How Rich Paul Could Build a Case Against the NCAA Over Its New Criteria for Agents
According to a new report, the NCAA intends to add criteria for agents who would like to represent college underclassmen basketball players. Under new NCAA rules that took effect this past spring, underclassmen can declare for the NBA draft, hire an agent and, for a limited time, preserve their NCAA eligibility and opt to return to school. The reported criteria, however, would exclude Rich Paul and certain other agents certified by the National Basketball Players Association (NBPA). As discussed below, Paul could potentially sue the NCAA, claiming that the NCAA’s criteria violate federal antitrust law.
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The changed landscape of agents, college hoops and agents
Under new NCAA rules, once the college season ends, and by no later than April 11, an undergraduate player can request an evaluation from the NBA Undergraduate Advisory Committee. This committee includes NBA team executives who provide candid and confidential projections of a player’s draft stock.
The committee, in other words, does important work. Some players are overly-optimistic about their chances of being drafted in the first round and landing a guaranteed contract. The feedback they receive from the committee could warn them that they are likely to be drafted in the second round or not drafted at all. Those with remaining NCAA eligibility might be wise to pull out of draft consideration and return to college (or not return to college and sign with the G League or prop team in another country).
After the player makes the request to the committee, he can then hire an “NCAA-certified agent.” The agent can then advise the player as he works out with NBA teams. The player then has until May 29 to decide if he wants to remain in consideration for the NBA draft or return to college.
The NCAA determined that for spring 2019, “NCAA-certified agents” included all “NBPA-certified agents.” In other words, Paul could represent college players who declared for the 2019 NBA Draft while not preserving their NCAA eligibility remaining. Going forward, however, the NCAA warned that it would develop its own certification-program for agents.
Enter a new report by CBS Sports college basketball insider Jon Rothstein. Rothstein tweeted on Tuesday that, according to his sources, the NCAA will require three main criteria:
1. The agent must have a bachelor's degree.
2. The agent must be certified by the NBPA for at least three years.
3. The agent must take, and pass, an in-person exam at the NCAA's headquarters in Indianapolis.
A number of NBPA-certified agents will fail to meet these criteria. Some, like Paul, did not earn a bachelor’s degree. Paul attended high school at Benedictine, a private Roman Catholic high school in Cleveland. During his time in high school, he befriended LeBron James. This sparked a friendship that eventually led to Paul forming Klutch Sports Group. His agency represents James, Anthony Davis, Draymond Green, Ben Simmons and other stars. Paul did not attend college.
Other NBPA-certified agents will fail the requirement that they must be licensed by the NBPA for three years. Still, others might not pass the NCAA’s standardized test.
Potential legal arguments against the NCAA’s criteria
Paul, and other agents excluded by the NCAA’s criteria, could argue that the criteria violate federal antitrust law. Section 1 of the Sherman Antitrust Act prohibits competing businesses from conspiring in ways that unreasonably interfere with competition. Section 1 is intended to limit opportunities for competing businesses to combine their economic power to the detriment of the marketplace.
In this context, the “competing businesses” are the more than 1,200 schools, conferences and affiliated organizations that comprise the NCAA. Colleges compete in myriad ways, including for students, student-athletes, grants, sponsorships, faculty, staff and media attention. Any agreement among NCAA members that constrains competition is vulnerable to an antitrust challenge. To that point, cases brought by Ed O’Bannon (challenging NCAA rules that prevent players from licensing their name, image and likeness) and Shawne Alston and Justine Hartman (challenging NCAA rules that cap the value of athletic scholarships) were premised on Section 1 claims.
In Section 1 claims, courts usually apply “Rule of Reason” analysis. This type of analysis instructs that a restriction on competition is illegal if it produces anticompetitive injuries that outweigh pro-competitive advantages. In antitrust litigation, judges have identified a wide range of anticompetitive injuries. They include limited choices, increased prices and weakened quality. Paul, then, would need to show that the NCAA’s criteria would be more injurious to competition than they would enhance competition.
As a starting point, Paul (or another NBPA-certified agent denied by the NCAA) would emphasize that the NCAA criteria limit the number of agents available to college players. Fewer available agents could mean that some college players are unable to hire an agent. Alternatively, a smaller number of certified agents could become overextended in advising college players. The basic argument that the marketplace for agents would be less competitive as a result of the NCAA criteria. That dynamic, in turn, could harm the quality of advising available college players.
Second, Paul would object to the necessity of the criteria in a world where the NBPA already acts as a gatekeeper for agents. He would stress that the NBPA, which is the exclusive bargaining agent for all NBA players and which requires prospective agents to pass a standardized exam and meet other measures designed to ensure that NBPA certified agents are sufficiently skilled, considers him qualified to represent NBA players. Paul could credibly contend that if the NBPA deems him qualified, the NCAA should as well.
Third, Paul would balk at the rationality of the NCAA’s criteria. Paul can factually argue that he is one of the most successful agents in NBA history. His client list rivals those of other top agents. In that same vein, Paul’s clients could easily hire different agents—but they place their trust in Paul and find his advice and guidance to be valuable. Paul, then, could question the logic of the NCAA criteria that deny him an opportunity to share his formidable skills as an agent with college players. The fact that Paul, 37, didn’t earn a college degree 15 years ago seems irrelevant versus the more recent history of professional success that Paul has achieved in his 20s and 30s.
Fourth, the NCAA criteria might pose unwitting consequences for the NCAA. NBPA-certified agents who are denied a chance to represent college players might still reach out to those players. Instead of encouraging them to “test the waters” before ruling out a return to school, those agents would be incentivized to urge that the players permanently sever their ties with college. This would be possible if those agents land endorsement deals for the players, who would forfeit their remaining NCAA eligibility by signing such deals. Along those lines, an agent deemed ineligible by the NCAA might be more inclined to opine that the player would be better off signing in the G League or abroad than going back to school (even an NCAA-eligible agent might be inclined to share such advice since he or she would only earn a commission if the player signs a pro contract).
Potential defenses for the NCAA
If the NCAA is sued, it would respond with a number of defenses aimed at portraying the criteria as advantageous to competition.
First, the NCAA would argue that it has the legal autonomy to determine its own rules that relate to amateurism—the broad set of NCAA rules that purport to distinguish college athletes from professional athletes. The NCAA has long argued that it is exempt from rigorous antitrust scrutiny on account of the unique qualities of amateurism. The NCAA has Supreme Court precedent on its side. In the 1984 antitrust case NCAA v. Board of Regents, the late Justice John Paul Stevens held that “[t]he NCAA plays a critical role in the maintenance of a revered tradition of amateurism in college sports.” He added, “[t]here can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics.”
Second, the NCAA would contend that the certification criteria are specifically designed with college athletes in mind. A college-educated agent might be more capable at representing a player whose decision is between turning pro and returning to school. In other words, the NCAA could maintain that NBPA criteria and NCAA criteria for agent certification should be different given their different constituencies. The NBPA is interested in agents who are capable of representing professional players in employment opportunities with NBA teams. The NCAA is interested in agents who can guide college players through the potential transition between life as a college student and life as a pro.
Third, the NCAA could insist its criteria enhance, rather than curtail, competition. To that end the NCAA could emphasize by that limiting the supply of available agents to those specifically qualified to represent college players, college players can be more secure in their choice of an agent.
It remains to be seen if NCAA agent certification criteria trigger litigation. We’ll keep you posted of any developments.
Michael McCann is SI’s Legal Analyst. He is also an attorney and Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.
