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California Passes College Athlete Compensation Bill

close up of wrapped money stack on football and green grass background
By Christopher Coble, Esq. | Last updated on

For years, National Collegiate Athletic Association guidelines prohibited college student athletes from profiting from their name or image while they are in college. But recently, federal courts have found that the NCAA can no longer prevent college football and basketball players from sharing in proceeds generated by use of their likenesses.

Still, the ability for student athletes to sign endorsement deals or otherwise license their name and image (and get paid for doing so) has yet to be codified. But that also might be changing soon. The California State Assembly unanimously passed the Fair Pay To Play Act this week, which prevents schools, leagues, and conferences in the state (including the NCAA) from punishing students who profit off of their own likeness while in school. And the NCAA is not too happy about it.

College Sports and Compensation

Under Senate Bill No. 206, California colleges and universities "shall not uphold any rule, requirement, standard, or other limitation that prevents a student of that institution participating in intercollegiate athletics from earning compensation as a result of the use of the student's name, image, or likeness." Schools also cannot revoke scholarships if students earn compensation for their name, image, or likeness.

The NCAA, specifically, is barred from punishing either students or schools regarding similar student athlete compensation. And the bill allows student athletes to obtain "professional representation in relation to contracts or legal matters, including, but not limited to, representation provided by athlete agents or legal representation provided by attorneys," as long as those professionals are licensed by the state.

Importantly, Bill 206 prohibits schools from paying athletes directly, even for their names, images, or likenesses. So, hypothetically, while a star quarterback could get paid for appearing in an ad or a local car dealership, they couldn't get paid for appearing in a similar ad for the school. (Legislators will still have to figure out what to do, however, if the QB wants to sign an endorsement deal with Reebok and the school is sponsored by Nike.)

An Unconstitutional Name, Image, and Likeness Scheme?

The California State Senate and Assembly still need to reconcile their two similar bills, and then send it to Governor Gavin Newsom. Even then, the Act will not go into effect until 2023. But the NCAA is already lobbying the governor to reject the bill, claiming it "would remove that essential element of fairness and equal treatment that forms the bedrock of college sports":

California Senate Bill 206 would upend that balance. If the bill becomes law and California's 58 NCAA schools are compelled to allow an unrestricted name, image and likeness scheme, it would erase the critical distinction between college and professional athletics and, because it gives those schools an unfair recruiting advantage, would result in them eventually being unable to compete in NCAA competitions. These outcomes are untenable and would negatively impact more than 24,000 California student-athletes across three divisions.

How the NCAA's threat to bar California student athletes and schools from competitions would be legally reconciled with the bill's explicit assertions to the contrary is anyone's guess. But the NCAA's assertion that the bill is "unconstitutional" seems a bit tenuous, especially given that the NCAA's amateurism rules "constituted an anti-competitive conspiracy" according to the Ninth Circuit Court of Appeals.

If other states want to balance the unfair recruiting advantage gained by California if the bill passes, they could pass similar laws. Or the NCAA, since it has "always, in everything [they] do, supported a level playing field for all student-athletes," could ensure that level playing field by removing its own restriction.

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