California's Fair Pay to Play & the NCAA

College athletes' ability to profit from their name, image, and likeness

On October 29, 2019, the NCAA Board of Governors, led by Ohio State President Michael Drake, unanimously voted to allow college athletes to benefit from their name, image, and likeness. This is an abrupt about-face for the NCAA, which recently referred to the issue as an existential threat. The NCAA’s official statement touts its modernization, but it includes several mandatory principles that may run counter to its vote, including a requirement the NCAA “make clear that compensation for athletic performance or participation is impermissible.”

It is not free market compensation that is contemplated by California’s law. California’s September 2019 passage of The Fair Pay to Play Act (Senate Bill 206) made national headlines as the most recent assault on the NCAA’s amateurism requirement and tax-exempt status.States acted quickly in response. Democratic representatives from Florida and Illinois proposed similar bills on September 30, 2019. On October 30, the Illinois House of Representatives approved the bill. Legislators from both parties in Colorado, Kentucky, Minnesota, Nevada, New York, Pennsylvania, and South Carolina are drafting and developing similar legislation. Today, November 6, 2019, Michigan lawmakers proposed a bill modeled after California's legislation.

In pertinent part, California’s bill states:

"A postsecondary educational institution shall not uphold any rule, requirement, standard, or other limitation that prevents a student of that institution participating in intercollegiate athletics from earning compensation as a result of the use of the student’s name, image, or likeness. Earning compensation from the use of a student’s name, image, or likeness shall not affect the student’s scholarship eligibility."

Following the passage of California’s bill, the NCAA continued to threaten a ban of California member schools from national championship competition. They had threatened this since June, so California legislators included Section 2(a)(3) which prohibits such action. It is a wise move, and one likely supported by United States Supreme Court precedent.

In 1984, the United States Supreme Court ruled in favor of the Universities of Georgia and Oklahoma under the Sherman Antitrust Act. NCAA v. Board of Regents. 468 U.S. 85 (1984). The universities challenged the NCAA’s cap on televised football games. The NCAA unsuccessfully argued that this would create unfair competition. As is obvious now, the cap on television rights violated antitrust law. Indeed, major conferences and even the University of Texas now have their own television networks. The NCAA’s threatened embargo of those institutions violated antitrust law in 1984, and its recent actions infringing on name, image, and likeness rights for athletes continued to do so.

The proposed NCAA changes are set to go into effect in January of 2021 – but don’t count on it. The NCAA’s own website has overtly stated concerns that this will lead to pay for play, though most accept that this presently occurs through the efforts of booster organizations. The bigger legal battle confronting the NCAA is the one that student-athletes are waging as they edge ever closer to becoming employees rather than amateurs. Northwestern University athletes tried unionizing in 2014, and did not exactly lose. Instead, the National Labor Relations Board issued the following statement after declining jurisdiction on the issue:

In the decision, the Board held that asserting jurisdiction would not promote labor stability due to the nature and structure of NCAA Division I Football Bowl Subdivision (FBS). By statute the Board does not have jurisdiction over state-run colleges and universities, which constitute 108 of the roughly 125 FBS teams. In addition, every school in the Big Ten, except Northwestern, is a state-run institution. As the NCAA and conference maintain substantial control over individual teams, the Board held that asserting jurisdiction over a single team would not promote stability in labor relations across the league. This decision is narrowly focused to apply only to the players in this case and does not preclude reconsideration of this issue in the future.

It appears evident that the NCAA will fight any measures to become a taxable employer that has to collectively bargain with student athletes.

Categories: Sports Law