictive means. These alternatives must operate within the same market as the restraint and must not themselves violate antitrust law. The 22% cap, which acts as a horizontal agreement among competitors to limit compensation, cannot be justified if those same goals can be met without such a broad wage-fixing mechanism. A viable alternative is to allow individual institutions to determine athlete compensation policies without any coordinated, cross-market ceiling. This would restore market competition in the athlete labor market while preserving flexibility for schools that wish to maintain an “amateur” model. So long as schools act unilaterally and not by agreement, this model does not run afoul of Section 1 of the Sherman Act. The Supreme Court has consistently held that price-fixing among horizontal competitors—whether maximum or minimum—is per se illegal [20]. In Arizona v. Maricopa County Medical Society, the Court reaffirmed that agreements among competitors to set price ceilings on compensation, even when intended to benefit consumers, constitute unlawful restraints of trade [21]. Similarly, in Catalano, Inc. v. Target Sales, Inc., the Court concluded that maximum price agreements are “just as much an illegal restraint of trade as one fixing minimum prices.” [22] Applying these precedents, a system in which each school independently determines athlete pay avoids the antitrust infirmity that arises when institutions jointly impose a wage ceiling. If the NCAA believes that amateurism cannot survive without coordinated limits on athlete pay, the appropriate remedy is not private collusion—it is public legislation. Congress has the authority to grant narrow antitrust exemptions where it deems coordination necessary to serve legitimate policy interests. In* Flood v. Kuhn,* the Supreme Court recognized baseball’s unique antitrust exemption, though criticized, based on longstanding congressional inaction [23]. More recently, courts and legislators have acknowledged that professional sports leagues operate under distinct legal frameworks that sometimes require limited immunity. The NCAA could pursue similar relief through legislative channels. Multiple proposals have already surfaced in Congress to provide the NCAA with conditional antitrust protection, contingent upon athlete welfare standards, education guarantees, or regulatory oversight. A statutorily defined exemption would allow for coordination without violating the Sherman Act, offering a path forward for preserving amateurism within legal bounds. The most ideologically distinct alternative is a free market model—one that removes caps entirely and allows athlete compensation to reflect market forces. This approach clashes directly with the NCAA’s narrative that amateurism is a unique and valuable market structure. The NCAA may argue that unrestricted compensation would destroy the amateur identity of college sports, which is precisely what gives it consumer appeal. In this view, the amateurism “product” depends on artificially low wages. But this defense is legally flawed. The Supreme Court has repeatedly held that defendants cannot justify anticompetitive conduct in one market by appealing to procompetitive effects in a different market. In United States v. Philadelphia National Bank, the Court ruled that “anticompetitive effects in one market [cannot] be justified by procompetitive consequences in another.” [24] That principle was reaffirmed in United States v. Topco Associates, which emphasized that cross-market balancing is impermissible in Sherman Act analysis [25]. Even if one accepts the premise that “amateurism” is a distinct product market, it cannot be preserved by suppressing compensation in the athlete labor market. Doing so amounts to using one market’s consumer preference to justify another market’s cartel behavior. As NCAA v. Alston confirmed, restraints must be tied to actual evidence and narrowly tailored to serve their procompetitive ends. And as the Court in California Dental Association v. FTC held, even restraints in sensitive or complex markets require a factual basis—not just theoretical appeal. Ultimately, less restrictive alternatives—ranging from institutional discretion to legislative intervention—show that the NCAA’s goals can be met without resorting to a coordinated wage cap. Under the Rule of Reason, the 22% revenue-sharing cap cannot be sustained when viable, lawful, and less anticompetitive paths remain available.

The 22% revenue-sharing cap in the House v. NCAA settlement constitutes an unreasonable restraint of trade under Section 1 of the Sherman Act. As a coordinated wage ceiling among competitors, it resembles the type of horizontal price-fixing condemned in Socony-Vacuum and Catalano, and it lacks the evidentiary support required under the Rule of Reason. Justifications based on preserving amateurism improperly rely on cross-market reasoning, which the Court rejected in Philadelphia National Bank and Topco. If coordination is truly necessary, the remedy lies in congressional exemption, not private agreement. Without such authority, the cap suppresses competition in the college athlete labor market and fails antitrust scrutiny.

[1] NCAA v. Alston, 141 S. Ct. 2141 (2021). [2] Alston, 141 S. Ct. 2141, 2166–67 (2021) (Kavanaugh, J., concurring). [3] In re College Athlete NIL Litigation, No. 4:20-cv-03919-CW, Doc. 535-2, at 61 (N.D. Cal. Sept. 26, 2024) (Amended Stipulation and Settlement Agreement). [4] Ohio v. American Express Co., 138 S. Ct. 2274, 2284–85 (2018). [5] Sherman Antitrust Act, 15 U.S.C. § 1. [6] United States v. Singer Manufacturing Co., 374 U.S. 174 (1963). [7] FTC v. Actavis, Inc., 570 U.S. 136 (2013). [8] Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 647 (1980). [9] Ohio, 138 S. Ct. 2274, 2284–85 (2018). [10] Texaco Inc. v. Dagher, 547 U.S. 1, 5–6 (2006). [11] Ohio v. American Express Co., 585 U.S. 529, 544 (2018). [12] Catalano, 446 U.S. 643, at 647 (1980). [13] Mackey v. NFL, 543 F.2d 606 (8th Cir. 1976). [14] National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma, 468 U.S. 85, 120 (1984). [15] NCAA v. Alston, 594 U.S. 159, 178–82 (2021). [16] United States v. Philadelphia National Bank, 374 U.S. 321, 370 (1963). [17] O’Bannon v. NCAA, 802 F.3d 1049, 1074 (9th Cir. 2015). [18] Brown v. Pro Football, Inc., 518 U.S. 231, 250 (1996). [19] Alston, 594 U.S. 159, 178 (2021). [20] United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223 (1940). [21]* Arizona v. Maricopa County Medical Society,* 457 U.S. 332, 348 (1982). [22] Catalano, 446 U.S. 643, 647 (1980). [23] Flood v. Kuhn, 407 U.S. 258, 282–83 (1972). [24] Philadelphia National Bank, 374 U.S. 321, 370 (1963).