From The Athletic:
How a Calif. state senator became inspired to author the bill that could change the NCAA and share the wealth
By Robert Litan Jun 26, 2019
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College athletics, especially at the major Division I schools, are a big business. The NCAA’s March Madness earns the organization and hence its member schools roughly $1 billion a year, primarily from television revenue. More than a dozen schools bring in more than $100 million a year for their athletic programs, mostly from football.
The lion’s share of all this money goes to the schools and the coaches, not to the athletes who generate all that income and who put their bodies on the line during games and practices.
This situation persists because the NCAA has long limited scholarship monies its member schools can hand out to athletes, in the interest of promoting “amateurism.” Prompted by lawsuits from former players, the NCAA has lifted the scholarship ceiling to the “full cost of attendance,” a figure that varies by school, depending on tuition, fees, board and food charges.
D-I athletes may eventually get some wiggle room in the scholarship monies they receive under a federal court decision handed down earlier this year in the widely publicized “Alston” case, which prohibited the NCAA from setting the caps on education-related financial aid packages but allowed the individual conferences to do so instead. U.S. District Judge Claudia Wilken closely followed the reasoning of the Ninth Circuit Court of Appeals, which had overturned her earlier ruling in an antitrust case brought by former UCLA basketball star Ed O’Bannon in which she awarded former D-I athletes $5,000 per year for their “names, likenesses and images” (NIL rights). The appellate court ruled that while the NCAA could not under the antitrust laws cap athletic scholarships below the full cost of attendance – because these scholarship monies were “tethered to education” — the NCAA had the authority to prevent athletes from being paid for their NIL rights, which are unrelated to education. Wilken’s latest ruling in the Alston case is on appeal before the same Ninth Circuit court, but no schedule for briefing, let alone a decision, has yet been provided.
The Alston ruling, however it ends up, has not stopped efforts to enable college athletes to earn NIL money – endorsement, speaking, or other revenue paid by third parties directly to the athletes, not through the schools.
Early this year, the Majority Whip of the California state Senate, Nancy Skinner, introduced the “Fair Pay to Play Act” (Senate Bill 206) which would prohibit California colleges from preventing their athletes from earning NIL money. Her bill, which quickly received bipartisan sponsorship, directly challenged the NCAA’s own NIL prohibition (more about the NCAA’s views about the bill soon). Remarkably, on May 22, the full Senate approved the bill by a lopsided margin of 31-4.
On Tuesday the first committee in the California State Assembly to consider the bill, the Arts, Entertainment, Sports, Tourism, and Internet MediaCommittee, approved it unanimously, 5-0. It now goes to the Higher Education Committee for a vote on July 9, and if approved then, from there to the Appropriations Committee, which if it approves, sends the bill to the floor sometime in August, or before the California legislature closes its 2019 session in mid-September.
In an interview last Friday, conducted before the first Assembly committee vote, Skinner told The Athletic she was “looking forward to being successful on the Assembly floor.” She added that in her time in the legislature – she was an Assembly member before graduating to the Senate – it has been “rare” for a bill she has backed not to be enacted.
Skinner says she has long been interested in ensuring that athletes get a far shake, stemming from her days as an undergraduate and graduate student at the University of California, Berkeley, and as a life-long sports fan. Al Cal, she was strongly influenced by Professor Harry Edwards, a long outspoken advocate of athletes’ rights, and throughout her adult life by UCLA and NBA great Kareem Abdul-Jabbar who has opposed the NCAA’s limits on athletes’ compensation.
Among other things, Skinner has been critical of the limits’ effects on minority athletes, who typically come from low-income families, and who barely scrape by in college as it is, even with full cost of attendance scholarships. In response to a frequently heard criticism of the bill that it would only enrich a few big-name football and basketball stars, Skinner notes that local businesses, not just national name brands, would be interested in running commercials and giving other NIL-earning opportunities to multiple athletes on college teams. Skinner cited the example of a star female wrestler from a small California town who will never make money as a professional athlete, but under SB 206 would be entitled to receive NIL money from a proud local sponsor.
It’s not just athletes in the traditional “money” sports who would benefit. Skinner points to UCLA superstar gymnast Katelyn Ohashi, whose perfect floor exercise has been viewed by almost 44 million viewers on YouTube. Why, Skinner asks, shouldn’t she be allowed to monetize her athletic success in the way that other YouTube personalities, with far fewer views, have found ways to do?
Skinner says she was stimulated to develop and introduce SB 206 after listening to a speech at the Oakland Rotary Club given by San Francisco sports economist Andy Schwarz and after further consulting with a broad range of experts. She credits San Diego litigator and University of SanDiego School of Law adjunct law professor Len Simon with one twist that was added to the bill as it wound its way through the California Senate: delaying the effective date until 2023, to give the NCAA time to change its current policy preventing college athletes from receiving NIL income. The delay also gives other states that are looking at the NIL issue time to decide whether they want to follow in California’s footsteps. At the federal level, one Congressman, Rep. Mark Walker (R-NC), introduced legislation in March in the U.S., House of Representatives that would deny colleges their exemptions if they don’t permit their athletes to earn NIL income.
Not unexpectedly, the NCAA has been less than thrilled with SB 206. Indeed, the organization has been trying both to catch up to and quash the bill.
On May 14, the NCAA announced it was creating a working group, chaired by Big East commissioner Val Ackerman, to study and report back recommendations on NIL policy by this October. It is hard to escape the conclusion that the NCAA was moved to create its panel by the impending consideration of SB 206 in the California Senate. If that was the motive, it didn’t work, because as noted, the full Senate overwhelmingly approved the bill.
On Monday, in a widely reported development, the NCAA upped the ante. Its president, Mark Emmert, sent a letter to two Assembly Committee chairs warning them that if SB 206 becomes law, California colleges could be prohibited from having their teams participate in NCAA championships. That move didn’t work either and may have backfired, because as also noted, the first Assembly committee to consider the Senate bill unanimously approved it.
One can only speculate what, if anything, the NCAA will do next, as the next Assembly committee readies for a vote soon, or how, if at all, possible passage of the bill by the full Assembly – and presumed signing into law by Governor Gavin Newsom – would affect the Ackerman Commission’s recommendations. Emmert’s threat to the California schools, however, may be a warning to the Commission, as well as to California, not to endorse a free market in NIL income for athletes generally.
In theory, if SB 206 does become law and the NCAA follows through on its threat, one or more California colleges could sue the NCAA for engaging in a group boycott, which is normally illegal under the federal antitrust laws, as law and business professor Marc Edelman has written. However, in practice, this is highly unlikely, as the California schools so far have opposed SB 206, even before the Emmert letter. I am guessing that fear of the NCAA is possible one reason for the California schools’ stance.
(Mike Lawrie / Getty Images)
Meanwhile, attorney and USD law professor Simon has argued that a free market in NIL income would be a clever way for the NCAA and member schools to get out of paying athletes more than the current full cost of attendance, and yet be able to claim that as long as someone else is paying for it, college athletes can earn money for participating in their sports. This would not only save the schools money, but enable coaches and athletic directors to avoid having to make the difficult decisions themselves on such question as: how much individual team players should be paid, and how to do so while complying with Title IX requirements that women athletes be treated comparably to their male counterparts. Instead, the market, through local and national sponsors, would be making all these decisions (though NIL income, as it is paid by third parties, would not be subject to Title IX).
Asked about the possibility that alumni groups or wealthy university supporters could form sham sponsorships, and thereby unleash a bidding war for athletes far beyond what legitimate business sponsors truly intent on gaining athlete endorsers would be willing to pay, Simon told The Athletic that the NCAA still would be within its rights to police such activity, by requiring that NIL agreements with athletes satisfy a legitimate commercial test. Further, the NCAA could insist that NIL payments not be used to steer an athlete to a particular school – a limitation which the NCAA also would have to enforce.
Simon adds that one virtue of an unrestricted, but legitimate NIL market is that it could “dry up” the under-the-table payments from certain companies to athletes that have been at the heart of the recent college basketball scandal. He asks: “If nationally recruited high school basketball players knew that legitimate payments were around the corner, why would they risk their college eligibility by taking secret payments?”
Simon wrote his essay in late April. Events since then in California at least have been moving in the direction he outlined then. More movement in the same direction may happen, depending on upcoming votes in the California legislature, and within the NCAA. The world Simon envisions also may eclipse in importance what happens in the federal judicial system, as the Alston case goes before the Ninth Circuit appellate court. Stay tuned.
(Top photo: Rich Pedroncelli / AP Photo)
How a Calif. state senator became inspired to author the bill that could change the NCAA and share the wealth
By Robert Litan Jun 26, 2019
College athletics, especially at the major Division I schools, are a big business. The NCAA’s March Madness earns the organization and hence its member schools roughly $1 billion a year, primarily from television revenue. More than a dozen schools bring in more than $100 million a year for their athletic programs, mostly from football.
The lion’s share of all this money goes to the schools and the coaches, not to the athletes who generate all that income and who put their bodies on the line during games and practices.
This situation persists because the NCAA has long limited scholarship monies its member schools can hand out to athletes, in the interest of promoting “amateurism.” Prompted by lawsuits from former players, the NCAA has lifted the scholarship ceiling to the “full cost of attendance,” a figure that varies by school, depending on tuition, fees, board and food charges.
D-I athletes may eventually get some wiggle room in the scholarship monies they receive under a federal court decision handed down earlier this year in the widely publicized “Alston” case, which prohibited the NCAA from setting the caps on education-related financial aid packages but allowed the individual conferences to do so instead. U.S. District Judge Claudia Wilken closely followed the reasoning of the Ninth Circuit Court of Appeals, which had overturned her earlier ruling in an antitrust case brought by former UCLA basketball star Ed O’Bannon in which she awarded former D-I athletes $5,000 per year for their “names, likenesses and images” (NIL rights). The appellate court ruled that while the NCAA could not under the antitrust laws cap athletic scholarships below the full cost of attendance – because these scholarship monies were “tethered to education” — the NCAA had the authority to prevent athletes from being paid for their NIL rights, which are unrelated to education. Wilken’s latest ruling in the Alston case is on appeal before the same Ninth Circuit court, but no schedule for briefing, let alone a decision, has yet been provided.
The Alston ruling, however it ends up, has not stopped efforts to enable college athletes to earn NIL money – endorsement, speaking, or other revenue paid by third parties directly to the athletes, not through the schools.
Early this year, the Majority Whip of the California state Senate, Nancy Skinner, introduced the “Fair Pay to Play Act” (Senate Bill 206) which would prohibit California colleges from preventing their athletes from earning NIL money. Her bill, which quickly received bipartisan sponsorship, directly challenged the NCAA’s own NIL prohibition (more about the NCAA’s views about the bill soon). Remarkably, on May 22, the full Senate approved the bill by a lopsided margin of 31-4.
On Tuesday the first committee in the California State Assembly to consider the bill, the Arts, Entertainment, Sports, Tourism, and Internet MediaCommittee, approved it unanimously, 5-0. It now goes to the Higher Education Committee for a vote on July 9, and if approved then, from there to the Appropriations Committee, which if it approves, sends the bill to the floor sometime in August, or before the California legislature closes its 2019 session in mid-September.
In an interview last Friday, conducted before the first Assembly committee vote, Skinner told The Athletic she was “looking forward to being successful on the Assembly floor.” She added that in her time in the legislature – she was an Assembly member before graduating to the Senate – it has been “rare” for a bill she has backed not to be enacted.
Skinner says she has long been interested in ensuring that athletes get a far shake, stemming from her days as an undergraduate and graduate student at the University of California, Berkeley, and as a life-long sports fan. Al Cal, she was strongly influenced by Professor Harry Edwards, a long outspoken advocate of athletes’ rights, and throughout her adult life by UCLA and NBA great Kareem Abdul-Jabbar who has opposed the NCAA’s limits on athletes’ compensation.
Among other things, Skinner has been critical of the limits’ effects on minority athletes, who typically come from low-income families, and who barely scrape by in college as it is, even with full cost of attendance scholarships. In response to a frequently heard criticism of the bill that it would only enrich a few big-name football and basketball stars, Skinner notes that local businesses, not just national name brands, would be interested in running commercials and giving other NIL-earning opportunities to multiple athletes on college teams. Skinner cited the example of a star female wrestler from a small California town who will never make money as a professional athlete, but under SB 206 would be entitled to receive NIL money from a proud local sponsor.
It’s not just athletes in the traditional “money” sports who would benefit. Skinner points to UCLA superstar gymnast Katelyn Ohashi, whose perfect floor exercise has been viewed by almost 44 million viewers on YouTube. Why, Skinner asks, shouldn’t she be allowed to monetize her athletic success in the way that other YouTube personalities, with far fewer views, have found ways to do?
Skinner says she was stimulated to develop and introduce SB 206 after listening to a speech at the Oakland Rotary Club given by San Francisco sports economist Andy Schwarz and after further consulting with a broad range of experts. She credits San Diego litigator and University of SanDiego School of Law adjunct law professor Len Simon with one twist that was added to the bill as it wound its way through the California Senate: delaying the effective date until 2023, to give the NCAA time to change its current policy preventing college athletes from receiving NIL income. The delay also gives other states that are looking at the NIL issue time to decide whether they want to follow in California’s footsteps. At the federal level, one Congressman, Rep. Mark Walker (R-NC), introduced legislation in March in the U.S., House of Representatives that would deny colleges their exemptions if they don’t permit their athletes to earn NIL income.
Not unexpectedly, the NCAA has been less than thrilled with SB 206. Indeed, the organization has been trying both to catch up to and quash the bill.
On May 14, the NCAA announced it was creating a working group, chaired by Big East commissioner Val Ackerman, to study and report back recommendations on NIL policy by this October. It is hard to escape the conclusion that the NCAA was moved to create its panel by the impending consideration of SB 206 in the California Senate. If that was the motive, it didn’t work, because as noted, the full Senate overwhelmingly approved the bill.
On Monday, in a widely reported development, the NCAA upped the ante. Its president, Mark Emmert, sent a letter to two Assembly Committee chairs warning them that if SB 206 becomes law, California colleges could be prohibited from having their teams participate in NCAA championships. That move didn’t work either and may have backfired, because as also noted, the first Assembly committee to consider the Senate bill unanimously approved it.
One can only speculate what, if anything, the NCAA will do next, as the next Assembly committee readies for a vote soon, or how, if at all, possible passage of the bill by the full Assembly – and presumed signing into law by Governor Gavin Newsom – would affect the Ackerman Commission’s recommendations. Emmert’s threat to the California schools, however, may be a warning to the Commission, as well as to California, not to endorse a free market in NIL income for athletes generally.
In theory, if SB 206 does become law and the NCAA follows through on its threat, one or more California colleges could sue the NCAA for engaging in a group boycott, which is normally illegal under the federal antitrust laws, as law and business professor Marc Edelman has written. However, in practice, this is highly unlikely, as the California schools so far have opposed SB 206, even before the Emmert letter. I am guessing that fear of the NCAA is possible one reason for the California schools’ stance.
(Mike Lawrie / Getty Images)
Meanwhile, attorney and USD law professor Simon has argued that a free market in NIL income would be a clever way for the NCAA and member schools to get out of paying athletes more than the current full cost of attendance, and yet be able to claim that as long as someone else is paying for it, college athletes can earn money for participating in their sports. This would not only save the schools money, but enable coaches and athletic directors to avoid having to make the difficult decisions themselves on such question as: how much individual team players should be paid, and how to do so while complying with Title IX requirements that women athletes be treated comparably to their male counterparts. Instead, the market, through local and national sponsors, would be making all these decisions (though NIL income, as it is paid by third parties, would not be subject to Title IX).
Asked about the possibility that alumni groups or wealthy university supporters could form sham sponsorships, and thereby unleash a bidding war for athletes far beyond what legitimate business sponsors truly intent on gaining athlete endorsers would be willing to pay, Simon told The Athletic that the NCAA still would be within its rights to police such activity, by requiring that NIL agreements with athletes satisfy a legitimate commercial test. Further, the NCAA could insist that NIL payments not be used to steer an athlete to a particular school – a limitation which the NCAA also would have to enforce.
Simon adds that one virtue of an unrestricted, but legitimate NIL market is that it could “dry up” the under-the-table payments from certain companies to athletes that have been at the heart of the recent college basketball scandal. He asks: “If nationally recruited high school basketball players knew that legitimate payments were around the corner, why would they risk their college eligibility by taking secret payments?”
Simon wrote his essay in late April. Events since then in California at least have been moving in the direction he outlined then. More movement in the same direction may happen, depending on upcoming votes in the California legislature, and within the NCAA. The world Simon envisions also may eclipse in importance what happens in the federal judicial system, as the Alston case goes before the Ninth Circuit appellate court. Stay tuned.
(Top photo: Rich Pedroncelli / AP Photo)
