By: Lindsey Barrington
On September 30, 2019, Governor of California, Gavin Newsom, signed the Fair Pay to Play Act into law. The Act permits college athletes to hire agents and be paid by companies looking to use their names, images, and likeness (NIL) rights to promote products. However, the Act does not protect an athlete if they sign an endorsement deal that conflicts with a school sponsorship or if they hire agents that are not licensed by the state. In addition, the Act is solely about contractual relationships between college athletes and companies that are looking to use the player’s NIL rights and not conflated with legal efforts requiring colleges to pay their athletes.
The legislation bypasses the National Collegiate Athletic Association’s (NCAA) ban on compensating student athletes aside from scholarships. Current NCAA regulations ban student athletes from executing any endorsement deals or accepting payment for the use of their images. However, if the NCAA permits California colleges to remain members in 2023, those schools would have a significant advantage in recruiting efforts. Unlike universities in other states, California colleges could offer athletes both an athletic scholarship and compensation from companies.
As a result of this advantageous recruiting strategy, California’s Fair Pay to Play Act has caused a rippling effect among states – forcing them to figure out legislative proposals that could compete with California’s recruitment practices when and if the Act takes effect in 2023. Last year, over 20 states proposed bills that would allow student athletes to receive compensation without penalty by the NCAA. However, given the legal and administrative challenges inherent to a ‘patchwork of states’ model, federal legislation is likely the better solution.
Congressman Mark Walker introduced the “Student-Athlete Equity Act” [Equity Act] which garnered bipartisan support from other House Representatives who signed on as co-sponsors. The Equity Act proposes an amendment to the Internal Code of 1986 to condition the NCAA’s status as a non-profit, which would permit student-athlete compensation from a third-party. Essentially, the NCAA would need to adopt the federal version of California’s Fair Pay to Play Act or its members would be subject to pay more in taxes.
Proponents of the Fair Pay to Play Act argue that universities have taken major financial advantage over student-athletes. In recent years, controversy around injuries have brought attention to the unpaid labor argument that college athletes suffer risk without an appropriate reward for their dedication. While only a fraction of amateur athletes eventually become professional athletes, proponents believe that they should profit in college as it could be their sole opportunity.
Conversely, the Act’s opponents believe that the new law will have detrimental effects on eligibility to participate in major league conferences. For example, The Pacific-12 athletic conference, which includes four California universities, stated that the Act would lead to the professionalization of college sports. While supporters of the Act argue that profitable college sports are already professionalized, the issue at play is focused on the source of payment: academic institutions. Would a better approach align colleges with major state retailers that can assure these large payments? Although it appears that most lawmakers would support student-athlete compensation, the potential effects of the Fair Pay to Play Act on recruitment begs the larger question of whether the Act, in practice, would provide the greatest advantage to those colleges that already have the upper-hand.
Both sides have legitimate arguments, but the Act must still survive legal battles in order to take effect in 2023. A legal challenge by the NCAA or its members could hinge on the constitutional provision that grants Congress the authority to oversee interstate commerce (proponents assert that Section 1 of the Sherman Act precludes the NCAA from banning California schools for complying with state law because it could constitute an illegal form of wage fixing). Furthermore, in recent years, the association has adjusted some rules to allow students to receive limited stipends and unlimited food from their universities.
Either way, litigation is likely to be protracted, and the next few years will give the NCAA time to contemplate its own strategy. For example, the NCAA could preempt the legal discussion by voluntarily changing its policy to permit college athletes the ability to hire agents and sign endorsement deals without forfeiting their eligibility. In the interim, California’s Fair Pay to Play Act continues to create confusion amongst student-athletes, coaches, and administrators who must prepare to function in a novel reality.
Jack Kelly, Newly Passed California Fair Pay to Play Act Will Allow Student Athletes to Receive Compensation, Forbes(Oct. 1, 2019), https://www.forbes.com/sites/jackkelly/2019/10/01/in-a-revolutionary-change-newly-passed-california-fair-pay-to-play-act-will-allow-student-athletes-to-receive-compensation/#4169ac0657d0.
Fair Pay to Play Act, S.B. 206, 2019 Cal. State Senate (Cal. 2019).
Steven Silver & Hera S. Arsen, Is “Fair Pay to Play” Fair in College Sports? What California’s New Law Means for the Future of Amateur Athletics, Ogletree Deakins, The National Law Review Blog (Nov. 9, 2019).
Terry Collins, Will Paying Student Athletes Save College Sports – or Kill the NCAA?, Fortune(Oct. 8, 2019, 11:30 AM), https://fortune.com/2019/10/08/ncaa-paying-athletes-california-fair-pay-play-law/.
Norman Chad, California’s Fair Pay to Play Act is a step in the right direction and the wrong direction at the same time, The Washington Post(Oct. 13, 2019, 2:21 PM), https://www.washingtonpost.com/sports/colleges/the-fair-pay-to-play-act-is-a-step-in-the-right-and-the-wrong-direction-at-the-same-time/2019/10/13/9f98a262-ec6d-11e9-9306-47cb0324fd44_story.html.
Jabari Young, Florida and NY push bills to compete with California’s NCAA ‘pay to play’ law, CNBC (Oct. 24, 2019, 5:19 PM), https://www.cnbc.com/2019/10/24/florida-and-ny-push-bills-to-compete-with-californias-ncaa-pay-to-play-law.html.
Steven Silver & Hera S. Arsen, supra note 3.
Alan Blinder, N.C.A.A. Athletes Could Be Paid Under New California Law, The New York Times (Oct. 1, 2019), https://www.nytimes.com/2019/09/30/sports/college-athletes-paid-california.html.
Billy Weitz, California Lawmakers Vote to Undo N.C.A.A. Amateurism, The New York Times(Sept. 11, 2019), https://www.nytimes.com/2019/09/09/sports/college-athlete-pay-california.html.
Chad, supra note 6.
Steven Silver & Hera S. Arsen, supra note 3.