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California Takes Aim At NCAA Pay Ban (#GotBitcoin?)

College athletes in state could get endorsement deals under bill banning schools from enforcing association’s compensation rules. California Takes Aim At NCAA Pay Ban (#GotBitcoin?)

California legislators voted to require schools in the state to allow their athletes to earn endorsement money, setting up a collision with the National Collegiate Athletic Association, which bans compensation for college athletes beyond a scholarship and modest stipend and is threatening to bar California athletes from its competitions.

The California state Senate, nearing the end of the legislative session in Sacramento, passed a bill by a vote of 39-0 that allows college athletes to earn money from their name, image or likeness, through sponsorship or endorsement deals, starting in 2023.

The bill also bans schools from preventing athletes from getting compensation or retaining agents. It covers all athletes at public or private colleges and universities in the state, according to its co-author, Sen. Nancy Skinner, a Democrat whose district includes the University of California, Berkeley.

NCAA athletes can forfeit their eligibility if they receive direct payment for participating in sports, in practice restricting their compensation to tuition, room, board and a handful of other expenses. On Wednesday, the NCAA Board of Governors told California Gov. Gavin Newsom it would ban California athletes from competition if he signed the bill.

“If the bill becomes law and California’s 58 NCAA schools are compelled to allow an unrestricted name, image and likeness scheme, it would erase the critical distinction between college and professional athletics and, because it gives those schools an unfair recruiting advantage, would result in them eventually being unable to compete in NCAA competitions,” the letter said. “These outcomes are untenable.”

When the bill was being considered in committee earlier this year, NCAA President Mark Emmert suggested in a letter to state legislators that “it likely would have a negative impact on the exact student-athletes it intends to assist.”

Lawyers who have represented athletes challenging NCAA rules scoffed at that suggestion, and said it seemed more likely that California would force the NCAA to follow its lead. They said dramatic differences between college athletes already exist. For example, Ivy League athletes don’t get sports scholarships, while military school athletes are salaried.

“One, I think it’s very unlikely that the NCAA would want to exclude some of its most prominent members from competing. Two, if it did, I am sure those conferences and schools would file an antitrust challenge…based on the fact that the NCAA would be organizing a group boycott,” said Jeffrey Kessler, counsel to a class of athletes suing the NCAA over compensation rules.

“If I had to predict the future, I think that the California legislation will become a standard that probably all the Power Five conferences will be allowed to adopt before 2023,” he said.

The NCAA letter pushed back against that suggestion and alleged the bill was unconstitutional, hinting at the prospect of litigation from both sides.

NCAA Chief Legal Officer Donald Remy said Wednesday that courts had frequently sided with the association in upholding a demarcation between college athletes and paid professionals, and that the U.S. Constitution generally bars states from enacting laws seeking to regulate interstate commerce.

California State University, Stanford University, the University of California and the University of Southern California stated their opposition to the bill while it was being considered in committee, according to the legislature.

Stanford’s statement said that its athletic programs, like others’, had agreed to the NCAA bylaws, with which the bill directly conflicted. USC said the bill would “encourage students to violate the NCAA bylaws, becoming athletically ineligible and putting athletic teams and athletic departments at risk.” The school cited penalties levied against its athletic program in 2010 after an investigation into rules violations in football, men’s basketball and women’s tennis.

California legislators have frequently sought to buck national policies, relying on the state’s size to carve its own path on issues from immigration to tailpipe emissions and influence the rest of the country to follow.

That approach has a high-profile backer. “California can change the game,” tweeted LeBron James, a basketball player for the LA Lakers, in one of several messages backing the bill earlier this week.

The NCAA argues compensation limits are necessary to maintain a distinction between college and professional sports, and that as amateurs, college athletes are adequately compensated through athletic scholarships and the chance to earn a college degree.

Advocates of expanded athlete compensation say competitors are exploited in a multibillion-dollar industry that rests on their labor, which in turn often limits their ability to earn the degrees for which they are enrolled.

But the issue has been fraught, and somewhat fluid. A commission on college basketball chaired by former Secretary of State Condoleezza Rice reported last year that players should effectively be limited to tuition, room and board payments for now, but held back on issues like name, image and likeness benefits because of ongoing lawsuits.

The NCAA’s working group on “name, image and likeness” is due to report its recommendations next month.

In March, a federal judge in Oakland, Calif., ruled in an antitrust case brought by athletes including former UC Berkeley basketball player Justine Hartman that the NCAA could no longer limit compensation or benefits for college athletes to those strictly related to education. That decision is being appealed.

Another prominent lawyer who has sued the NCAA said California was giving athletes the victory they have sought in litigation. “This bill mirrors what we are aiming at in court,” said class-action plaintiffs attorney Steve Berman, of the case involving Ms. Hartman.

The California state Assembly passed the bill Monday by a vote of 73-0.

The legislation now heads to the desk of Mr. Newsom, a Democrat who negotiated changes for University of California athletes while he was lieutenant governor. His office said that he would evaluate the bill, but Mr. Newsom hinted at his stance Tuesday.

“LeBron James supports it for a reason, let’s leave it at that,” he said.

California Will Allow College Athletes To Earn Endorsement Money

Here’s How It Could Change College Sports.

Will other states follow and how will the NCAA respond? The answers will ultimately determine the impact of this new law.

The new California law requiring schools in the state to allow their athletes to earn endorsement money isn’t scheduled to take effect until 2023. But already, it is clear that one state’s decision to give college athletes the ability to profit from their name, image or likeness will have far-reaching effects on the economics of college sports.

The impact will extend from campuses to other U.S. statehouses. And it could alter both the flow of talent into top athletics programs and the stream of marketing revenue into college sports.

Here are some immediate questions that will ultimately determine the impact of the law, signed by Gov. Gavin Newsom on Monday.

1. Will Other States Follow?

Elected officials in several other states are already trying. A New York state senator has proposed legislation that goes even further, requiring colleges to pay athletes directly. A pair of Colorado state senators are planning to introduce a similar bill there. A proposed South Carolina bill—set to be filed in January—is similar to California’s.

There has been talk of such measures at the state level before, but backers are hoping the California law will help them gain more support. “This will be a building block that we can use in the state of South Carolina to make our case,” said South Carolina state senator Marlon Kimpson.

Kimpson, a Democrat, filed a bill in 2014 requiring Clemson and the University of South Carolina to pay its football and basketball players. The legislation effectively died without getting to a vote. If the California law proves to put South Carolina schools at a competitive disadvantage, Kimpson said he is hopeful that would spur more openness to a similar measure.

2. How Will The NCAA Respond?

The NCAA’s board of governors, in a letter to Newsom before he signed the bill, threatened to ban California athletes from its competitions if the law went into effect. The group cited the “unfair recruiting advantage” it would create.

“I think that would be enough of a disadvantage to wipe out any advantage that we might take,” said Pepperdine athletic director Steve Potts. “I just don’t want to put our student athletes in a position where they’re not allowed to compete at the highest level.”

But doing so would remove some of the most prominent NCAA member institutions from its championships, among them UCLA, USC, Cal and Stanford. And such a stance could prove difficult to uphold if enough other states were to enact similar legislation.

An NCAA ban for California schools could trigger an antitrust lawsuit. Likewise, the NCAA—which called the bill “unconstitutional” in its letter to Newsom—could attempt through legal action to overturn or at least delay the implementation of the law.

3. How Significant Of A Recruiting Advantage Would California Schools Gain?

In the highest-profile sports, at the highest-profile schools, the advantage would be obvious. Take UCLA, which has a storied history and an iconic brand but struggles to attract top-tier football and basketball recruits. How differently would a five-star player view the Bruins knowing his potential endorsement income in Los Angeles?

“Kids are going to go where the money is,” said Tom Luginbill, ESPN’s national football recruiting director. “Yes, there are a select group of programs that can recruit solely to the development of an NFL player, but it doesn’t solve any financial problems, at least not during college.”

That is precisely why Luginbill believes that one way or another, schools from the rest of the country will end up being able to offer athletes the same rules for off-the-field earning ability. Competing coaches will demand it.

“No way Nick Saban is going to go out on the recruiting trail and feel like they’re at a disadvantage,” Luginbill said.

4. Which Athletes Would Benefit Most?

Not all college athletes are expected to reap substantial financial benefits from marketing their name, image and likeness. According to Brenton Sullivan, co-founder and CEO of college sports recruiting platform FieldLevel, the law will most benefit athletes in revenue generating sports, such as football and men’s basketball, and high profile athletes with established social media followings coming out of high school.

“[For] top athletes I think that there would be a recruiting advantage,” said Sullivan. “But for everyone else, there’s a lot of unknowns here.”

Sullivan predicted that the law may also give athletes who break out later in their college careers an added incentive to transfer to California universities. Doing so would allow them to capitalize on their newfound starpower before their eligibility runs out.

5. How Will All This Alter The Competitive And Financial Landscape In College Sports?

David Carter, a USC sports business professor, said the ability of student-athletes to monetize their name and image—both in California and across the U.S.—is probably inevitable. When that becomes the norm in college sports, he said it could very well widen the already considerable gap between the haves and the have-nots.

Already, the 65 schools in the Power Five conferences earn dramatically more media and sponsorship revenue than the rest, while competing in facilities that rival those seen in professional sports.

“Now,” Carter said, “you’ll see a further polarization of these athletes being able to migrate to schools in these markets where they can further build their own brands. People are saying it creates a competitive advantage. What it does is it just extends the existing competitive advantage. That’s not inconsequential if you’re a midmarket school.”


Updated: 9-30-2019

California Governor Signs Bill Allowing College Athletes To Earn Endorsement Money

NCAA vows to fight in court, possibly bar state schools from its competitions.

California Gov. Gavin Newsom has signed a bill allowing college athletes in the state to earn endorsement and sponsorship money, ending weeks of suspense over whether he would go head-to-head with the National Collegiate Athletic Association and its vow to fight the law in court and possibly bar state schools from its competitions.

“Colleges and universities reap billions from these student athletes’ sacrifices and success but block them from earning a single dollar. That’s a bankrupt model—one that puts institutions ahead of the students they are supposed to serve,” said Mr. Newsom, a Democrat, on Monday soon after he signed the bill.

On Monday, the NCAA issued a statement again criticizing California for acting out of step with the rest of the country, but did not directly repeat its earlier threats. The association had asked California to wait on passing the legislation because, in part, it has its own report on name, image and likeness issues coming out in October.

The governor had indicated early on that he was sympathetic to the bill. But he was slower to carry out the signing ceremony even as he added his support to other controversial bills, including one extending employee benefits to so-called “gig” workers.

Before signing the bill, the governor said he felt strongly about it, but was still giving the law careful consideration.

“With respect, there’s a racialized element to this,” Mr. Newsom said in an interview last week on the Daily Show with Trevor Noah. “Close to 90% of these coaches are white and the majority of Division I basketball players are black, the plurality of Division I football players are black, and with all due respect, this notion of student athlete? Give me a break.”

The California legislature passed the bill Sept. 11, by a unanimous vote in the state senate that followed another unanimous vote in the state assembly.

Hours before senators voted, the NCAA board of governors wrote to Mr. Newsom, telling him they would ban athletes in California schools from competition if he signed the bill. They also said they believed the bill was unconstitutional, setting up the prospect of litigation that could come from multiple directions.

Updated: 10-4-2019

Is California’s New Law Doomsday for College Sports? Come On.

Freeing athletes to capitalize on their names doesn’t have to unravel the NCAA.

This week California passed its college sports “Fair Pay to Play Act”— Gov. Gavin Newsom signed the bill into law, right there on LeBron James’s barbershop talk show, “The Shop,” and, as far as I can tell, the rivers and seas did not boil, the dead did not rise, and cats and dogs did not start living together.

What’s happening in California has yet to unleash the apocalypse Bill Murray grimly outlined in “Ghostbusters.” It won’t even whirl into action until 2023, three whole years from now—by then, it’s possible we may be all living in yurts on Mars, but I doubt it. Newsom’s signing is not The End of College Sports As We Know Them.

Let’s clarify a few things. The California law isn’t forcing colleges to start lavishing salaries on their college athletes. Your favorite school’s quarterback does not get to wander down to the Chancellor’s office and pick up a paycheck because Gavin Newsom said it’s AOK.

Instead, what this law does is give college athletes—and, it’s important to note, we’re talking about all college athletes, men and women, in big revenue sports, and sports that make no money whatsoever—a right that literally every other student on campus enjoys: the ability to make money off their name, image and likeness.

That means if a videogame wants to start cranking out videogames with a college point guard on the cover, well, the videogame company is going to have to compensate the star point guard. Same goes if a T-shirt designer wants to start selling T-shirts with the point guard’s face on it. Or if a local car dealership—somehow, we have all settled on car dealerships as the hypothetical rainmakers of college sports—wants to pay that point guard to appear in a commercial for its new minivan, the one with the 59 cup holders.

How much are they going to get paid? That will be up for the athlete to settle on with the potential employer. The California law allows for the athlete to employ an agent to help in those negotiations.

This right already exists for college students who aren’t athletes. If you’re in school on a chemistry scholarship, and the local chemical company wants to hire you for a part-time job, you’re not going to lose your chemistry scholarship. Same goes for other non-athletes on campus. Tom Herman, the University of Texas football coach who’s expressed openness to reforming name, image and license rules, put it thusly in a recent comment: “The first-chair trombonist in the jazz band, he can go use his name, image and likeness all he wants and promote ‘Johnny’s Trombones’ if he wants to.”

Exactly. But while Johnny Trombones can cash in on his talent, Johnny Football can’t. What California’s doing is saying the NCAA can’t punish an athlete for doing something everyone else on campus can do.

That’s it. That’s what’s happening. “I think it’s the right thing to do,” the UCLA football coach Chip Kelly said the other day. “It doesn’t cost the universities, it doesn’t cost the NCAA—what it did before is it put restrictions on athletes, and it no longer does, and I think it’s progress.”

The NCAA does not agree. Though the organization has been considering a revise to its name/image/likeness rules, NCAA boss Mark Emmert told the Indianapolis Star that the California move is tantamount to “a new form of professionalism, and a different way of converting students into employees.” While that comment hints at what the NCAA is really anxious about—student athletes organizing as employees—it’s a bit overheated. Is Johnny Trombones no longer viewed as a student because he’s taking gigs as Johnny Trombones?

This is usually the part of a column like this where I launch into some dramatic sentence about the billion-dollar marketplace of college athletics, and how the money has gotten too big to ignore, and all the well-paid adults in the room knew this day was coming. But this bill is not a radical restructuring of the current environment.

Does it mean more enforcement work for schools? Yep. What happens if one player gets endorsements and nobody else does? That’s surely a headache for coaches, though coaches haven’t seemed to mind being able to cash in themselves. California’s law will create market transparency, and even contains a provision to protect existing school deals. All that hell-talk you’ve been hearing about Nike or Adidas swooping in and detonating the market? The California law contains a provision that prevents a player from taking a deal that unsettles a school’s existing sponsorship.

There’s some theater here, on all sides—the unveil on LeBron’s show; Newsom’s Aaron Sorkin-like flourish as he preps to sign. (“I don’t want to say this is checkmate…but this is a major problem for the NCAA.”) Even more theatrical are the Chicken Littles who see this as The End. Over the past few days we’ve been treated to all kinds of doomsdayism—free marketers freaking out about freeing a market, states’ rights proponents railing against states’ rights. There’s an overarching fear of mega-bucks donors with blank checks warping the landscape by funneling money to players—as if that sort of thing wasn’t happening illegitimately for eons. (There’s some irony to the notion of trying to preserve the status quo by saying your membership can’t be trusted to not exploit the rules.)

I get it. Fear sells. I can stand on my soap box and remind everyone that the Olympics went through this whole song and dance over amateurism and endorsements, and the Olympics didn’t fall off the face of the earth after making reforms—they got bigger—but that’s not the kind of rhetoric that registers in 2019. Nobody gets attention these days for saying: I think this is reasonable, and let’s see what happens.

But let’s see what happens. California is pushing college sports to do better, other states are in fast pursuit, and the NCAA still has plenty of time to step in with a reasonable reform of its own. The rivers and seas are not boiling, cats and dogs aren’t living together. Yet. I checked, and I’m pretty sure.

Updated: 10-29-2019

NCAA Clears Way For Athletes To Earn Endorsement Money

The decision comes a month after California passed a law requiring schools in the state to allow college athletes to profit from their name, image and likeness.

The NCAA cleared the way for college athletes to begin profiting from their name, image and likeness on Tuesday, a landmark decision that could dramatically alter the economics of college sports.

The move came amid growing pressure from legislators, a month after California passed a law requiring schools in the state to allow college athletes to earn endorsement money, and represents a stark shift in policy.

In a concession the NCAA had long resisted, the organization’s governing board directed its three divisions to immediately consider changing the rules governing such benefits for athletes, and to make any such changes no later than January 2021.

“We must embrace change,” said Michael Drake, chair of the board and president of Ohio State University.

The details of the new policy are yet to be determined. The NCAA said it must be “in a manner consistent with the collegiate model,” making clear that compensation for performance or participation is still prohibited, among other conditions. But the directive nonetheless paves the way for a scrambled financial landscape in college sports.

College athletes, who have remained largely cut off from the profits of what has grown into a multi-billion-dollar industry, may soon be able to earn related income without jeopardizing their eligibility to compete.

The NCAA’s decision is expected to create opportunities for financial gain large and small for a wide range of athletes. For a tennis star, it could lead to giving paid lessons to recreational players. For a gymnast with a crowd-pleasing floor exercise, it might mean monetizing a YouTube channel. For a football player, it could mean being featured in a video game.

Though endorsement money wouldn’t necessarily stop the best football and basketball players from turning pro before they graduate, it would at least decrease the financial imbalance between them and the institutions that profit from their participation.

Electronic Arts chief executive Andrew Wilson said last week that he would be open to the return of his company’s NCAA Football games, which it discontinued in 2013 amid lawsuits filed by former players seeking compensation from the NCAA.

“If there’s a world where the folks who govern these things are able to solve for how to pay players for the use of their name and likeness and stats and data, we would jump at the opportunity to build a game in a heartbeat,” Wilson said at the WSJ Tech Live conference.

New NCAA regulations could prevent a scenario raised by the California law, set to take effect in 2023, in which the rules governing college sports could vary by state.

The law had sparked a dramatic confrontation between the state and the association. The NCAA had threatened to bar California from its competitions, and said it believed the bill was unconstitutional, setting up the prospect of litigation that could come from multiple directions.

The sponsor of the California bill, Democratic state Sen. Nancy Skinner of Berkeley, said Tuesday she saw the NCAA move as “great progress” but had no intention of accepting the matter as settled.


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