Ultimate Resource On NCAA Pay Ban (#GotBitcoin?)
College athletes in state could get endorsement deals under bill banning schools from enforcing association’s compensation rules. Ultimate Resource On 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.”
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.
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.
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.
NCAA Wants To Allow Athletes To Cash In…To A Point
A new proposal outlines ‘guardrails’ for allowing college athletes to retain agents and profit from their name, image and likeness.
The National Collegiate Athletic Association on Wednesday rolled out its first concrete proposals on how it plans to allow college athletes to cash in on marketing opportunities generated by their collegiate sports prowess. But the debate will likely focus on how the NCAA also wants to limit the opportunities star athletes can generate.
The NCAA proposal would allow college athletes to retain agents and profit from their name, image and likeness as long as the association agrees that proposed deals represent fair market value. The NCAA says the measure is meant to protect student athletes from exploitative below-market deals, but it could also be used to block lucrative “professional opportunities” that it believes could provide an unfair recruiting advantage for some schools.
The NCAA also said it would seek a “safe harbor” antitrust exemption from Congress. That would allow it to impose some broad uniformity that regulates the terms of name, image and likeness endorsement deals—and limit lawsuits over pay issues.
“Allowing promotions and third-party endorsements is uncharted territory,” said Michael V. Drake, chair of the NCAA Board of Governors and president of Ohio State, in a statement in which he said the association is trying to “modernize” to “protect college athletics and college athletes on a national scale.”
The NCAA had resisted endorsement rights for athletes for decades, including in lengthy, costly court battles. Then California passed a law effectively nullifying NCAA rules within the state, starting in 2023.
Faced with the prospect of up to three dozen other states following suit—and members of Congress from both parties working on federal legislation to force the NCAA to change—the NCAA suddenly announced it would amend its own rules. It also threw its backing behind Congress passing federal legislation to create a nationwide system, to prevent any one state from acting alone.
The nation’s top antitrust enforcer, Makan Delrahim, has said he has been eyeing the NCAA’s actions to date and that he will continue to do so.
“We welcome the steps it announced today. We will analyze any specific rules that the NCAA’s three divisions propose to adopt relating to NILs, as well as any conduct pursuant to those rules, to ensure the NCAA and its member institutions comply with the antitrust laws,” said Delrahim, head of the Antitrust Division of the Department of Justice, in a statement.
The new proposal will test the appetite of states, players and federal lawmakers to continue a prolonged fight over the future of college sports. Some of those entities are likely to push for athletes to have a less restrictive path to profiting from their success while in college.
“Today is either the day that a wall of injustice around student-athletes started to crumble, or the day the NCAA used more tactics to bait and switch young men and women from some of America’s most vulnerable communities,” said U.S. Rep. Mark Walker, a North Carolina Republican who has pushed for years to undo the NCAA’s amateurism definition. “The working group’s final report has some reason for pause at the implied request for the NCAA to have antitrust exemptions.”
The proposals, presented to the board of governors by a 19-person federal and state legislation working group co-chaired by Big East commissioner Val Ackerman and Ohio State athletic director Gene Smith, provide the clearest look yet at the NCAA’s vision for athlete compensation. One important tenet: allowing athletes to sign endorsements in no way makes them employees of the university nor professional athletes.
Smith said that “there will be no cap” on athletes’ earning potential. At the same time, the NCAA is looking to create a mechanism to review payments to athletes’ deals as part of an effort to quash deals from boosters that would function as compensation for athletic performance or recruiting inducements.
This potentially is at odds with California’s plan for uncapped compensation, and some federal lawmakers’ hopes to remove restrictions on college athletes. California Sen. Nancy Skinner, a Democrat and co-author of the state’s landmark law, said she was encouraged by the NCAA’s progress but still believed that “the devil will be in the details.”
Florida Rep. Chip LaMarca, a Republican author of a similar bill, said the NCAA “proposals reek with protectionism” and “are about protecting their pockets, not about student athletes.”
But the NCAA approach could also satisfy states and members of Congress who want to settle the issue and move on. The NCAA suspended competition in March due to the coronavirus outbreak, and college sports suddenly faces new financial pressures and has a fleet of federal lobbyists pushing its perspective on Capitol Hill.
The NCAA’s proposals would allow athletes to “identify themselves by sport and school” but prohibit them from using logos or markings from their university of athletic conference when monetizing their name, image and likeness. For example, Clemson quarterback Trevor Lawrence could hawk a sports energy drink, but be barred from wearing his school’s eye-catching orange or showing footage of him quarterbacking the Tigers to a national championship in 2019.
This ostensibly would allow an athlete who competes for a Nike-sponsored school to sign a sneaker deal with a rival brand, such as Adidas. However, it’s unclear whether universities would be able to challenge or limit such arrangements.
The NCAA proposals are the ultimate test of one of the stickiest questions in the compensation debate: Is value generated from the name on the front of the jersey or the name on the back?
“The NCAA has argued in lawsuits and publicly that the players don’t have any value. It’s all what the schools bring,” said Ramogi Huma, president of the National College Players Association. “For an entity that believes that college athletes don’t have market value to determine what market value is, [that] is a losing proposition for college athletes.”
The NCAA has said it’s worried that schools with the most prominent national brands could exploit their marketing value by dangling lucrative endorsement deals to gobble up the most talented recruits. Advocates for players’ compensation say it’s unlikely that the scales of competitive balance could tip further out of whack, and this is another way to penalize athletes.
“Your name, image and likeness value is so inherently tied to your sport ability that…it’s impossible to disentangle,” said Andy Schwarz, an antitrust economist who has consulted in cases challenging NCAA rules.
The NCAA’s Athlete Endorsement Plan Comes With a Long-Shot Demand
The association wants an antitrust exemption from Congress so it can oversee name, image and likeness deals.
The National Collegiate Athletic Association’s plan for allowing college athletes to commercially exploit their name, image and likeness relies on something that it’s far from certain to obtain: an antitrust exemption from the U.S. Congress.
The NCAA last month moved one step closer to allowing college athletes to accept endorsement money with an approval for the concept from its Board of Governors—as long as it can keep some control over those payments to ensure they aren’t booster payments in disguise.
That’s long been a fixation of the association that has spent much of its 114-year history arguing in lawsuits that college sports cannot survive if athletes are paid for their performance.
But the NCAA has also ended up on the wrong side of the last two high-profile court battles over its remuneration rules, with judges rejecting the NCAA’s antitrust defenses of its ways of doing business. The latest defeat came on Monday, in a case brought by former West Virginia University running back Shawne Alston and other Division I athletes.
As the NCAA bends in the face of a groundswell of pressure from states and federal legislators, it’s clear that the association will only be able to write the rules the way it wants if it can get an exemption from antitrust laws. It’s also clear that its antagonists are unwilling to see that happen.
The Ninth U.S. Circuit Court of Appeals said in its ruling Monday that the NCAA’s limits on the education-related benefits an athlete could receive under the current rules violated federal antitrust law.
Ramogi Huma, an advocate for athletes’ rights, said the plaintiffs’ victory showed that antitrust laws were a way of holding the NCAA to account. “Each time the NCAA loses an antitrust lawsuit, players gain more equitable treatment,” he said.
Possibly as soon as next summer, college athletes will be allowed to sign deals in which they profit from their name, image and likeness. While many details remain out of focus, the NCAA says it does not intend to cap athletes’ compensation.
The NCAA has also said it would require athletes to disclose the terms of their endorsements deals via a clearinghouse that could be run by the NCAA, university compliance officials or a third party.
Big East commissioner Val Ackerman, co-chair of the NCAA working group charged with creating the new plan, said the group hadn’t decided who might oversee the mechanism and whether it will be able to void a deal deemed excessive or corrupt.
“There was a desire to see what the market was saying so that if you did see something that was really extreme you would at least have a mechanism to take a look at that and pick out the red flags,” said Ackerman.
What recourse the NCAA would have to deal with those “red flags” is unclear. Ackerman suggested that the divisions could institute payment “gradations” that correspond to particular third party income opportunities to make sure that “transactions are legitimate and don’t morph into payment that looks like disguised payment from the school to play college sports.”
For instance, a volleyball player could make $500 for signing autographs at an event put on by a campus pizza shop, but perhaps not $500,000.
Antitrust experts say that introducing a clearinghouse with clearly defined compensation tiers could amount to price fixing, no matter if it is run by an independent entity or the NCAA.
“If you as an organization and a bunch of independent firms are all agreeing to use a body’s pricing mechanism, that’s going to be an antitrust violation,” said Andy Schwarz, an antitrust economist who has consulted on cases challenging NCAA rules, including Alston v. NCAA.
“Fixed [prices] doesn’t mean everyone pays the same thing, but set to an agreed upon level, whether it’s high, low, the same or different for everybody.”
Ackerman’s working group suggested the NCAA Board of Governors solve its problem with a “safe harbor” exemption from antitrust law from Congress. Unfortunately for the NCAA, some of the lawmakers most interested in how it operates think that is a terrible idea.
“There is no way I would consider giving a blanket antitrust exemption in exchange for an incredibly limited compensation right for college athletes around name, image and likeness. It’s a non-starter,” said Sen. Chris Murphy, a Connecticut Democrat.
Murphy is co-founder of a working group that is willing to create federal legislation that sets a national standard for the NCAA rather than forcing it to grapple with 50 state laws. That’s something the NCAA wants. Murphy’s version of a national standard isn’t.
“It’s just preposterous to think that Congress would give a broad antitrust exemption so that the NCAA can write their own rules on name, image and likeness,” he said, adding that he would expect “broad compensation” for athletes to be on the table before he would even consider it.
Nobody, to date, is rushing to champion the NCAA’s request, including Republican Sen. Marco Rubio of Florida, who has generally sought protections for colleges in the debate so far, and Sen. David Perdue of Georgia, another member of the working group.
Aides to Sen. Roger Wicker, the Mississippi Republican who heads the Commerce Committee, said that he planned to work with the Senate Judiciary Committee “to address the antitrust issue as it relates to NIL” and that he “will consider the merits of all proposals on the table.” Aides to the Senate Judiciary Committee chairman, South Carolina Republican Lindsey Graham, declined to comment.
Wicker sent a letter to 50 schools, conferences and associations this month asking 20 questions about their current financial arrangements with college athletes and what they hoped to see happen next. The word “antitrust” did not appear in the letter.
None of that bodes well for senators ready to move quickly on something the NCAA wants resolved by the end of the year — something some of its own members acknowledge.
“Name the environments in which Congress is least likely to act,” said Notre Dame athletic director Jack Swarbrick. “An election year and a pandemic would be one and two on the list.”
Supreme Court To Hear NCAA Antitrust Case On College-Athlete Compensation
Justices agree to take up NCAA appeal of ruling that it unlawfully limited competition for college athletes.
The Supreme Court agreed to decide whether the National Collegiate Athletic Association violated federal antitrust law by maintaining tight limits on compensating college athletes, a case that could determine the future shape of college sports.
The court, in a brief written order Wednesday, said it would hear the NCAA’s appeal of lower court rulings that found the association unlawfully limited competition for college athletes by restricting the kinds of compensation they could receive related to their education.
Those rulings cleared the way for college athletes to receive an expanded range of education-related benefits, such as laptop computers or musical instruments, study-abroad programs, internships and paid-for graduate school. The rulings didn’t lift NCAA limits on athlete compensation unrelated to education.
The Supreme Court is stepping into a legal and political fight that has subsequently expanded dramatically and is now not just about athlete compensation, but also control of the multibillion-dollar college-sports industry.
In the years since former West Virginia University running back Shawne Alston and other former Division I athletes filed their suit, states have brought unprecedented pressure on the NCAA to allow direct compensation to athletes for the use of their names, images or likenesses.
In response, the NCAA tore up its decadeslong definition of amateurism and conceded that it will allow some endorsement money to flow to college athletes starting in the 2021-2022 school year.
With both sides ready for a bruising fight over the parameters of the new compensation order, which could involve millions of dollars for some college athletes, Congress is showing an unprecedented level of interest in the association.
Several different groups of lawmakers are readying bills that would establish a new federal set of rules for intercollegiate athletics. The outcome of that tussle could either favor the more restrictive NCAA view or the more expansive view from states such as California, which has led the challenge.
The Justice Department’s top antitrust official, meanwhile, has signaled concerns about the NCAA’s limits on athlete compensation, telling The Wall Street Journal earlier this year that he was monitoring developments.
The Supreme Court is likely to hear arguments in the spring, with a decision expected by the end of June. That opinion could put a heavy thumb on the scale, coming shortly before the new school year, when the first state law requiring endorsement compensation is also set to take effect.
Gabe Feldman, a law professor at Tulane University, said the case could determine the level of control the NCAA can exert over college athletes’ compensation.
“In some ways, the foundational question is who gets to control the governance of college sports,” Mr. Feldman said.
In 2019, U.S. District Judge Claudia Wilken in Oakland, Calif., said the NCAA had a legitimate interest in adopting rules that maintain a distinction between student-athletes and professionals who receive unlimited cash payments.
But the NCAA’s restrictions on education-related compensation, she ruled, went too far and weren’t necessary for “preserving consumer demand for Division I basketball and FBS football.”
The Ninth U.S. Circuit Court of Appeals affirmed that ruling in May.
The NCAA, in its petition to the high court, said those rulings deprived the association of the leeway it needs to administer intercollegiate athletics and would “fundamentally transform the century-old institution of NCAA sports, blurring the traditional line between college and professional athletes.”
Donald Remy, the NCAA’s chief legal officer, in a statement Wednesday said the association was pleased the court had accepted the case and believed the eventual ruling would help in future tussles.
“The NCAA and its members continue to believe that college campuses should be able to improve the student-athlete experience without facing never-ending litigation regarding these changes,” he said.
The NCAA has pledged to unveil its detailed plans in early 2021 that would take effect by the new school year. It also has asked Congress to grant it an antitrust exemption.
Mr. Alston and other former Division I athletes argue that the NCAA’s rules violated U.S. antitrust law by artificially depressing their compensation.
Lawyers for the athletes said in a court brief that college basketball and football are lucrative industries built on “the hard work, sweat, and sometimes broken bodies of student-athletes. Coaches, assistant coaches, and athletic directors take millions in salaries. Yet the schools have agreed among themselves to limit what student-athletes may receive for their work in generating these extraordinary revenues.”
Advocates for athletes’ rights have criticized the NCAA’s early signals on what will be allowed in 2021-2022 because of potential restrictions such as requiring athletes to disclose the terms of their endorsement deals via a clearinghouse.
They say that allowing athletes to profit from signing memorabilia is a far cry from paying them the same multimillion-dollar salaries their coaches earn.
Jeffrey Kessler, a lawyer for the athlete plaintiffs, also said he welcomed the court’s willingness to weigh in. “It is time for the Supreme Court to reaffirm that the antitrust laws apply fully to the multibillion-dollar businesses of Division I basketball and FBS football and that the era of exploiting the athletes who provide the labor in those businesses is at an end,” he said.