New law to allow athletes to be paid
California’s statute takes aim at NCAA’s amateurism model
Gov. Gavin Newsom of California signed into law a plan to allow college athletes to strike endorsement deals, intensifying the legal and political clashes that ultimately could transform the economics of college sports.
The governor’s signature opened a new front of legal pressure against the amateurism model that has been foundational to college sports but has restricted generations of students from earning money while on athletic rosters.
If the law survives any court challenges, the business of sports would change within a few years for public and private universities in California, including some of the most celebrated brands in American sports. So, too, would the financial opportunities for thousands of student-athletes,
who long have been forbidden from trading on their renown to promote products and companies.
“Every single student in the university can market their name, image and likeness; they can go and get a YouTube channel, and they can monetize that,” Newsom said in an interview with the New York Times. “The only group that can’t are athletes. Why is that?”
The measure, he said, was “a big move to expose the farce and to challenge a system that is outsized in its capacity to push back.”
Newsom’s decision, though backed by vast support from the Legislature, was the subject of anxious anticipation by the NCAA, the top governing body for college sports, and its critics.
In a statement Monday, the NCAA, which had warned that it considered the measure “unconstitutional,” said that it would “consider next steps in California” and cautioned that “a patchwork of different laws from different states will make unattainable the goal of providing a fair and level playing field.”
The Pac-12 Conference was even harsher in its assessment and said the law would “lead to the professionalization of college sports and many unintended consequences related to this professionalism.”
The state’s rebuke of a system that generates billions of dollars each year went against powerful universities, including California, Stanford and Southern California. The schools said the law would put their athletes in danger of being barred from routine competitions and showcase events like the College Football Playoff and the men’s and women’s NCAA basketball tournaments, made-for-TV moments that help some universities log more than $100 million each in annual athletic revenue.
But the NCAA and its members confronted a statehouse uprising that went well beyond the governor’s office — one that effectively rendered them bystanders, not power brokers, in the debate that led to the first law of its kind. Legislators in other states, including New York and South Carolina, voiced support for similar proposals after California lawmakers passed their plan unanimously.
The California measure — Senate Bill 206 — will apply to the state’s biggest college sports programs, as well as many of its smaller ones. The schools and the NCAA will not be allowed to keep a student from participating in sports if they have been paid for the use of their name, image or likeness, whether in connection with a lucrative shoe contract or a modest endorsement for a local restaurant. Students also will be permitted to hire agents, a move that is restricted under NCAA rules.
“People are just so aware of the fact that you’ve got a multibilliondollar industry that, let’s set aside scholarships, basically denies compensation to the very talent, the very work that produces that revenue,” said Sen. Nancy Skinner, a Democrat, who wrote the legislation. “Students who love their sport and are committed to continuing their sport in college are handicapped in so many ways, and it’s all due to NCAA rules.”
Students and universities have been penalized for violations of NCAA bylaws that typically block students from participation if they reach promotional agreements or work with agents. Yet NCAA rules did not eliminate a vast undercurrent of illicit activity, some of which has been on public display in the wake of a federal corruption inquiry tied to college basketball.
Sensing the severity of the legislative threats from California, a handful of other states and Congress, the NCAA announced in May that it had convened a committee to consider changes — a tactic that supporters of the existing model hoped would buy time and stave off legislative action.
The group’s recommendations are expected in October, but California officials, skeptical that the NCAA would adopt substantive reforms, chose to press ahead with their legislation without waiting.
The legislation left open the possibility that California could rework its approach once the NCAA’s plans are made public.
At the same time, it also explicitly declares that it is the Legislature’s intent “to avoid exploitation of student-athletes, colleges, and universities.”
The California proposal drew strong support from some current and former student-athletes who said that it would edge the college sports industry, however reluctantly, toward an era when its players would be compensated for their talents and the risks that they assume.
Newsom signed the bill during an episode of a television show hosted by LeBron James, the Los Angeles Lakers star and a prominent supporter of the legislation.
“NCAA, you got the next move,” James said in an Instagram post. “We can solve this for everyone!”
The NCAA has signaled that it may ask the courts to block the law before it takes effect in 2023. A legal challenge could hinge on the constitutional provision that grants Congress the authority to oversee interstate commerce.
Earlier legal skirmishes have allowed the NCAA’s business model to stand with limited modifications, and the association has adjusted some rules in recent years to allow students to receive limited stipends and unlimited food from their universities.
If the courts ultimately back the measure, NCAA members in California could face a series of wrenching prospects, including leaving the association or openly defying the NCAA’s rules, risking fines and their access to competition. (An analysis by the California State Assembly’s staff said some public universities could have losses “potentially in the tens of millions of dollars,” but acknowledged that it was not clear whether the NCAA could lawfully punish members for complying with a state statute.)
The NCAA also would have to decide whether — and how — to penalize California universities, including four members of the Pac-12 Conference.