One year into NIL era, fresh questions about its future
ERIC OLSON AP Sports Writer
The first year of the athlete compensation era in college sports evolved into almost everything the NCAA didn’t want when it gave the green light last summer.
What was envisioned as a way for college athletes to make some pocket money based on their celebrity has turned into bidding wars for top recruits and transfers who can command millions for their services. State laws have been passed or overturned and funding in some cases is coming from deep-pocketed donors and alumni who have waded into the recruiting wars.
The current frenzy has given rise to serious concerns about recruiting practices and competitive balance and, in turn, questions about where NIL compensation — short for name, image and likeness — goes from here. Will Congress get involved? Will schools take on a primary role?
“The way this money situation is exploding on schools, they’re going to compete themselves into the ground,” University of Illinois labor law professor Michael LeRoy said. “They can’t all win under these rules.”
Some would say there are no rules, or that rules set up by the NCAA and in state laws have no teeth and are treated more like suggestions.
“When you see Nick Saban losing his cool over recruiting, it’s a sure sign that damage is being done at the highest levels of NCAA athletic competition,” LeRoy said, referring to t he Alabama football coach’s comments in May alleging Texas A&M “bought every player on their team.”
The NCAA interim NIL policy says there is to be no pay for play, no recruiting inducements and that athletes must provide a service in exchange for pay. With the schools themselves left out of the loop in the wheeling and dealing, so-called booster collectives sprung up to provide earning opportunities — and, critics say, recruiting enticements.
Basketball player Nijel Pack made one of the first big splashes in April. When his transfer from Kansas State to Miami was announced, it was made public he would get a two-year, $800,000 deal with a medical tech company that came with a car. Pack already is featured in an advertisement.
There have been media reports of football and basketball recruits and transfers being promised millions of dollars in NIL deals — all against the rules because they haven’t enrolled.
The NCAA Division I Board of Governors in May warned that enforcement staff would investigate and take action against the most “outrageous violations,” with the schools being penalized for boosters’ improper conduct.
Dionne Koller, a professor and director of the Center for Sport and the Law at the University of Baltimore law school, said she’s not surprised how NIL has unfolded. The market, she said, was at a boiling point.
“Because we now let the genie out of the bottle,” she said, “this is what’s happening.”
Mark Bradley: NIL money + transfer portal = chaos
Eric Gay
California college athletes would be the first to receive payments related to their athletic performance directly from schools. The NCAA, following what’s been laid out in court decisions, has always fought to keep benefits “tethered to education.”
Well, in SB 1401, much of the compensation still would be related to academics. The bill states a noble goal of improving graduation rates for Black athletes in football and men’s and women’s basketball — the only three sports where players currently don’t receive more than 50% of revenues back purely through their scholarships.
Schools would establish a degree completion fund for each athlete, and the contents of the fund — fed annually — would be made available soon after degree completion (within six years). If the athlete does not graduate within six years, he or she will forfeit the fund and it will go back into the athletic budget. Players would have immediate access to a maximum of $25,000 each year, while the rest would build over time.
Eric Gay
California college athletes would be the first to receive payments related to their athletic performance directly from schools. The NCAA, following what’s been laid out in court decisions, has always fought to keep benefits “tethered to education.”
Well, in SB 1401, much of the compensation still would be related to academics. The bill states a noble goal of improving graduation rates for Black athletes in football and men’s and women’s basketball — the only three sports where players currently don’t receive more than 50% of revenues back purely through their scholarships.
Schools would establish a degree completion fund for each athlete, and the contents of the fund — fed annually — would be made available soon after degree completion (within six years). If the athlete does not graduate within six years, he or she will forfeit the fund and it will go back into the athletic budget. Players would have immediate access to a maximum of $25,000 each year, while the rest would build over time.
The amount owed to each athlete would be the half of the sport’s total revenue minus the team’s total student grant-in-aid package divided by the number of players. For instance, each USC football player could make upwards of $200,000 a year.
Think about taking $15 million to $20 million that currently has been used to reinvest in football resources and to fund the rest of the athletic department and transferring it to football players, and it’s easy to see why administrators are getting ready for a fight.
On the other side of the coin — and this point will have been argued by Sen. Steven Bradford, the bill’s author, and National College Players Assn. executive director Ramogi Huma — should it really have been college football and basketball players’ sacrifice all these years to subsidize the training of America’s future Olympians?
There’s a compelling argument that the amateur model — particularly in the last two decades as television revenues have exploded — has led to a displacement of what could have been generational wealth for young Black athletes and their families.
Aaron M. Sprecher
The amount owed to each athlete would be the half of the sport’s total revenue minus the team’s total student grant-in-aid package divided by the number of players. For instance, each USC football player could make upwards of $200,000 a year.
Think about taking $15 million to $20 million that currently has been used to reinvest in football resources and to fund the rest of the athletic department and transferring it to football players, and it’s easy to see why administrators are getting ready for a fight.
On the other side of the coin — and this point will have been argued by Sen. Steven Bradford, the bill’s author, and National College Players Assn. executive director Ramogi Huma — should it really have been college football and basketball players’ sacrifice all these years to subsidize the training of America’s future Olympians?
There’s a compelling argument that the amateur model — particularly in the last two decades as television revenues have exploded — has led to a displacement of what could have been generational wealth for young Black athletes and their families.
The bill establishes a “pay for play” model but stops at designating athletes as employees, stating, “This does not establish evidence of an employment relationship between a student athlete and their institution of higher education.”
Among administrators, this is viewed as clever wording meant to make the bill easier to pass and harder to lobby against. The assumption is that once “pay for play” begins, employment and collective bargaining will quickly follow.
The bill establishes a “pay for play” model but stops at designating athletes as employees, stating, “This does not establish evidence of an employment relationship between a student athlete and their institution of higher education.”
Among administrators, this is viewed as clever wording meant to make the bill easier to pass and harder to lobby against. The assumption is that once “pay for play” begins, employment and collective bargaining will quickly follow.
That is hard to know. It has a long way to go, needing to make it through the Senate and then through a bunch of committees in the Assembly and then the Assembly floor before moving onto the governor’s desk.
The bill has already been amended. The original asked for Title IX protections and mechanisms in place to curb the cutting of non-revenue sports, but those parts have been removed to fully focus on revenue sharing.
Given the massive implications for athletic department budgets as it’s currently written, there has already been discussion about amending the payment structure to give schools the option of distributing only new revenues (increases year over year) to the players.
In that case, say USC football made $10 million more in 2022 than it did in 2021. Then all of the gain would go to feeding the players’ degree completion funds — $117,650 each — but the department would be able to continue to use the same amount from 2021 to fund the rest of its sports and avoid the doomsday scenario.
One thing to factor in is that the Pac-12 will be renegotiating its media rights contracts for 2024, which should bring in significantly more revenue from the conference.
If SB 1401 becomes law, much of that windfall could go to the athletes and quickly make them whole, so to speak, in working toward the bill’s requirement of a 50/50 split.
It seems likely that if the bill passes, it will have something like this new revenues option in place, because it would give the schools a chance to maintain their current level of operations.
Jae C. Hong
That is hard to know. It has a long way to go, needing to make it through the Senate and then through a bunch of committees in the Assembly and then the Assembly floor before moving onto the governor’s desk.
The bill has already been amended. The original asked for Title IX protections and mechanisms in place to curb the cutting of non-revenue sports, but those parts have been removed to fully focus on revenue sharing.
Given the massive implications for athletic department budgets as it’s currently written, there has already been discussion about amending the payment structure to give schools the option of distributing only new revenues (increases year over year) to the players.
In that case, say USC football made $10 million more in 2022 than it did in 2021. Then all of the gain would go to feeding the players’ degree completion funds — $117,650 each — but the department would be able to continue to use the same amount from 2021 to fund the rest of its sports and avoid the doomsday scenario.
One thing to factor in is that the Pac-12 will be renegotiating its media rights contracts for 2024, which should bring in significantly more revenue from the conference.
If SB 1401 becomes law, much of that windfall could go to the athletes and quickly make them whole, so to speak, in working toward the bill’s requirement of a 50/50 split.
It seems likely that if the bill passes, it will have something like this new revenues option in place, because it would give the schools a chance to maintain their current level of operations.
In the era of the one-time transfer waiver, this is a key component of the bill — especially one tied to degree completion.
The wording states that if an athlete transfers to another California institution, the degree completion fund will transfer after enrollment and be managed and funded by the new school.
If an athlete transfers to an institution out of state, the degree completion fund is forfeited.
Greg Beacham
In the era of the one-time transfer waiver, this is a key component of the bill — especially one tied to degree completion.
The wording states that if an athlete transfers to another California institution, the degree completion fund will transfer after enrollment and be managed and funded by the new school.
If an athlete transfers to an institution out of state, the degree completion fund is forfeited.
Huma, the former UCLA linebacker who has become one of the leaders of the college athlete rights movement nationally, is confident that the answer is no.
When the NCAA made threats against California with SB 206, the Department of Justice antitrust division established an NCAA boycott of California schools would be a violation of antitrust laws.
Power Five conference leaders already talking publicly about possibly leaving behind NCAA governance certainly wouldn’t help the association’s cause if it were to threaten California.
Brynn Anderson
Huma, the former UCLA linebacker who has become one of the leaders of the college athlete rights movement nationally, is confident that the answer is no.
When the NCAA made threats against California with SB 206, the Department of Justice antitrust division established an NCAA boycott of California schools would be a violation of antitrust laws.
Power Five conference leaders already talking publicly about possibly leaving behind NCAA governance certainly wouldn’t help the association’s cause if it were to threaten California.
One year into NIL era, fresh questions about its future
Reed Hoffmann
FILE - Kansas State guard Nijel Pack (24) shoots next to West Virginia forward Isaiah Cottrell during an NCAA college basketball game in Manhattan, Kan., Feb. 14, 2022. The first year of the athlete compensation era in college sports evolved into almost everything the NCAA didn't want when it gave the green light last summer. What originally was envisioned as a way for college athletes to make some pocket money based on their celebrity has turned into bidding wars for football and men's basketball recruits and transfers. Pack made one of the first big splashes in April. (AP Photo/Reed Hoffmann, File)
Reed Hoffmann
FILE - Kansas State guard Nijel Pack (24) shoots next to West Virginia forward Isaiah Cottrell during an NCAA college basketball game in Manhattan, Kan., Feb. 14, 2022. The first year of the athlete compensation era in college sports evolved into almost everything the NCAA didn't want when it gave the green light last summer. What originally was envisioned as a way for college athletes to make some pocket money based on their celebrity has turned into bidding wars for football and men's basketball recruits and transfers. Pack made one of the first big splashes in April. (AP Photo/Reed Hoffmann, File)
Short of congressional action to sort out NIL issues, some wonder if athletes will be declared employees of their schools and have NIL issues addressed through collective bargaining.
Proponents say their position is strengthened by last fall’s memorandum from National Labor Relations Board general counsel Jennifer Abruzzo, who wrote college athletes fit the definition of “employees” under federal labor law: someone who performs services for an institution and is subject to its control.
Koller said she agrees there is a strong legal basis for calling athletes employees.
“Whether we actually get to the point of collective bargaining, I’m still in wait-and-see mode because this is something that can be changed by statute,” she said. “The NLR Act can be amended to say college athletes can’t be considered employees. Whether Congress would do that, that’s a political question and something we have to keep in mind.”
LeRoy said there is nothing to prevent public schools from adopting collective bargaining or Congress from passing an industry-specific collective bargaining law, just as it did in 1926 with railroads and in 1936 with airlines.
Marc Edelman, a law professor at Baruch College in New York, said Abruzzo’s memo set the stage for unionization. The NCAA, on the losing end of court cases in antitrust lawsuits, has long opposed unionization and its newly redrawn constitution makes clear athletes cannot be paid by their schools for playing sports.
To be determined would be whether only athletes in revenue-producing sports would be included. There also would be Title IX implications with regard to how men’s and women’s interests are addressed.
LeRoy, who wrote the 2014 book “Collective Bargaining in Sports and Entertainment: Professional Skills and Business Strategies,” said now that athletes can make NIL money maintaining a semblance of competitive balance should be the impetus for unionization.
Without it, LeRoy said, the five to 10 most well-heeled programs will sign elite, money-motivated recruits and further separate themselves from other programs.
“No league can win when you don’t have some kind of competitive balance in your rule system,” he said. “Rule No. 1 for a league is have anti-competitive rules in order to be competitive. That’s to say, they have to put restraints on a labor market in order to spread talent around and to make the league interesting from a fan standpoint.
“The way this is rapidly evolving, it’s going to accentuate the difference between the haves and the have-nots. I personally don’t see 65 Power Five teams hanging together in the same grouping under this current system.”
That topic is among the many under discussion as the NCAA’s three divisions restructure themselves, a process that picked up momentum last year.
LeRoy envisions the conferences as the “employers,” or “management,” in collective bargaining and key areas of negotiation being revenue sharing, a salary cap and creative ways to deal with NIL. He offered a couple possibilities: backloaded NIL agreements requiring athletes to stay at a school three or four years before they collect their money, or setting an annual per-team limit on NIL earnings.
Tom McMillen, president and CEO of the LEAD1 Association, which represents top-tier athletic directors, suggests a less radical approach. He said athletic departments should oversee NIL activities to ensure compliance.
McMillen said expanded group licensing involving the schools and all athletes would more equitably distribute NIL money. Because schools that receive federal aid must comply with Title IX, male and female athletes would have equal opportunities to cash in.
“The athletic department already arranges internships, jobs, academic tutors — they play a super role in these kids’ lives,” McMillen said. “You could have a licensing division focused on the kids run by the athletic department. It’s going to be compliant and they’re going to do it the right way.”
Another option, McMillen said, would be a compromise to unionization where Congress would set up a new social contract for basketball and football players that could involve some form of bargaining, but not collective bargaining as outlined by federal law.
“Our ADs our very concerned, 97%, about going full throttle to the professional model,” he said. “They would love to see college sports preserved and it has to be preserved, obviously, in a way that if coaches are making millions of dollars, student-athletes are going to have to have a chance to make more.”
