NCAA: National Collegiate Athletics Association or Non-Compensation of Amateur Athletes?

            In 2019, the NCAA recorded a revenue over 1.045 billion dollars, mainly coming from Men’s Basketball TV marketing and television rights.[1] That revenue of over 1 billion dollars was then split among 14 different sources ranging from: Sport Sponsorship and Scholarship Funds to General Administrative Expenses.[2] Not included in this distribution of funds were direct payments to the student athletes responsible for the product being sold. The fact that student-athletes were being left out in the proverbial cold was the basis for decision by California Governor Gavin Newsom to allow athletes to profit from endorsements.[3]

            Governor Newsom signed SB 206, better known as the “Fair Play to Pay Act”[4], in attempts to rectify the large inequality that exists in the current collegiate athletics system.[5] The law specifically states that earning compensation from the use of a student's name, image, or likeness shall not affect the student's scholarship eligibility.[6] Additionally, California State Senator Steve Bradford stated that the purpose of the bill was to put an end to the idea of student athletes being treated as chattels and afford the athletes the opportunity to profit off of their own achievements, likeness, and image.[7]

            While SB 206 is a monumental shift in the landscape of compensating student athletes, it was not a bracket busting, Cinderella story. In 2014, a group of former NCAA athletes led by Ed O’Bannon launched an Anti-Trust law-suit on the NCAA.[8] O’Bannon, the most outstanding player in the NCAA Men’s Basketball Tournament in 1995, and his fellow plaintiffs alleged that the NCAA had violated Anti-Trust laws and the Sherman Act.[9] The basis of these violations arose due to the NCAA’s strict requirement that all student athletes must be amateurs, resulting in an inability to receive compensation for their name, image, or likeness (NIL).[10] While the O’Bannon lawsuit centered around the NCAA franchise video games,[11] the outcome of the case was likely the signaling of a change in opinion towards the NCAA’s amateurism rules. The Ninth Circuit Court of Appeals concluded that the compensation rules requiring college athletes to remain amateurs, were subject to Anti-Trust laws, and those very same rules were restricting trade and/or dissuading competition.[12]  However, in a somewhat odd twist of fate, the 9th Circuit concluded that while amateurism does violate Anti-Trust laws, amateurism is vital to the NCAA’s model, productivity, and demand.[13] Therefore, the end was result was the 9th Circuit concluding that NCAA laws and rules were too restrictive and must be relaxed in certain areas.[14]

            While the O’Bannon decision did not eradicate amateurism from NCAA, it did indicate that some minds were not as deeply entrenched in the concept as prior.[15] Due to the “success” of the decision, the O’Bannon case was picked up in mainstream media.[16] It was touted as being the first time athletes were able to “stick it” to the proverbial “man”. The O’Bannon litigation, which was filed in the district court in 2014, seemed to be a catalyst for many progressive NCAA compensation initiatives for athletes. In 2014, the NCAA decided that athletes could receive unlimited food and snacks in conjunction with their athletic participation.[17] Beginning in the fall of 2015, Division 1 “full-ride” athletes were given cost of living stipends,[18] money that could be used to help the athletes make ends meet. More recently, there has been a push by several United States Congressmen to encourage the NCAA to pay for complete healthcare of athletes who suffer injuries during their collegiate career.[19]

            But in the end, what does any of this actually mean? For starters, the NCAA seems open to the idea of paying players for their name, image, and likeness.[20] In a letter released by Stacey Osburn, NCAA Director of Communications, Ms. Osburn relayed that the NCAA Board of Governors “support[s] rule changes to allow-student athletes to receive compensation”.[21] SB 206 goes into effect in 2023, so that NCAA has a couple of years to determine how exactly it wants to structure the payments players can receive.[22]Additionally, the NCAA has made clear that it does not intend to allow institutions to pay athletes directly, nor does it plan to allow athletes to profit off of the use of conference, school logos, or other trademarked material.[23] This decision likely goes to the NCAA’s major argument and concern in the O’Bannon case. This concern was that allowing institutions to pay athletes directly would ruin the popularity of college athletics.[24]

            While all of this sounds like progress, a lot still remains in the balance. Allowing athletes to profit off their name, image, and likeness is a necessary step, but the NCAA has really made little in the way of sizable concessions. The NCAA essentially stopped capitalizing on the name, image, and likeness of its amateur athletes when it stopped producing its line of NCAA video games in 2013.[25] Additionally, by digging in on direct payment from member schools to athletes, the NCAA has preserved revenue streams for the colleges themselves. In a 10-year span over 2008-2018, the combined revenue of the Power-5 conferences grew by nearly 260%.[26] For comparison, the NFL and NBA revenues grew by only 110%.[27] Thus, the facts still remain that NCAA athletes remain undercompensated in the grand scheme of the economics of collegiate sports from a monetary perspective. Perhaps the most compelling example of this fact is illustrated by the potential salaries of players if college athletes were compensated comparatively to professional standards. Most professional players associations negotiate close to a 50% share of all revenue. If NCAA athletes were entitled to the same share, each football player would be entitled to around $360,000 per year and each male basketball player closer to $500,000 each year.[28] The legal actions and progress may on their face seem to make a significant difference, however, there is still a long way to go in the march for appropriate compensation of college athletes. 

FOOTNOTES

[1] NCAA, http://www.ncaa.org/about/where-does-money-go (last visited Oct. 30, 2020). 

[2] Id.

[3] Colin Dwyer, California Governor Signs Bill Allowing College Athletes To Profit From Endorsements, NPR (Sep. 30, 2019, 11:13 AM) https://www.npr.org/2019/09/30/765700141/california-governor-signs-bill-allowing-college-athletes-to-profit-from-endorsem.

[4] Id.

[5] Id.

[6] Fair Pay to Play Act, ch. 383, 2019 Cal. Legis. Serv. (West).

[7] Id.

[8] Id.

[9] O'Bannon v. Nat'l Collegiate Athletic Ass'n, 802 F.3d 1049, 1053 (9th Cir. 2015).

[10] Id. at 1055.

[11] Id.

[12] Id. at 1070.

[13] Id.

[14] Id. at 1079.

[15] Joe Nocera, O’Bannon Ruling Stands, but N.C.A.A.’s Status Quo May Yet Collapse, N.Y. Times (Oct. 3, 2016), https://www.nytimes.com/2016/10/04/sports/ncaa-obannon-case-ruling-supreme-court.html.

[16] Id.

[17] NCAA Council Votes to Give Student-Athletes Unlimited Meals, Snacks, USA Today (Apr. 15, 2014, 5:17 PM), https://www.usatoday.com/story/sports/college/2014/04/15/ncaa-legislative-council-meals-student-athletes/7750413/.

[18] Blair Kerkhoff & Tod Palmer, They’re Not Paychecks, but Major College Athletes Got Extra Scholarship Stipends for First Time This School Year, The Kansas City Star (Jun. 26, 2016, 12:44 PM),  https://www.kansascity.com/article86062792.html.

[19] Steve Berkowitz, Sen. Chris Murphy Calls for NCAA to Improve Athletes’ Health Care; Meeting With Emmert Set, USA Today (Dec. 16, 2019, 11:02 AM), https://www.usatoday.com/story/sports/college/2019/12/16/report-ncaa-should-pay-complete-health-care-coverage-athletes/2661767001/.

[20] Stacy Osburn, Board of Governors Moves Toward Allowing Student-Athlete Compensation for Endorsement and Promotions, NCAA (Apr. 29, 2020, 8:30 AM), http://www.ncaa.org/about/resources/media-center/news/board-governors-moves-toward-allowing-student-athlete-compensation-endorsements-and-promotions.

[21] Id.

[22] Alan Binder, N.C.A.A. Athletes Could Be Paid Under New California Law, N.Y. Times (Sep. 30, 2019), https://www.nytimes.com/2019/09/30/sports/college-athletes-paid-california.html.

[23] Osburn, supra note 20. 

[24] O'Bannon v. Nat'l Collegiate Athletic Ass'n, 802 F.3d 1049, 1053 (9th Cir. 2015).

[25] Id. at 1055.  

[26] Tommy Beer, NCAA Athletes Could Make $2 Million A Year If Paid Equitably, Study Suggests, Forbes ( Sep. 1, 2020, 1:03 PM), https://www.forbes.com/sites/tommybeer/2020/09/01/ncaa-athletes-could-make-2-million-a-year-if-paid-equitably-study-suggests/?sh=6c2df2915499. 

[27] Id.

[28] Id.