Earlier this week, California Governor, Gavin Newsom signed into law SB 206 that allows college athletes to strike endorsement deals and hire agents, all while being enrolled in colleges and universities across the state. The bill is set to take effect, January 1, 2023. According to California state lawmakers, they wish to attack the “long-held National Collegiate Athletic Association (NCAA) philosophy that college athletes should earn a degree, not money, for playing sports.” Several other states have negotiated similar legislation, as they combine to take on the 14 billion dollars a year of NCAA revenue on the bodies and schedules of college athletes.
SB 206 would prohibit California postsecondary educational institutions except community colleges, and every athletic association, conference, or other group or organization with authority over intercollegiate athletics, from providing a prospective intercollegiate student-athlete with compensation in relation to the athlete’s name, image, or likeness, or preventing a student from participating in intercollegiate athletics from earning money as a result of athletics. The bill would require professional representation obtained by student-athletes to be from persons licensed by the state. The bill would specify that athlete agents shall comply with federal law in their relationships with student-athletes.
The bill would prohibit the revocation of a student’s scholarship as a result of earning compensation or obtaining legal representation as authorized under these provisions. The law will prevent a student-athlete from entering into a contract providing benefit to the athlete for the use of the athlete’s name, image, or likeness if a provision of the Agreement conflicts with a provision of the athlete’s team contract. The bill would prohibit a team contract from preventing a student-athlete from using the athlete’s name, image, or likeness for a commercial purpose when the athlete is not engaged in official team activities, as specified.
Since the last 1990s, college athletes have battled the NCAA, citing record association and college profits as a direct result of their athletic abilities. From video games, college ticket uniform sales, and television contracts, NCAA is cashing in, despite their tax-exempt, 501 (c) status as an “educational institution.” Furthermore, the NCAA identifies and classifies all student-athletes as “amateurs,” unable to be compensated by fair market value and endorsement contracts. SB 206 would end the “amateur athlete” tag and bring the NCAA into the fold as an entertainment company, identical to that of the ESPN, CBS and Fox Sports. Such a dramatic shift would declassify the NCAA as an “educational institution” and hold the $1 billion per year revenue as “taxable.”
Most of the NCAA income comes from television contracts, particularly from March Madness; the total value of the tournament’s media contracts, which extended recently to 2032, is valued at $19.6 billion. According to a March, 2019 article by The Nation, the NCAA keeps half all revenue to pay high salaries to its association’s top-level executives, like $2.4 million in 2016 to its president – and distributes the remainder to collegiate athletic conferences, the most powerful of which are composed of universities that pay coaches millions of dollars a year and have state-of-the-art sports facilities that rival that of professional sports teams.
Immediately following Monday’s SB 206, many professional sports athletes have come to defend the legislation, verbally bash the NCAA, and demand rapid and across-the-board change. Here are just a few:
— SportsCenter (@SportsCenter) October 2, 2019
I’m so incredibly proud to share this moment with all of you. @gavinnewsom came to The Shop to do something that will change the lives for countless athletes who deserve it! @uninterrupted hosted the formal signing for SB 206 allowing college athletes to responsibly get paid. pic.twitter.com/NZQGg6PY9d
— LeBron James (@KingJames) September 30, 2019
#Clippers‘ Paul George on California legislation to get NCAA student-athletes paid for their image/likeness – “Shout out to Cali for getting it. College kids should get paid and compensated for their likeness. They’re semi-pros. It’s a big commitment. It’s a job.” pic.twitter.com/jOv40lKRG0
— Tomer Azarly (@TomerAzarly) October 2, 2019
Even though many professional athletes, as well as many Americans, believe that the tax-exempt status of the NCAA and student-athlete compensation are linked arguments, they are not. Sure, there is blending between the two, however, that is not how this legal argument needs to be addressed. The old saying, “two wrongs don’t make a right” is a perfect example here.
Do I believe the revenue generated from the entertainment that the NCAA provides via its multi-billion-dollar contracts negate its tax-exempt status? YES, IT DOES. Should the IRS move forward with removing the exempt status? YES, IT SHOULD. However, do student-athletes need to be compensated and be allowed to enter into agency contracts? ABSOLUTELY NOT! And, here is why.
First, and I know that many disagree, student-athletes (some at the age of 17 upon entering college) are professionals – in any sense of the word. (As a whole) Upon enrolling into college, they are 1-year past getting a driver’s license, they are barely eligible to enter into military service, cannot purchase alcohol or tobacco (at many retailers) and lack the maturity and emotional capacity to handle both academics, and what would be a business enterprise. According to the National Labor Relations Act of the Fair Standards Act, student-athletes are not employees, and their participation in college sports is voluntary.
Second, America has seen the destruction that agents, money, and players unions have brought to professional sports. Player walkouts, salary contract stalemates, relocation of teams and players to other geographical markets, and player protests; the list goes on and on. Although SB 206 doesn’t accurately identify the use of any unionized activity among compensated student-athletes, unions in California accounted for 14.7 percent of wage and salary workers (2018). With such a figure, I would certainly submit that the “Golden State” would entertain and support such a measure.
Some professional sports allow for high school athletes to skip a college career, and become eligible. However, leagues such as the NBA and NFL, require student-athletes to meet specific criteria. The NBA, per the player’s union collective bargaining agreement, requires an athlete to be at least 19 years old by December 31 of the year of the draft. And while there is no minimum age in the NFL, the league’s player’s union does require that athletes be out of high school for at least three years before they are eligible to play.
So, it would be safe to state that the current unions of professional sports leagues (NBA and NFL) are currently restricting new players due to age – setting requirements of 19, and 3-years post-high school respectively. Then why are California and other state legislatures believing that “pay to play” is a good idea? After all, it is the professional unions of these leagues that believe that a certain age should be met to compete for compensation! Let’s face it, over the last 20-years, many athletes across all spectrums believe that a catching a ball, running fast and nailing a three-pointer is more critical than cracking a book, community participation, and reinvesting their wealth into more substantial projects and purchases rather than another sported “Madea, Meshika” hat from Cam Newton at a Carolina Panthers Sunday-night loss.
Student-athletes matter, their abilities are undeniable – but so are their classmates that are performing student research for medical cures. Where does the endless compensation and entitlement wheel stop? Well, it should stop right here. If a player’s goal is to become a professional, then college is the place for it. Take a year, or two, learn about yourself, obtain the knowledge necessary to become a professional. However, and more importantly, learn the attitude and responsibilities that come along with that role. This is the first step – let’s solve this problem and state as a student; you are not an employee – therefore, you will not be paid to play. After that, the debate and action go to the NCAA that behaves more like ESPN but gets the privileges like the Clinton Foundation.
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