Pugh Raises Antitrust Stink Over NCAA Scholarship Caps and Transfer Rule: The Next Big Lawsuit?

Devin Pugh, a former scholarship player at Weber State, had a common experience. He was promised a four year scholarship, but when his coach retired, the new coach said he did not intend to renew Pugh’s grant-in-aid. Pugh looked into transferring. Several D-I schools expressed interest. Colorado State, Colorado, Troy offered a conditional scholarship—contingent upon his ability to play two years. But an NCAA rules that requires a transfer to sit out a year deprived Pugh one year of eligibility. Another rule limits player eligibility to five years. Since Pugh had only one more year due to NCAA rules, schools did not offer him. Forced to sit for a year, Pugh transferred to a D-II school, where he could play immediately—but he had to borrow money for tuition.

Last month, Pugh filed a class action lawsuit alleging that NCAA caps on scholarships and one-year transfer rules are unlawful restraints on trade. Click here for the complaint. 

At the core of the complaint, his attorneys allege as follows:

By unlawfully agreeing to limit the number of Division I football scholarships that a member institution can grant in any given year, the NCAA and its member institutions have ensured that student-athletes in the class receive tens of millions less for their labor for member institutions than they would receive – and the member institutions would pay – in a competitive market.

Plaintiff also challenges the NCAA's rules that prevent Division I football players from transferring to other NCAA Division I schools without losing athletic eligibility for a year. The NCAA's limitation on the mobility of college athletes is patently unlawful. For a striking contrast, one can simply examine the unfettered mobility of the players' coaches. Football coaches, including assistant coaches, are free to leave a school at any time they choose to take another job in the college or professional football ranks. This ability to better their own situation has allowed coaches to reap enormous financial benefits. At least 34 Division I head football coaches now earn more than $3 million per year, even prior to the calculation of what can often be performance bonuses in excess of $1 million.

Players, however, suffer a severe penalty for transferring – the loss of a year of athletics eligibility. This can make them a very unattractive option for coaches who are under constant “win now” pressure. The NCAA's transfer rules restrain players' ability to make the best choices for themselves, including ones based on financial considerations, academics considerations, athletics considerations, and personal circumstances. The NCAA's transfer rules are anticompetitive and violate the Sherman Act.