Not Quite Filling The Gap: Why the Miscellaneous Expense Allowance Leaves the NCAA Vulnerable to Antitrust Litigation

IntroductionIn the 2011-2012 fiscal year, the football program at the University of Texas at Austin reported more than $77 million in profit.1 With 120 players comprising the team's 2012 team roster, each football player generated, on average, over $640,000 for the university during that sea- son.2 Surprisingly, however, an English major at the University of Texas can receive more money under a full academic scholarship than the starting quarterback of the Longhorns' football team can receive under a full athletic scholarship.3 If a student receives a full academic scholar- ship from the University of Texas, he will receive a maximum of $51,998 per year; if a student receives a full athletic scholarship, conversely, he will receive a maximum of only $468, 246 per year.4For decades, the National Collegiate Athletic Association (NCAA) has limited the amount of athletics-based financial aid that universities can provide to student-athletes to a level below that allowable for aca- demic scholarships.5 The NCAA has limited athletics-based financial aid to the "full grant-in-aid," which covers tuition and fees, room and board, and required course-related books.6 At the same time, universi- ties provide academic scholarships and need-based financial aid up to the "full cost of attendance," which includes not only tuition and text- books, but also miscellaneous expenses, such as school supplies, laun- dry expenses, health and disability insurance, travel costs, and inciden- tal expenses.7 For the 2012-2013 academic year, the average amount of these miscellaneous expenses was approximately $3201 per year for public universities and $2527 for private colleges.8On October 27, 2011 the NCAA increased the limit of athletics- based financial aid through a piece of legislation known as the Miscel- laneous Expense Allowance ("MEA").9 This legislation allowed universi- ties to provide student-athletes receiving full athletic scholarships with additional financial aid "up to the institution's calculation of full cost of attendance or $2000, whichever is less."10 Nearly two months after the legislation passed, 160 schools signed onto override legislation to block the MEA.11 The NCAA has suspended the legislation for now, and is currently still considering different proposals from the Student-Athlete Well-Being Working Group.12 If passed, legislation would likely impose the same $2000 cap as originally proposed.13The push to increase compensation for student-athletes has been gaining momentum in recent years, most notably after the 2006 case in the U.S. District Court for the Central District of California, White v. NCAA.14 In White, the court ruled that a class of former student-athletes sufficiently alleged an anticompetitive agreement among NCAA mem- bers, allowing the plaintiff class to survive summary judgment.15 The plaintiffs argued that in a free market student-athletes would receive athletics-based aid up to the full cost of attendance-the same amount granted through full academic scholarships.16 Although this case was settled before trial, it provided future litigants with a blueprint for an antitrust suit against the NCAA that would at least survive a motion to dismiss.17Even if the NCAA addresses the problem highlighted in White by enacting the MEA, the NCAA would continue to be vulnerable to anti- trust suits.18 Yet, enactment of the MEA would reduce the amount of antitrust damages awarded to a successful plaintiff class.19 The terms of the MEA would set a higher cap to compensation, but it would still be an artificially created cap below the full cost of attendance at more than half the universities in the country.20 Until the NCAA permits universi- ties to grant athletics-based aid up to the full cost of attendance without any artificial caps or restrictions, the NCAA remains vulnerable to anti- trust suits from student-athletes.21Part I of this Note briefly outlines the history of the NCAA and the history of student-athlete compensation and explains how that com- pensation structure would change under the MEA. …