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Image via Wikipedia user Yanping Nora Soong.

published on October 3, 2019 - 1:19 PM
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Athletes, universities and the NCAA got the final word from Gov. Gavin Newsom when he signed a bill allowing players rights to their likenesses.

With governance over 24 sports including basketball and regular season football, the nonprofit NCAA oversees 1,117 colleges and universities across the country.

Introduced by state Senators Nancy Skinner (D-Berkeley) and Steven Bradford (D-Gardena), Senate Bill 206, otherwise known as the “Fair Pay to Play Act,” changes decades of restrictions on student athletes and businesses in the state of California.

The bill passed unanimously in both houses of the California legislature. And now, beginning in 2023, neither schools nor the NCAA could stop a player from accepting an endorsement or hiring an agent or lawyer on their behalf.

In the four years before implementation, the NCAA’s committee on student endorsements would have to decide if the effects on fundraising, student time management and the decline of amateurship are enough to keep the national organization from coming to loggerheads with the state of California.

Former Secretary of State and then-head of the Commission on College Basketball Condoleezza Rice called the rules for athlete pay “incomprehensible” in 2018.

In the 2016-17 school year, the NCAA made a record-breaking $1.2 billion in revenue, according to a report from Senator Chris Murphy (D-Connecticut).

That year, total revenue made by college sports programs topped $14 billion.

In 2003, that total equaled $4 billion.

 

Source: U.S. Sen. Chris Murphy (D-Connecticut) report, “Madness, Inc.”

 

More than 100 million people watch the NCAA basketball tournament, commonly called March Madness. Advertisers pony up as much as $1 million for a 30-second commercial spot, according to the report.

A case was brought against the NCAA in 2009 from a basketball player over a licensing deal between video game developer EA Sports and the NCAA. The deal allowed EA to use the likenesses of college players for their NCAA franchise.

EA Sports executive Joel Linzner testified that their NCAA football game franchise has garnered about $80 million a year in revenue, according to a May article from USA Today.

“The issue has recently come to a head over the last decade or so as collegiate sports have begun to mimic professional sports more and more,” said Courtney Brunious, full-time faculty at University of Southern California, who teaches sports business.

In order to play in NCAA-sanctioned games, players must abide by the organization’s handbook, which restricts nearly all forms of payment, outlines academic standards that must be maintained as well as a number of other rules to “ensure student success.” This goes so far as to limit meals given to athletes from businesses.

Members of the NCAA Board of Governors wrote a letter to Newsom Sept. 11 asking him to not sign the bill because “it would erase the critical distinction between college and professional athletics.” The NCAA went so far as to threaten a ban on California universities playing in games due to “an unfair recruiting advantage.”

The NCAA did not respond to multiple requests for comment.

The authors of the bill have accused the current system of being exploitative and “generating wealth for all involved except the students.”

The NCAA’s website said that it pays out $2.9 billion annually in scholarships to Division I and II schools. Of all Fresno State’s athletes, 75% earn scholarships, said Frank Bucher, senior associate athletics directors for the university.

Fresno State athletics officials declined to comment further for this story.
Despite that, however, some claim it is still imbalanced.

The report from Sen. Murphy found that of the 65 Power Five conference programs, 12% of revenue went to scholarships while 16% went to coaches’ salaries.

Former Dallas Cowboys and Fresno State Quarterback Kevin Sweeney said that managing both school and sports was akin to having two 40-hour-a-week jobs. And on top of both of those jobs, he had to recover from the physical intensity of the game. He said he averaged four to eight hours a week in rehabilitation. And he says that when he was playing in the ‘80s, he had teammates who were running out of food by the end of the month.

“Universities in major programs are making a lot of money,” Sweeney said. “They need to find a happy medium.”

The Fair Pay to Play Act does not allow colleges to pay athletes.

And while the NCAA said allowing professional-style endorsements for college athletes would harm competition and favor big schools, Brunious says the advantage already exists.

“Name brand schools usually have bigger athletic department budgets, they have nicer facilities, they have the ability to have more robust coaching staffs,” Brunious said. “There are built-in advantages for the bigger schools already, so I don’t know if it would change that much in terms of how much an advantage they have.”

Instead, Brunious predicts that what may happen for smaller schools is the emergence of local businesses hoping to capitalize on college athletes to help market their own brands.

Sweeney says that after graduating he wanted to maintain his privacy, but there were a number of businesses that asked him to come out and endorse their product.

 

Source: U.S. Sen. Chris Murphy (D-Connecticut) report, “Madness, Inc.”

 

“You see it a lot of times in professional sports where there are associations that athletes have with their local businesses. They’ll be brand ambassadors or sponsors for local brands or local products, and those aren’t necessarily on a national scale, but they do still generate some type of revenue for that athlete,” Brunious said.

It may even help in allowing athletes in sports other than basketball or football to earn sponsorship dollars from organizations. That may supplement scholarships for students.

The report from Sen. Murphy found that the NCAA averages $31.9 million from football, more than all other sports combined.

On the flip side, the bill may also pit athletes against universities in competition for limited marketing budgets.

“There may be a case of what ends up being a net gain for the athletes ends up being a net loss for the school’s athletic departments from a sponsorship standpoint,” Brunious said.

California isn’t the only state looking to press the NCAA. Two South Carolina lawmakers have plans to file a bill similar to SB 206 in January, when the Legislature reconvenes, according to the Washington Post.

A state representative in Washington state proposed a bill earlier this year that would allow student to receive endorsements. It went so far as to allow students to sue the NCAA on antitrust violations. One version of the bill died in committee. A companion bill in the Washington Senate made it so far as the Ways and Means Committee before it ended.

If movements like these are successful, they may thwart the NCAA’s ability to pressure states with threats to keep them from sanctioned games and tournaments.

Brunious thinks that even if the California bill passes, the issue will be resolved before the 2023 deadline.

The first section of SB 206 states it is the intent of the legislature to monitor the group the NCAA commissioned in May and “revisit the issue to implement significant findings and recommendations.”

“There are too many large organizations that have a large stake in resolving this,” Brunious said.


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