California Moves Toward the Next College Sports Disruption: Sharing Revenue With Athletes
The state Assembly has passed a bill that would require schools to pay players, setting off alarm bells for college sports officials around the country
By Louise Radnofsky and Laine Higgins Wall Street Journal June 2, 2023 3:59 pm ET
California lawmakers have moved onto the next big battleground in the convulsive world of college sports: sharing the industry’s wealth with athletes.
California’s state Assembly on Thursday passed a bill to require universities in the state to use all new athletic revenue generated by sports such as football and basketball to pay players. It could give athletes a slice of tens of millions of dollars each year and has already set off alarm bells for college sports officials around the country.
The institutions that control college sports view the California legislation as the most imminent threat yet to their vision of amateur athletics. College sports has been rocked by changes to rules that have undermined its longtime version of amateurism, which long involved awarding scholarships but prohibiting almost any other kind of payment to athletes.
In the last four years, states—led by California—have forced the industry to allow players to be compensated for their name, image and likeness. There are also accelerating legal fights over whether athletes are entitled to the minimum wage, and other worker benefits. But California’s latest bill, college sports officials say, is the one that keeps them awake at night.
If California’s College Athlete Protection Act takes effect, said one administrator from the Pac-12 Conference, it will be impossible to run university athletic departments in the way they long have operated. The bill was widely expected to pass the Assembly; both sides see a tougher fight ahead in the state Senate.
Athletes’ rights advocates believe the California legislation puts the most significant win of their careers within their grasp, one that would definitively shred the idea that college athletes cannot be paid by their schools for playing sports.
“I see it as an existential threat to the injustice in college sports,” said Ramogi Huma, the president of the National College Players Association, who has been dreaming for decades of pay for college athletes.
The California bill is intended to share the rapidly expanding revenue pool generated by college sports as it grows in the future. Beginning in the 2023-2024 school year, revenue generated that exceeds their school’s 2021-2022 revenue will be shared among athletes.
That could include a windfall for University of Southern California and University of California, Los Angeles, football players after their schools move in 2024 to the Big Ten, as they would benefit from the conference’s $7.5 billion seven-year media rights deal. It could also mean a boost for San Diego State players after its bracket-busting men’s basketball team made it to the final of the 2023 NCAA tournament.
Payments to players would be based on a formula in which half of the money is set aside for male athletes and half for female athletes every year, and then apportioned equally among players in programs that generate revenue over the 2021-2022 baseline, after the cost of players’ scholarships has been deducted.
The exact figures for what the bill’s backers call an athlete’s “fair market value” won’t be calculable until schools file revenue reports each year. But in one sign of how much money could be on the table for college athletes, the bill includes a provision that requires schools to pay out up to $25,000 of what they owe players within 60 days of filing a revenue report, with the rest set aside in a fund that players will receive only after they complete their degrees.
Schools would have discretion over how to share any remaining money in the men’s or women’s pools after compensating players in revenue-generating programs, a provision that could bring paychecks for graduating female athletes even in sports that don’t turn a profit on schools’ balance sheets.
The bill sets the first payday for March 2024, based on revenue generated this year. The bill would also establish and enforce health and safety standards and require richer schools to pay current and former athletes’ sports-related medical expenses.
The consternation—and excitement—around the bill is all because it’s coming out of California, which in 2019 effectively created the current athlete endorsement era when legislators passed a bill establishing in-state players’ right to profit from the use of their name, image and likeness.
The NCAA threatened to exclude California schools if the governor signed the bill. The governor signed it anyway. And almost immediately other states began work on their own “NIL” bills to avoid getting left behind in recruiting, quickly rendering the NCAA’s stance almost irrelevant.
“The College Athlete Protection Act of 2023 further establishes California as a leader in protecting the rights of college athletes,” said the bill’s sponsor, Democratic assemblymember Chris Holden.
Huma says he is already in touch with some of the lawmakers in states that followed California almost four years ago, “encouraging them to be ready” to move again.
“We knew with NIL that if we could get one state to do this, we could get all the other states to do this,” said Huma. “I think that it will follow the same trail.”
The biggest conferences share Huma’s belief that what happens in college sports in California isn’t going to stay in California—and they are determined not to see the institutions of college sports follow the Golden State’s example. This time, the conferences are taking the lead, while the NCAA sticks to telling athletes what it sees as the negative consequences of the bill.
The Pac-12 and Big Ten, flanked by officials from the University of California, California State systems, and Stanford, have fanned out to lobby Sacramento lawmakers against the bill.
They’ve been targeting representatives who have expressed support for the measure in a last-ditch attempt to persuade them to change their minds, said a person familiar with the Pac-12’s efforts.
PHOTO The Pac-12 and Big Ten, flanked by officials from the University of California, California State systems, and Stanford, have fanned out to lobby Sacramento lawmakers against the bill. Photo: Dylan Stewart/Zuma Press
The big conferences are also looking to Washington, where they’ve hired a public affairs firm to help them argue to Congress for a federal bill that pre-empts state laws requiring revenue sharing—which they want within months, to try to beat California to the punch.
A federal bill is a major long shot, when Congress is deeply divided on most things—and somewhat unified around the idea of being skeptical of the NCAA.
“There is zero chance a bill like that passes,” said Huma. “This isn’t going to get past both chambers and be signed by President Biden.”
Revenue-sharing opponents’ best hope is getting backing from lawmakers who haven’t staked out hard positions on athlete compensation, but feel fondly about college sports teams and could be motivated by the idea that college sports might not look the way it does today.
“Everybody in Congress either roots for a sports team or went to college somewhere,” said one person familiar with the effort.
Some athletic departments are already gaming out what their budgets might look like if the California bill comes to pass, said Casey Schwab, chief executive of college sports advisory firm Altius Sports Partners.
“This moment in time right now feels like the fall of 2020, nine months before NIL [name, image and likeness] went live,” Schwab said. “We’re nine to 12 months away from that next moment of panic in college sports.”
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Included with WSJ story …
PHOTO UCLA is set to move to the Big Ten in 2024. Leonard Ortiz/Zuma Press
PHOTO San Diego State guard Lamont Butler, right, celebrates with teammates after hitting a winning shot in the Final Four against Florida Atlantic. Photo: David J. Phillip/Associated Press
PHOTO The Pac-12 and Big Ten, flanked by officials from the University of California, California State systems, and Stanford, have fanned out to lobby Sacramento lawmakers against the bill. Photo: Dylan Stewart/Zuma Press
Included with this posting …
https://newsroom.ucla.edu/file?fid=6170c27b2cfac27230e78de6
