Quick Hits
- The Tenth Circuit is reviewing an antitrust class action that alleges the NCAA’s Five-Year Eligibility Rule imposes unreasonable restraints on 2022-enrolled college athletes in violation of Section 1 of the Sherman Antitrust Act.
- A federal district court found that the NCAA likely holds monopsony power, potentially suppressing competition for athlete services and harming overall compensation for athletes.
- The NCAA argues that the college athletes failed to meet their burden for a preliminary injunction and did not properly consider the Five-Year Rule’s procompetitive benefits.
The NCAA’s Five-Year Rule, adopted in June 2026, allows athletes to play five seasons within a student-athlete’s five-year period of full-time enrollment. As written, the rule does not grant five years of eligibility to athletes who enrolled in 2022.
A class of 2022 college athletes filed a challenge seeking an additional year of eligibility, alleging that the rule violates Section 1 of the Sherman Antitrust Act by imposing unreasonable restraints on college athletes who enrolled in 2022.
A federal district court issued a preliminary injunction, blocking enforcement of the rule. The district court found that the NCAA and its member universities likely exercised “monopsony” power, treating the NCAA and member universities as a single buyer of labor. The court also found that the rule, as applied to 2022 enrollees, likely suppresses competition for athletes’ services.
The NCAA appealed the case, and last month, the Tenth Circuit stayed the district court’s preliminary injunction. The athlete challengers have moved for expedited appellate briefing with the NCAA football and other fall sports seasons already in full swing.
The NCAA argued in an appellate brief that “the district court accepted an illogical market definition and stretched Plaintiffs’ limited evidence far beyond what it actually established. The district court then compounded its error by disregarding the NCAA’s legitimate procompetitive interests and ordering relief that does not protect those aims.”
The case is the latest in a flurry of antitrust challenges to NCAA eligibility rules and transfer restrictions. The NCAA is pushing the U.S. Congress to pass the Protect College Sports Act (S.4668) to regulate college sports; that bill is currently under consideration in the U.S. Senate.
Anticompetitive Effects on Athlete Compensation
The district court sided with the plaintiff class, who invoked antitrust liability under a “monopsony” theory, which in this case involves allegations of wage restrictions imposed by market-controlling buyers (i.e., the NCAA and member institutions) on labor supplied by many sellers (i.e., Division I athletes who enrolled in 2022).
The district court ruling treated the NCAA and its member universities as a single buyer, or a coordinated group of buyers, in a defined labor market for the services of Division I college athletes. Failure to extend five years of eligibility to this class of plaintiffs likely has anticompetitive effects on “overall wages,” the district court found. The district court held that Section 1 of the Sherman Act—which prohibits illegal restraints of trade—permits claims that challenge market abuse on the buyer side. The district court further noted that the Wisne plaintiffs’ Section 1 challenge is to the NCAA’s alleged anticompetitive monopsony.
Though a 2024 settlement agreement that was approved by the court in House v. NCAA allows schools to share revenue directly with college athletes (while capping revenue sharing by the schools themselves), the district court in Wisne recognized that college athletes may now earn unlimited compensation for use of their names, images, and likenesses (NIL) from other sources.
Thus, the district court reasoned that the NCAA should not be permitted to “categorically argue” that there will be no impact on overall wages if the 2022 athletes are barred from continuing to compete. In monopsony terms, artificially restricting the supply of experienced athletes could depress the total compensation available to the labor force as a whole.
NCAA’s Procompetitive Justifications
When the NCAA opposed the injunction at the district-court level, it argued that the Five-Year Rule, as written, has procompetitive benefits because it ensures that a class of Division I college athletes exits each year, thereby opening opportunities for high school graduates. The rule also purportedly preserves the uniqueness of Division I sports and protects the “reliance interests” of athletes who planned around roster spots opening up for the 2026 season.
However, the district court rejected that reasoning, emphasizing a principle central to monopsony analysis: “antitrust law does not endorse—or sustain—this understanding of markets or market output, i.e., that reducing laborers in a market is somehow procompetitive.” In other words, suppressing the available labor pool does not result in a competitive benefit, because it instead causes exactly the harm that antitrust law aims to prevent when buyers coordinate their conduct, the district court found.
Further, the district court criticized the NCAA’s attempt to characterize its reliance-interest argument as “equitable” in nature rather than as a true “procompetitive” rationale required under antitrust law. Relying on the Supreme Court of the United States’ decision in NCAA v. Alston, the district court stated that whether “a restraint has an equitable or social benefit for a class of individuals, such as incoming Division I student-athletes, bears little relevance to an antitrust inquiry” (emphasis in original). From a monopsony perspective, the district court suggested, the fact that some workers may benefit from restricted competition does not justify buyer-side coordination that harms the labor market overall.
The district court also found that even had the NCAA demonstrated legitimate procompetitive benefits, the plaintiffs would still prevail because they had “shown there are substantially less restrictive means for realizing any purported rationale.” This is because the NCAA’s own bylaws already provide for eligibility waivers, the district court noted, undermining any claim that the all-or-nothing approach was necessary.
Key Takeaways for Employers
The Tenth Circuit’s forthcoming decision could extend the line of post-Alston case law by rigorously applying antitrust scrutiny to any labor-market restraint imposed through collective buyer action—whether by a sports association or any other group of competing employers (including employers affiliated through some industry association or that may utilize certain shared vendors). The district court’s explicit use of monopsony analysis is significant, signaling that organizations acting collectively to set eligibility or participation rules for their workforce may face a similar framework traditionally applied to price-fixing among sellers of a product.
Significantly, the case highlights how labor-eligibility rules can be treated as commercial restraints even when framed as eligibility standards, credentialing requirements, or membership conditions. Organizations that set or rely on such rules may want to consider that arguments based on protecting incumbents or creating orderly turnover could be viewed skeptically under the antitrust laws.
The district court ruling suggested that reducing the labor pool is the harm that monopsony law addresses, not a justification for it. Further, when an organization provides exceptions or waivers to a hard rule, the district court’s ruling highlights how a court may view those same mechanisms as less restrictive alternatives that could undermine the claimed necessity of the restriction in the first place.
Ogletree Deakins’ Higher Education Practice Group and Unfair Competition and Trade Secrets Practice Group will continue to monitor developments and will provide updates on the Higher Education, Sports and Entertainment, and Unfair Competition and Trade Secrets blogs as additional information becomes available.
A version of this article was previously published by the American Bar Association Litigation Section: Corporate Counsel.
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