Cal­i­for­nia changes the land­scape

New law could have big im­pact on fu­ture of col­lege ath­letes

The Morning Call - - SPORTS - By J. Brady McCul­lough

With one sig­na­ture from Gov. Gavin New­som on Mon­day morning, Cal­i­for­nia took the lead on col­lege ath­lete com­pen­sa­tion with the ap­proval of Se­nate Bill 206, which will al­low ath­letes to profit from the use of their name, im­age and like­ness start­ing in 2023.

With that same sweep of the pen, though, comes even more ques­tions.

The NCAA re­leased a state­ment Mon­day that showed col­lege sports’ gov­ern­ing body is in the dark too about what hap­pens next.

“As a mem­ber­ship or­ga­ni­za­tion, the NCAA agrees changes are needed to con­tinue to sup­port stu­dent-ath­letes, but im­prove­ment needs to hap­pen on a na­tional level through the NCAA’s rules-mak­ing process,” the state­ment read. “Un­for­tu­nately, this new law al­ready is creat­ing con­fu­sion for cur­rent and fu­ture stu­dent-ath­letes, coaches, ad­min­is­tra­tors and cam­puses, and not just in Cal­i­for­nia.”

The thing is, the bill is pretty sim­ple if one ac­tu­ally takes the time to read it in­stead of tak­ing head­lines at face value or be­liev­ing the NCAA’s pre­vi­ous tac­tics, which have called the bill “un­con­sti­tu­tional” or an ex­is­ten­tial threat. The rel­e­vant por­tion of the bill is about 700 words, and it does not threaten the fu­ture of col­lege sports.

Here are key ques­tions and an­swers about the law:

Q. What does the bill do?

A. Col­lege ath­letes in Cal­i­for­nia will be al­lowed to sup­ple­ment what the schools of­fer them — tu­ition, room and board and a stipend for any ex­tra cost of at­ten­dance — with com­pen­sa­tion stem­ming from the use of their name, im­age and like­ness.

That means they can en­ter into en­dorse­ment con­tracts with brands as big as Nike and as small as Joe’s Chevro­let deal­er­ship; they can be paid to host camps to teach their sport; and they can make money from sign­ing au­to­graphs. To ac­com­plish this, they will also be al­lowed to sign with an agent or hire an at­tor­ney to rep­re­sent them.

The NCAA’s am­a­teurism rules cur­rently pro­hibit all of the above.

But, through this law, none of th­ese ac­tions will re­sult in the ath­lete los­ing his or her schol­ar­ship or be­ing un­able to par­tic­i­pate in their sport. None of th­ese ac­tions will re­sult in the NCAA, the con­fer­ences or other group or or­ga­ni­za­tion with author­ity over col­lege sports pre­vent­ing a school from par­tic­i­pat­ing due to the com­pen­sa­tion of an ath­lete for use of their NIL.

Q. How will the law af­fect col­lege ath­letic depart­ment bud­gets?

A. It won’t, at least not in­ten­tion­ally.

If there’s one thing to un­der­stand about SB 206, it is this: Col­lege ath­letic de­part­ments will not have to spend an ex­tra dime on ath­lete com­pen­sa­tion be­cause of this law.

In fact, the bill goes so far as to ex­plic­itly ban the NCAA, con­fer­ences and schools from pay­ing play­ers for use of their NILs — not that any of those en­ti­ties would ever choose to do so.

“A post-sec­ondary ed­u­ca­tional in­sti­tu­tion, ath­letic as­so­ci­a­tion, con­fer­ence or other group or or­ga­ni­za­tion with author­ity over in­ter­col­le­giate ath­let­ics shall not pro­vide a prospec­tive stu­dent ath­lete with com­pen­sa­tion in re­la­tion to the ath­lete’s name, im­age or like­ness,” SB 206 states.

The se­na­tors who wrote and amended this bill did not make life any harder for the num­bers crunch­ers in col­lege ath­letic de­part­ments. They did not touch other NIL is­sues, such as the fact that play­ers don’t re­ceive any cut of the hun­dreds of mil­lions of dol­lars in me­dia rights deals ne­go­ti­ated by the schools and con­fer­ences. All of that coin stays in the school’s cof­fers, and schools can con­tinue to claim that their ath­letes are stu­dents and not em­ploy­ees.

Cal­i­for­nia uni­ver­si­ties ex­pressed to the Leg­is­la­ture that there would be un­in­tended fi­nan­cial con­se­quences to the bill, like hav­ing to add mil­lions of dol­lars worth of com­pli­ance staff to po­lice this new world of ac­tiv­ity. They also pre­dicted that they would have to pay NCAA fines up to $5 mil­lion to­tal for their teams not be­ing com­pli­ant.

Q. Will the law mean Cal­i­for­nia schools get kicked out of the NCAA or Pac-12?

A. USC, Stan­ford, the Uni­ver­sity of Cal­i­for­nia sys­tem and Cal­i­for­nia State Uni­ver­sity schools all op­posed SB 206 as it moved its way through the state Se­nate. Those schools right­fully fear ret­ri­bu­tion from the NCAA in the form of not be­ing able to par­tic­i­pate in cham­pi­onships be­cause of Cal­i­for­nia hav­ing a ma­jor re­cruit­ing ad­van­tage. It is likely to end up in the courts whether that would be an an­titrust vi­o­la­tion by the NCAA.

But SB 206 should not be viewed an ex­is­ten­tial threat to Cal­i­for­nia col­leges’ abil­ity to play big-time sports. It may be an ex­is­ten­tial threat to the NCAA, if the or­ga­ni­za­tion moves too slowly to adapt.

Re­mem­ber: Col­leges don’t need the NCAA to keep play­ing sports and mak­ing hun­dreds of mil­lions of dol­lars. The NCAA needs the col­leges, and it par­tic­u­larly needs Cal­i­for­nia’s enor­mous econ­omy and mas­sive TV mar­ket share to help fuel its money-mak­ing en­gine.

Q. How could the law af­fect re­cruit­ing for Cal­i­for­nia schools?

A. The pay­ments to play­ers would come from third par­ties, and as part of SB 206, ath­letes will have to dis­close them to the schools. Much of the com­pen­sa­tion to ath­letes that comes un­der the ta­ble - lead­ing to NCAA in­frac­tions com­mit­tee in­ves­ti­ga­tions and var­i­ous forms of pun­ish­ment when caught - can now come above board.

Joe from Joe’s Chevro­let no longer will have to pass shoe boxes full of cash to his fa­vorite player. In­stead, he can em­ploy them for an ad or an ap­pear­ance at the deal­er­ship to sign mem­o­ra­bilia.

Ath­letic de­part­ments could be hit marginally by SB 206 if donors elect to give their money di­rectly to the ath­letes through their busi­nesses in­stead of do­nat­ing to the school to help fund in­flated coach­ing salaries and sparkling new fa­cil­i­ties that have more bells and whis­tles than many pro­fes­sional fran­chises pro­vide to their play­ers.

Q. What does this mean for the NCAA long term?

A. The courts have taken their shots at the NCAA’s am­a­teurism rules over the last decade, and, de­spite a Cal­i­for­nia fed­eral judge’s rul­ing in O’Ban­non v. NCAA in 2014 that the or­ga­ni­za­tion’s NIL by­laws were a vi­o­la­tion of an­titrust law, noth­ing has changed in the flow of money in col­lege sports.

New­som sign­ing SB 206 into law in­tro­duced a new bat­tle­ground, one that should in­ject much more fear into the NCAA and the schools.

The NCAA has ap­pointed a work­ing com­mit­tee to ex­am­ine the NIL is­sue, and it is ex­pected to re­lease its find­ings in Oc­to­ber at some point. State leg­is­la­tors from around the coun­try will be watch­ing.

“We will con­sider next steps in Cal­i­for­nia while our mem­bers move for­ward with on­go­ing ef­forts to make ad­just­ments to NCAA name, im­age and like­ness rules that are both re­al­is­tic in mod­ern so­ci­ety and tied to higher ed­u­ca­tion,” the NCAA’s state­ment read.

“As more states con­sider their own spe­cific leg­is­la­tion re­lated to this topic, it is clear that a patch­work of dif­fer­ent laws from dif­fer­ent states will make unattain­able the goal of pro­vid­ing a fair and level play­ing field for 1,100 cam­puses and nearly half a mil­lion stu­dent-ath­letes na­tion­wide.”

If the NCAA does not back down and dras­ti­cally al­ter its NIL by­laws — it is un­likely to, at least this early in the game — then it risks Cal­i­for­nia schools and uni­ver­si­ties in like-minded states seek­ing a new endgame:

Start­ing a new gov­ern­ing body for col­lege sports that over­sees schools that al­low ath­letes to profit from their NIL. The sys­tem would func­tion sim­i­larly to the Olympic model for ath­lete com­pen­sa­tion.

Imag­ine if Wash­ing­ton, Ore­gon, Colorado, Utah and Ari­zona even­tu­ally passed sim­i­lar leg­is­la­tion, and the Pac-12 schools — des­per­ate for na­tional rel­e­vance as it stands — dis­banded from the NCAA? If other states did not fol­low, much of the best ta­lent would find its way to the West Coast, a mi­gra­tion for which the rest of the coun­try would not stand.

But no one should ex­pect Pac-12 com­mis­sioner Larry Scott to be lead­ing this revo­lu­tion.

“The Pac-12 is dis­ap­pointed in the pas­sage of SB 206 and be­lieves it will have very sig­nif­i­cant neg­a­tive con­se­quences for our stu­dent-ath­letes and broader uni­ver­si­ties in Cal­i­for­nia,” read a state­ment re­leased by the Pac-12 on Mon­day. “This leg­is­la­tion will lead to the pro­fes­sion­al­iza­tion of col­lege sports and many un­in­tended con­se­quences re­lated to this pro­fes­sion­al­ism. (It) im­poses a state law that con­flicts with na­tional rules, will blur the lines for how Cal­i­for­nia uni­ver­si­ties re­cruit stu­dent-ath­letes and com­pete na­tion­ally, and will likely re­duce re­sources and op­por­tu­ni­ties for stu­dent-ath­letes in Olympic sports and have a neg­a­tive dis­parate im­pact on fe­male stu­dent-ath­letes.”

For the next three years, state­ments like that will con­tinue from col­lege sports’ power bro­kers. Mon­day, Cal­i­for­nia broke through the noise.

The NCAA would be smart to avoid its own ex­tinc­tion, ad­mit that its sports are at min­i­mum semi-pro and al­low name, im­age and like­ness use.

With a cap, of course, be­cause peo­ple don’t change overnight.


With one sig­na­ture from Gov. Gavin New­som on Mon­day morning, Cal­i­for­nia took the lead on col­lege ath­lete com­pen­sa­tion with the ap­proval of Se­nate Bill 206, which will al­low ath­letes to profit from the use of their name, im­age and like­ness start­ing in 2023.

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