The Price of College Sports: What’s Next for NCAA Student-Athletes After the Governor of California Signs Compensation Bill Into Law?

Written by Dustin Dorsino

Intercollegiate athletics have been around for 150 years and the National Collegiate Athletic Association (NCAA), the governing body for student-athletes competing in intercollegiate athletics, has expanded significantly since its official formation in 1906; it now includes more than 1,000 member schools. In an effort to preserve amateurism principles at the heart of college athletics, the NCAA has in place various rules that limit student-athletes’ compensation. In 2014, the NCAA announced that its member schools could begin offering student-athletes scholarships totaling the full cost of attendance. However, many student-athletes wanted to use their own image and likeness—something the NCAA and universities had been doing for many years—to make money beyond the full cost of attendance.

In a landmark United States Court of Appeals case, O’Bannon v. Nat’l Collegiate Athletic Ass’n, the Ninth Circuit vacated a district court judgment that would have allowed universities to pay student-athletes up to $5,000 per year in deferred compensation. This ruling meant that universities did not have to pay student athletes anything beyond the full cost of attendance, and NCAA’s amateurism rules meant that the same student-athletes could not profit off of their images and likenesses.

The Bill

In an effort to avoid the exploitation of student-athletes and universities, the California Senate unanimously approved a bill on September 11 that would allow student-athletes to use their own images and likenesses to earn money from endorsements and sponsorships. After the bill was presented to California Governor Gavin Newsom on September 18, 2019, he had 30 days to either sign or veto the bill. On Monday, September 30, Governor Newsom signed the bill into law, now known as the Fair Pay to Play Act (the “Act”), and it will thus apply to all student-athletes attending California member universities.

The Act had a long road to travel on its way to being signed into law by Governor Newsom. It was first introduced in February 2019 and was initially referred (and re-referred) to the Committee on Education three times. After being passed by the Committees on Education, Appropriations, Arts, Entertainment, Sports, Tourism, and Internet Media, and Higher Education, it was ordered to the Senate on September 9th.

The Act amends the Education Code to add Section 67456, which protects California member universities as well. The NCAA will be prohibited from preventing a university from participating in intercollegiate athletics as a result of its student-athletes earning compensation for the use of their image or likeness.

What Does This Mean for Student-Athletes?

The Act does not take effect until January 1, 2023. It will not require California member universities to write any student-athlete a paycheck. It does, however, prohibit California member universities from stopping student-athletes—whether by revoking their scholarships or voiding their eligibility—from profiting off of their own likenesses or images.

According to legal experts, this legislation could result in the downfall of NCAA amateurism rules prohibiting student-athletes from making money off of their statuses as student-athletes.

Although some have predicted a free-agency free-for-all where prospective student-athletes rush to commit to schools to which this legislation would apply, the Act prohibits California member universities from compensating student-athletes directly. Student athletes will be required, however, to disclose to their university any contract providing them compensation for the use of their image or likeness.

What’s Next?

The NCAA is expected to challenge the constitutionality of the Act in an effort to cement student-athletes’ status as students—not employees—of the universities they attend. If the NCAA does challenge the constitutionality of the Act, its likely position would be that it violates the Commerce Clause (Art. I § 3, Clause 8 of the US Constitution). The NCAA would argue that, because the Act would result in California member schools being unable to compete in NCAA competition pursuant to current NCAA recruiting rules, the Act unconstitutionally regulates interstate commerce—a function that is reserved for Congress. However, given that the NCAA would be violating federal antitrust law by banning California schools from competition, and the fact that courts have often ruled against the NCAA in antitrust cases, the NCAA’s potential challenge would likely be unsuccessful.

According to Nancy Skinner, the California senator who drafted the bill, the hope is that other states will adopt similar legislation, thereby pressuring the NCAA to change its own longstanding policies. In fact, New York State Senator Kevin Parker proposed a similar bill last month that would require college athletic departments to reserve 15% of annual revenues and divide it equally among student-athletes.

Given that the Act will not go into effect until 2023—pending any lawsuit brought by the NCAA—the NCAA may want to get ahead of similar legislation by implementing its own policies governing how student-athletes may commercialize their likenesses. However, Michael Drake, Chair of the NCAA’s Board of Governors, has voiced his concern over blurring the line between amateur college athletics and professional sports. The NCAA is expected to meet with university presidents, athletic directors, and conference commissioners this month and report its findings on how it could modernize its current policies that restrict student-athletes from making money.

Sources

2019 Cal. S.B. 206, 2019-20 Reg. Sess. (Cal. 2019).

Bill Hutchinson, California Governor Signs Bill Allowing College Athletes to Profit From Endorsements, Yahoo! News (Sept. 30, 2019).

Chris Bumbaca & Steve Berkowitz, NCAA Sends California Governor Letter Calling Name, Likeness Bill ‘Unconstitutional’, USA Today (Sept. 11, 2019).

Dan Murphy, N.Y. Senator Proposes Bill to Pay College Athletes, ESPN (Sept. 18, 2019).

Mike Curley, Cal. Senate Backs Athlete Pay Bill Over NCAA Protest, Law360 (Sept. 11, 2019).

O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir. 2015).

 

Photo courtesy of ESPN.

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