It is well known that student-athletes at NCAA-member institutions have long been considered amateurs and are prohibited from making money in connection with their athletic participation.   However, in recent years, many current and former student-athletes have fought to be paid for their athletic participation and for the use of their likenesses based on the massive revenues generated by major intercollegiate sporting events.   In furtherance of student-athletes’ position, the California state legislature recently passed the “Fair Pay to Play Act,” allowing student-athletes at California colleges and universities to receive compensation for use of their names, images, and likenesses in connection with their participation in intercollegiate athletics beginning in 2023.  Nine other states are also considering similar legislation, and members of Congress have similarly proposed federal legislation on student-athlete compensation.  This article explores the recently enacted and proposed legislation, the conflict such legislation presents with NCAA bylaws, and the impact these new and proposed laws could have on intercollegiate athletics going forward.

New Legislation and Existing NCAA Bylaws

The National Collegiate Athletic Association (NCAA) has long promoted the principles and ideals of sportsmanship, student-athlete well-being, equality, and amateurism in intercollegiate athletics.[1]  In furtherance of its amateurism principle, the NCAA believes that student-athletes’ participation in intercollegiate athletics “should be motivated primarily by education and by the physical, mental, and social benefits to be derived” from such participation, and that student-athletes’ amateur status serves to protect student-athletes “from exploitation by professional and commercial enterprises.”[2]  The NCAA defines a “professional athlete”—as opposed to a student-athlete—as “one who receives any kind of payment, directly or indirectly, for athletics participation.”[3]  Additionally, under NCAA regulations, a student-athlete loses his or her amateur status, and is therefore not eligible for intercollegiate competition, if he or she, among other things, “[a]ccepts a promise of pay,” including “any direct or indirect salary, gratuity, or comparable compensation,” or “[e]nters into an agreement with an agent.”[4]

However, on September 30, 2019, California enacted the “Fair Pay to Play Act,” opening the door for student-athletes to be compensated for use of their names, images, and likenesses.  The Act specifically states that beginning January 1, 2023, “[a] postsecondary educational institution 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” and that such compensation “shall not affect the student’s scholarship eligibility.”[5]  Under the new California statute, student-athletes may also hire agents to procure business and sponsorship deals using their likenesses.[6]  The Act further prohibits any athletic association, conference, or other governing body for intercollegiate athletics, including the NCAA, from preventing a student-athlete from earning such compensation as a result of use of his or her name, image, or likeness.[7]

Several other states have followed California’s lead and have either proposed or are exploring legislation allowing for student-athletes to be paid.[8]  Nine states (Colorado, Florida, Illinois, Kentucky, Minnesota, Nevada, New York, Pennsylvania, and South Carolina) have either proposed or expressed interest in passing bills similar to California’s Act.[9]  While all of these states have proposed similar provisions allowing for compensation for use of a student-athlete’s name, image, or likeness, South Carolina has gone even further than the others by proposing to pay a $5,000.00 annual stipend to student-athletes for their participation in more profitable sports like football and basketball.[10]  Additionally, former Ohio State University football player and current United States Representative, Anthony Gonzalez (R-OH), stated he plans to propose a federal bill allowing student-athletes to be paid for use of their name or likeness.[11]

Implications of Enacted and Proposed Student-Athlete Compensation Legislation

The California Fair Pay to Play Act and other similar proposed legislation directly contradict NCAA regulations intended to protect student-athletes’ amateur status, which will create conflicts as these laws take effect.

These enacted and proposed state statutes could greatly impact the recruitment of student-athletes.  Because student-athletes in states with compensation laws would have the opportunity to make money through a revenue stream not available in other states, top-tier recruits might be more drawn to colleges or universities in states with enacted compensation statutes, concentrating better talent in those states.  However, NCAA President Mark Emmert has warned the NCAA will not allow institutions from states with such laws in place to participate in its national championships.[12]  As a result, states’ compensation statutes could have the opposite effect on top recruits who ultimately want to compete for NCAA national championships and could deter them from attending colleges or universities in those states.

Additionally, these new and proposed statutes combined with the NCAA’s restrictions on student-athletes’ receipt of any form of compensation could create the perfect stage for future antitrust litigation.  In O’Bannon v. National Collegiate Athletic Association, the Ninth Circuit determined that, because student-athletes’ participation in their sports are an essential component of the NCAA’s products and business, the NCAA’s rules prohibiting compensation for student-athletes constituted “restraints of trade or commerce” and are therefore subject to antitrust scrutiny.[13]  The Ninth Circuit further found that the current and former student-athlete plaintiffs incurred an antitrust injury because the NCAA prevented them from earning compensation for use of their names, images, and likenesses in certain video games.[14]  As the NCAA continues to fight such legislation, one would expect similar litigation to arise, especially in states where student-athlete compensation for use of name, image, or likeness is permitted.

In light of the continued debate over student-athlete compensation, and perhaps sensing an approaching crisis, the NCAA announced in May of this year that it had formed a working group comprised of member representatives from all three NCAA divisions, including athletic directors, conference commissioners, student-athletes, and university presidents, to examine the issues surrounding compensating student-athletes for use of their names, images, or likenesses.[15]  However, the NCAA has noted the working group “will not consider any concepts that could be construed as payment for participation in college sports” as the “NCAA’s mission to provide opportunity for students to compete against other students prohibits any contemplation for pay-for-play.”[16]  Upon California’s enactment of the Fair Pay to Play Act, the NCAA made another statement expressing its concern over confusion created by the new law and asserting that such laws “will make unattainable the goal of providing a fair and level playing field for 1,100 campuses and nearly half a million student-athletes nationwide.”  The NCAA further stated it “will consider next steps in California while [its] members move forward with ongoing efforts to make adjustments to NCAA name, image and likeness rules that are both realistic in modern society and tied to higher education.”[17]  Time will tell whether the NCAA continues its hard stance against all forms of compensation or finds some kind of middle ground allowing certain forms of compensation while maintaining student-athletes’ amateur status.

While the debate surrounding student-athlete compensation has become more prevalent over the past several years, California’s Fair Pay to Play Act and similar proposed legislation have thrust the issue of compensation for use of student-athletes’ names, images, and likenesses to the forefront.  It is not yet known what direction the NCAA will take, but it is clear our long-held image of amateurism in collegiate athletics may soon change.

[1] NCAA 2019-20 Division I Manual, NCAA (Aug. 1, 2019), § 2.

[2] Id. at § 2.9.

[3] Id. at § 12.02.11.

[4] Id. at § 12.1.2.

[5] S.B. 206, Reg. Sess. (Cal. 2019).

[6] Id.

[7] Id.

[8] Charlotte Carroll, Tracking NCAA Fair Play Legislation Across the Country, Sports Illustrated (Oct. 2, 2019), https://www.si.com/college/2019/10/02/tracking-ncaa-fair-play-image-likeness-laws.

[9] Id.

[10] Id.

[11] Dan Murphy, Congressman to propose federal legislation for paying college athletes, ESPN (Oct. 2, 2019), https://www.espn.com/college-sports/story/_/id/27751454/congressman-propose-federal-legislation-paying-college-athletes.

[12] Steve Berkowitz, NCAA says California schools could be banned from championships if bill isn’t dropped, USA Today (June 24, 2019, 8:56 a.m.), https://www.usatoday.com/story/sports/2019/06/24/ncaa-california-schools-could-banned-championships-over-bill/1542632001/. 

[13] O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049, 1065-66 (9th Cir. 2015).

[14] Id. at 1067.

[15] Michelle Brutlag Hosick, NCAA working group to examine name, image and likeness, NCAA (May 14, 2019, 2:40 p.m.), https://www.ncaa.org/about/resources/media-center/news/ncaa-working-group-examine-name-image-and-likeness.

[16] Id.

[17] Stacey Osburn, NCAA statement on Gov. Newsom signing SB 206, NCAA (Sept. 30, 2019, 10:44 a.m.), https://www.ncaa.org/about/resources/media-center/news/ncaa-statement-gov-newsom-signing-sb-206.

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Posted on Oct. 24, 2019, by Jaclyn M. Flint