Earlier on Monday, California Gov. Gavin Newsom made history when he signed SB 206, dubbed the Fair Pay to Play Act, into law. Newsom signed the bill during an episode of The Shop with LeBron James, a vocal advocate of the legislation.
What happens next after California’s governor signed a bill to pay NCAA players
California just passed a landmark bill, but this battle isn’t over.
This law allows college athletes in California the ability to profit off of their name and likeness, something current NCAA bylaws do not allow them to do. Once the bill goes into effect in 2023, athletes at all 58 of California’s NCAA member institutions could hypothetically cut an ad for a local car dealership or be paid to host a party.
The NCAA, at least in public, has strongly opposed this bill, threatening to ban California schools from postseason competition, including the NCAA tournament.
We’re a long way from 2023, and there are plenty of questions to be answered before the first college basketball player (legally) collects an endorsement check.
How open of a marketplace for likeness rights are we actually going to get?
Already, SB 206 has some restrictions on 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. So if a basketball player goes to a Nike school, he wouldn’t be able to sign an endorsement contract with, say, Adidas. That would probably limit the marketplace for endorsements in apparel, food and beverage, and perhaps other industries as well.
The NCAA would almost assuredly want that marketplace to be even more restrictive, especially so they could say such contracts were “tied to education.” Check out their official statement after Newsom signed the bill, for example (bolding mine).
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. Unfortunately, this new law already is creating confusion for current and future student-athletes, coaches, administrators and campuses, and not just in California.
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.
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.
Will the working group come back and insist that all endorsement money be held in a trust, only to be released after graduation? Will they require firms that sign contracts to offer an educational or internship component to the athlete? Will they require an athlete to maintain a certain GPA in order to retain likeness rights?
Law firm Kennyhertz Perry had what I think is a reasonable possible prediction:
By using the term “tethered to education” in its release, it’s clear that any NIL rules proposed by the NCAA will attempt to fit within the Ninth Circuit’s O’Bannon decision. As a result, it’s highly unlikely that the NCAA will propose a plan where athletes can be paid directly by third parties (such as for appearing in a commercial or signing autographs) or are automatically entitled to cash payments that they can access after they leave school. Doing so would contradict the O’Bannon appellate decision and put its precedential value at risk. More likely is a plan where athletes may engage in activities where they are paid for the use of their NIL, but any money earned is put into a fund that can be accessed as a result of meeting specified academic benchmarks, such as maintaining a certain GPA, meeting yearly academic progress requirements, or graduating.
Will those compromises be acceptable to California lawmakers, or will any restrictions of this labor market spur lawsuits?
On that note, will California be the only state to pass such a law, or will others join them?
The NCAA can talk a big game about threatening major sanctions to California universities, but they probably don’t really have the leverage to do it. Wholesale banning every California school from the postseason, or even the NCAA, would cripple the Pac-12.
Jokes about Pac-12 basketball aside, booting that many teams from the NCAA tournament (the main moneymaker for the NCAA), not to mention that many huge TV markets, could threaten the value of their broadcast and advertising agreements. College administrators have made overblown doomsday predictions before, and any claim that the Rose Bowl, USC, UCLA and Stanford will be cast off to sea probably falls under that camp.
But whatever leverage the NCAA thinks it may have over one state really gets blown up if anybody else passes a similar law.
Already, lawmakers in South Carolina and New York have proposed laws that actually even more aggressive (schools do not directly pay athletes under SB 206, but they do under the South Carolina and New York bills) than what California just passed. A lawmaker in Florida is planning on bringing similar legislation soon.
Such bills have at least been discussed in Washington and Colorado, and a few federal lawmakers and presidential candidates are interested as well.
If just one more state joins, and especially if that state is a populated and important to college athletics as Florida, any hope of nipping radical change in the bud for the NCAA is probably shot. They’ll have to negotiate.
What’s great about this bill is that it forces the NCAA to act
Left to their own devices, the NCAA would rather enact very tiny, piecemeal reforms at a snail’s pace. But outside forces, like the courts, have required them to make major changes, like with the deregulation of TV broadcast rights, or with cost of attendance scholarships.
The NCAA adamantly does not want different states to have different rules about likeness rights, but since SB 206 doesn’t go into effect until 2023, everybody now has a hard deadline to come up with a real solution. The final result may not be as open a marketplace as many advocates may want, but it will unquestionably lead to more athletes being able to secure more money in their pockets. And that’s a positive step.
At the end of the day, virtually every student on campus has the ability to market their own likeness. Allowing athletes to do the same is just common sense, especially since somebody is probably already compensating them for the value of their labor.
And thanks to a bipartisan effort in California, we’re closer to reaching that goal.
