On Friday, California governor, Gavin Newsom, signed the Fair Pay to Play Act into law, which will ultimately affect NCAA student-athletes. The law has been heavily contested by the NCAA, believing it to go against the current core tenets of the NCAA’s identity and business model. While the signing was recorded last Friday, it was released on Monday, according to Newsom’s office.
Beginning on January 1, 2023, California colleges can no longer punish NCAA athletes for collecting endorsement money.
The signing was hosted Monday morning by NBA superstar, LeBron James and his multimedia platform, The Uninterrupted during an online-only episode of “The Shop” on HBO. This bill, according to James’ tweet, will “change the lives of countless athletes who deserve it!”
“It’s going to initiate dozens of other states to introduce similar legislation,” Newsom said on the show. “And it’s going to change college sports for the better by having now the interest finally of the athletes on par with the interests of the institution. Now we are rebalancing that power.”
Why Does This Bill Matter?
From a legal standpoint, Senate Bill 206 (SB206) restricts how an athlete can monetize his or her likeness. Under SB 206, there’s a provision that prohibits athletes from accepting deals that would conflict with a school’s preexisting contracts. For example, if a basketball player goes to a school that has a preexisting contract with Nike, they wouldn’t be able to sign an endorsement deal with Adidas. This severely restricts a player’s freedom of movement to do what they wish with their likeness and image.
The NCAA, at least in public has strongly opposed California’s bill, threatening to ban California schools from postseason competition, including the NCAA tournament. From the NCAA’s perspective, things do need to change, but on a national level through the NCAA’s rules-making process.
“Unfortunately, this new law already is creating confusion for current and future student-athletes, coaches, administrators, and campuses, and not just in California,” the NCAA said in its statement.
Membership in the NCAA, the top governing body for college sports, is voluntary. Athletes can get valuable scholarships, but the NCAA has long banned paying athletes to preserve the academic missions of colleges and universities.
The law, which is scheduled to go into effect in January 2023, does not require schools to pay athletes directly as employees. Instead, it makes it illegal for schools to prevent an athlete from earning money by selling the rights to his or her name, image or likeness to outside bidders.
The NCAA Believes This to Be An “Existential Threat”
Obviously, the NCAA is less than pleased with California’s recent action, believing this law to be an “existential threat” to athletics and the governing body’s business model.
Back in September, the NCAA sent a letter to Newsom while lawmakers were mulling the bill, calling it “unconstitutional” and a “scheme,” in a recent interview with CBS Sports.
The letter was signed by NCAA President Mark Emmert and 21 other members of the organization’s board of governors. The NCAA urged California to hold off on the bill to give a working group formed earlier this year more time to examine the name, image and likeness issue.
“Right now, nearly half a million student-athletes in all 50 states compete under the same rules,” the letter read. “This bill would remove that essential element of fairness and equal treatment that forms the bedrock of college sports.”
On Monday, the NCAA issued a less terse statement, expressing concerns about states creating their own rules for college athletes. It stated it would continue to make “adjustments” to its rules “that are both realistic in modern society and tied to higher education.”
“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 said in a statement.
“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.”
“You’ve got 50 different states with 50 different labor law rules,” Emmert told CBS Sports. “If you move into what are, in essence, labor negotiations, you have to do that state-by-state … It just falls apart in its complexity.”
The NCAA has publicly criticized this since its inception, talking a big game about threatening major sanctions against California universities. However, the reality is that there probably isn’t much leverage to follow through on that. Why?
Wholesale banning every California school from the postseason, or even the NCAA, would cripple the Pac-12,” wrote Matt Brown in his take on SBNation. Already, lawmakers in South Carolina and New York have proposed laws that seem to be more aggressive than what California just passed. According to sources close to CBS Sports, a Florida lawmaker intends to bring similar legislation soon, hoping for its enactment prior to 2023.
The PAC-12 Is Disappointed
Of course, the Pac-12 joins in the NCAA’s disappointment, as it released its blasting statement Monday, expressing its disappointment in the passage of the bill because the conference believes it “will have very significant negative consequences for our student-athletes and broader universities in California.”
“This legislation will lead to the professionalization of college sports and many unintended consequences related to this professionalism, 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,” the Pac-12 said in its statement.
Athletic Directors Are Concerned
Some athletic directors in California are concerned that the new law will actually put their schools at a recruiting disadvantage.
If rules don’t change nationally before 2023, the NCAA says California teams would be banned from taking part in NCAA competitions. This is no mere sanction and must be considered significantly.
San Diego State athletic director, John David Wicker said he’s concerned that no out-of-state schools will be willing to schedule games with his teams. Wicker said if forced to choose between abiding by the state’s law and following NCAA rules, he would likely follow NCAA rules.
“We are the NCAA, and so if we have rules that dictate that you can’t monetize your name, image, and likeness based on the sport, and those student-athletes do that, then they’re going to be barred from competition until whatever is adjudicated,” Wicker told ESPN in August. “…[T]he state of California doesn’t regulate the NCAA in that sense.”
#1 -Senator Nancy Skinner (D-Berkely)
Senator Skinner first introduced the Fair Pay to Play Act back in February. She envisions that this Act will provide a change on a national scale.
Believing others will follow California’s lead, she said that the law’s authors intentionally delayed its implementation for three years to give others a chance to catch up. She added that several states have contacted her office in recent months to ask about her proposal—including, but not limited to politicians in Florida, New York, Washington state, Colorado, Maryland, North Carolina, and South Carolina.
#2—Senator Mark Walker (R-NC)
Senator Walker has proposed a change to the federal tax code that would force the NCAA to choose between giving athletes the rights to their name, image, and likeness—or risk losing their tax-exempt nonprofit status.
A representative from Walker’s office told ESPN that the California law has given added momentum to the proposal, which is currently in the House Committee on Ways and Means in the early stages of the legislative process.
Voices From the Industry
We spoke with Aaron Zack, former NFL agent and current NFL and NBA marketing agent about California’s new law.
“As a business owner in the sports marketing field, I have always believed that each of my clients are their own CEO,” Zack shared with us.
“They reached the professional sports level that they are at due to their constant training and skill set. These college athletes should be able to be compensated off the field and build their own business and brand.”
When we asked Zack about whether the NCAA should continue to restrict student-athletes on how they use their image and likeness, he was in agreement with Governor Newsom:
“Athletes should not be restricted by the NCAA, which is why I love Governor Newsom for taking the first steps in what will be a major movement in collegiate sports, beginning with signing the Fair Pay to Play Act. This should start a domino effect in other states to stop the NCAA ban on collegiate athletes making money through endorsement deals. Colleges are making hundreds of millions of dollars off of these players so I believe athletes should be able to make money based on their own personal business and brand.”
We also reached out to Harlem Globetrotters star and owner of BullBodyProject, Will Bullard:
“I think that this is a great idea. Athletes in college work just as hard as the next level guys, if not harder, to prove a point that they belong on that next level. For them not to be compensated for their hard work and effort that they do for their school is wrong. When I was a college athlete, we got per diem I would say for the month throughout scholarships, but it wasn’t nothing like the next level. The top-tier athletes should definitely get paid because of all the money and attention the bring to the school. For example, Obama went to watch Zion play for 30 seconds before he busted out his shoes. So I agree that college kids should get paid for their services out side of the scholarship.”
Grit Daily: Do you think California’s law would disrupt the very essence of NCAA rules as the organization claims will happen?
Will Bullard: I don’t think it’ll mess the NCAA rules up. I actually think it’ll make kids want to go to college, and it gives kid in high school something to look forward to!
GD: How will it affect the NCAA in your opinion?
WB: It’ll not only put the NCAA back in good standards with everyone, but it’ll give kids across the country that good hope about college sports. It’s more to the games and hard work, but it’s a whole college experience! Being an athlete in the NCAA is hard work because you’re not a normal student, you’re a student athlete—you have 2 jobs and the very demanding schedule. The athletic programs makes being a student hard! I don’t think getting compensated for your hard work is a bad thing at all.
What Concerns Remain?
From a legal standpoint, if California and the NCAA remain at odds in 2023, the Fair Pay To Play Act will likely lead to lawsuits that will require a judge to decide how it can be enforced. The NCAA contends the new law is unconstitutional because it violates rules that protect interstate commerce.
Skinner said, however, that multiple legal experts have assured her that the bill is constitutional. Furthermore, she said the NCAA’s assertion that it will ban California schools from future competition would violate federal antitrust laws.
“The NCAA has repeatedly lost antitrust cases in courts throughout the nation,” Skinner said. “As a result, threats are their primary weapon.”
A series of lawsuits, many of them filed in California courthouses, have chipped away at the NCAA’s compensation rules during the last decade.
Former UCLA basketball player Ed O’Bannon filed a lawsuit in 2009 that eventually prompted the NCAA to allow schools to pay athletes “cost of attendance” stipends — typically between $3,000 and $5,000 based on the school — to offset the price of some education-related items not covered by a scholarship.
SB 206 allows for college athletes to receive compensation from outside enterprises, enabling them to profit off their ability, marketability, intellect and more — the way every other college student outside the purview of the NCAA has been able to for decades.
California’s move now turns the tide to the NCAA to act, placing a hard deadline to come up with a real solution. Indeed, the NCAA does not want different states to have different rules about likeness rights, so at the end of the day, virtually every student-athlete now has an ability to market their own likeness.