20 January 2022 - Firm News
This article was initially published in Forbes on Tuesday, December 17, 2109.
In September, California Governor Gavin Newsom signed the Fair Pay to Play Act into law. As of January 1, 2023, California’s law will enable college athletes in the State of California to profit on their name, image, and likeness. The change will allow college athletes to receive compensation from activities such as promoting products and endorsing brands.
The law, which contradicts long-standing NCAA amateurism rules, propelled a flurry of similar proposed state legislation across the country. Some states expanded on California’s law. New York, for example, would require colleges to fund “injured athlete” accounts to provide financial benefits to athletes who suffer career-ending or long-term injuries. In Congress, bipartisan support for similar federal legislation emerged. Name, image, and likeness compensation also became a prevalent issue among Democratic presidential candidates.
Likely feeling pressure from the growing legislative activity, in late October, the NCAA’s governing board announced that it unanimously approved exploring changes to its amateurism rules to permit college athletes to benefit from the use of their name, image, and likeness. However, the NCAA’s announcement left many questions unanswered. It did not contain specifics as to how and when the amateurism rules would change. Its carefully crafted language led some to believe that the NCAA would continue dragging its feet on the issue.
This month more federal action was announced. Senator Chris Murphy, D-Connecticut, and Senator Mitt Romney, R-Utah, announced the formation of a bipartisan working group to review athlete compensation. The group will meet early next year to explore the necessary legislation.
With looming federal and state legislation, it is in the NCAA’s best interest to act swiftly. While California’s law doesn’t take effect until 2023, federal or other state legislation could come sooner. Conflicting state legislation on athlete compensation would create chaos and result in legal disputes. While federal law would be more practical, the NCAA should pass its own meaningful rule changes with the appropriate input and buy-in from athletes, school officials, and other stakeholders.
Permitting college athletes to profit from their name, image, and likeness will undoubtedly create new concerns and challenges for both colleges and athletes. Some matters will be addressed by limitations and requirements contained in any new legislation. In California’s law, athletes are prohibited from entering into contracts that conflict with school sponsorships, and athletes must hire state-licensed agents.
Other challenges will need to be addressed by the schools. College athletes are young people, many of whom have not had to properly manage personal finances, negotiate contracts, or hire agents or attorneys. Today, many university athletic departments already provide athletes with some life skills development training, which typically includes a financial literacy component. As a practical matter, these programs may need to be supplemented to address new areas of concern and information gaps. Presumably, universities have the personnel and resources to provide necessary services on campus but may need to consider requiring participation from their athletes and providing other on-going support for the services to be effective.
Many who oppose changes to the NCAA’s amateurism rules seem to isolate any benefits to athletes in high revenue-generating sports, like college football and basketball. However, there are real benefits for athletes in non-revenue generating sports and sports where athletes are less likely to become professionals, and for female athletes. Take swimming and gymnastics, for example, where college athletes can create significant fame and potential for fortune while competing in the Olympics. There is no post-college professional circuit with a considerable payday. These athletes must decide between lucrative sponsorship opportunities or competing in college. Missy Franklin, the five-time Olympic gold medalist, gave up money from sponsors to preserve her ability to swim in college. Katie Ledecky, former Stanford University swimmer and five-time Olympic gold medalist, forfeited her NCAA eligibility to sign a lucrative endorsement deal with swimwear company TYR.
Then there is UCLA gymnast Katelyn Ohashi, whose impressive floor routines went viral this year. Ohashi was unable to monetize any of her newfound celebrity and marketability due to the NCAA’s amateurism rules. “I was handcuffed by the NCAA’s rules,” Ohashi stated in a New York Times opinion video published in October.
The overwhelming majority of college athletes will not play professional sports or have national market appeal. The opportunity for most athletes to derive any financial benefit from the use of their name, image, and likeness will unlikely lead to windfall profits. Instead, it will lead to supplemental income, a savings cushion, or a head start on paying back student debt. As a result, meaningful change by the NCAA will ultimately lead to real-life benefits for college athletes fortunate enough profit on their name, image and likeness.