Is the NCAA On Board With the CA Student-Athlete Law? A Look at the Fine Print

The NCAA’s announcement this past Tuesday that it is clearing the way for college athletes to begin profiting from their name, image and likeness has generated quite a bit of buzz, especially in wake of California’s recently-passed law requiring the state’s schools to allow college athletes to earn endorsement money. The organization’s governing board directed its three divisions to immediately consider changing the rules governing such benefits for athletes.¹

But is this step by the NCAA as groundbreaking as its news coverage seems to imply? Is the organization reading the tea leaves and changing its long-held beliefs on amateurism? As the NCAA signs billion-dollar contracts and its coaches command million-dollar salaries, is this a major step in the movement to finally allow American college athletes to take in some of that revenue swilling around their sports, like an eighteen-year-old striker for Manchester United or a sixteen-year-old Eastern European tennis player? Can Ed O’Bannon (the lead plaintiff in a class action lawsuit filed against the NCAA in 2009 over its commercial use of athletes’ images) take comfort that the movement he bolstered is taking a huge step?

Ed O’Bannon, lead plaintiff in O’Bannon v. NCAA, a class action lawsuit filed against the NCAA over its commercial use of student-athlete images. Not the last time a person, or governing body, from California has been a thorn in the NCAA’s side. (Al Bello/Allsport/Getty Images)

In a word, no. Some skepticism is warranted here. Journalists such as Matt Brown of SBNation and Nate Scott of USA Today are correctly wondering how concrete a step this actually is. A careful reading of the relevant documents is required.

California Senate Bill #206 — Collegiate Athletics: Student Athlete Compensation and Representation (SB206)

SB206 prohibits institutions from preventing a student from earning compensation from one’s name, image or likeness, and declares that earning such compensation shall not affect the student’s scholarship eligibility. Just to reiterate, the bill does not allow for colleges to pay athletes. It merely allows an athlete to profit off of their likeness. The law also prohibits institutions from penalizing students for hiring agents or attorneys.

This brief (four-page) bill is a stunning “shot heard round the world,” or at least the round U.S. intercollegiate athletic landscape. I can only envision past athletes who have been penalized for taking a fee for signing autographs, like Todd Gurley and Johnny Manziel, or for hiring an agent nodding their head in agreement. And, like a rap beef, SB206 names names, as the NCAA is specifically mentioned in plain language. The bill prohibits students who are earning compensation from their likenesses or hiring agents and lawyers from being penalized by “an athletic association, conference, or other group or organization with authority over intercollegiate athletics, including, but not limited to, the National Collegiate Athletic Association.”

California governor Gavin Newsom. (Rich Pedroncelli/Associated Press)

NCAA Announcement

On Tuesday, the NCAA posted a statement on its website announcing in the first paragraph that it had voted unanimously to “permit students participating in athletics the opportunity to benefit from the use of their name, image and likeness.” But the rest of the statement is couched in milquetoast actions and caveats. The NCAA’s Board of Governors is merely directing its three divisions “to immediately consider updates to relevant bylaws and policies.” These actions are “a natural extension of the numerous steps NCAA members have taken in recent years to improve support for student-athletes.” On the associated Q&A page, the NCAA states that “more discussion and examination… is needed before deciding on specific approaches to future name, image and likeness opportunities for student-athletes.” And, of course, everything will have to be conducted “in a manner consistent with the collegiate model.” Accordingly the organization uses language in the statement that it always has, such as “make clear that compensation for athletics performance or participation is impermissible” and “reaffirm that student-athletes are students first and not employees of the university.”

This announcement was based on feedback from a working group on this issue that was established by the NCAA back in May to little fanfare. Per Tuesday’s announcement this working group “will continue to gather feedback through April on how best to respond to the state and federal legislative environment and to refine its recommendations on the principles and regulatory framework.”

NCAA president Mark Emmert. (David J. Phillip/Associated Press)

After reviewing the documents, here are a few points that come to mind.

1 — Turf War

This situation has elements of the perennial states’ rights versus national oversight debate that has characterized America since the Constitutional Convention in 1787. The NCAA raises this subject on the Q&A page, stating that “[i]t is critical that college sports are regulated at a national level. This ensures the uniformity of rules and a level playing field for student-athletes.”

As previously mentioned, SB206 specifically references the NCAA. Returning fire, the NCAA specifically mentions its opposition to the California law. It further states that “the California law and other proposed measures ultimately would lead to pay for play and turn college athletes into employees” and that “the action taken by California likely is unconstitutional, and the actions proposed by other states make clear the harmful impact of disparate sets of state laws.”

Contrary to the NCAA’s assertion, it bears repeating that SB206 does not call for universities to pay athletes directly. In fact, there is a specific clause in the law stating that universities “shall not provide a prospective student athlete with compensation in relation to the athlete’s name, image, or likeness.”

2 — Different and Opposing Approaches

The NCAA, touted by media sources as moving on this issue, is still opposed to and considering litigation against California for actually moving on this issue. Additionally, the NCAA has threatened to bar California from its competitions.

There is a fundamental difference in approach. SB206 wants to remove onerous rules preventing student-athletes from monetizing their name, image and likeness, while the NCAA merely wants to refine these rules. California and other entities considering similar measures (such as Congress and the state of South Carolina) are focused on fairness to the student athlete, while the NCAA seems focused on competitiveness between institutions and establishing a clear regulatory framework (with the NCAA in charge, of course), while paying lip service to fairness in compensation for student-athletes.

3 — Does California Have Material Influence on NCAA Working Groups?

Like an activist who takes a role as a prosecutor or runs for office, there has always been an appeal in reforming the system from within. However, from a purely numerical perspective, it doesn’t appear that California has much influence on the NCAA or its working group. Of the 1,115 NCAA member institutions,² only 5% (58) are from California. The NCAA’s working group has sixteen members, not including the three student-athlete representatives that were not specifically named. The only member who represents California institutions is Carolayne Henry, the senior associate commissioner for governance and legal affairs of the Mountain West Conference (MWC). Of the eleven MWC member institutions, three are from California: Fresno State, San Jose State and San Diego State.

Note that California State University, Stanford University, the University of California, and the University of Southern California all opposed SB206 while it was being considered in committee.³

Is the NCAA Getting on Board or Not?

I recently read that an old adage in journalism is that if a question is asked in the title the answer is usually no. The NCAA is nodding to public opinion by forming a working group, but not really drawing a line in the sand. Anyone who’s worked in Corporate America, or politics for that matter, has seen this movie, so to speak. Company sees hot button issue; forms working group, task force, committee, or whatever you want to call it; assigns staff; has regular meetings/conference calls/etc.; working group/task force/committee comes up with a nice glossy report with plenty of shiny charts and graphs; issue blows over; report gathers dust on shelf in executive office; company moves on to regular course of business, essentially unchanged. (I’ve worked in both Corporate America and the government so I can attest to this phenomenon, although I’ll admit my description of it is a bit pithy and stylized.) If the NCAA was really on board, it would be supporting, or at least not denigrating and considering litigation against, California’s approach. It looks like the leopard can’t change its spots after all, at least not without a Supreme Court ruling. Unfortunately for the NCAA, it doesn’t look like this issue will blow over, and it continues to move forward — albeit at a glacial pace, as the CA law is not scheduled to take effect until 2023.

¹ Source: Wall Street Journal. https://www.wsj.com/articles/ncaa-clears-way-to-allow-athletes-to-be-compensated-11572372807

² The NCAA “About Us” section states that there are 1,117 member schools, but the interactive member school graphic lists 1,115 institutions

³ Source: Wall Street Journal. https://www.wsj.com/articles/california-takes-aim-at-ncaa-pay-ban-11568244553

Born in the Bronx, raised in NJ, living in Harlem. BA from Harvard, MBA from Dartmouth, CFA. Dual citizen: USA & Jamaica, Finance & Soccer.

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