October 2, 2019
For as long as the National Collegiate Athletic Association (“NCAA”) and universities have made money on college sports, people have debated whether college athletes should be compensated for their contributions to this lucrative revenue source. On September 30, 2019, the State of California made its position clear on the issue when Governor Gavin Newsom signed into law Senate Bill 206, the Fair Pay to Play Act (the “Law”). The Law opens up many college athlete marketing revenue streams and sets the stage for a possible showdown with the NCAA over the constitutionality of the Law.
How does the Law make way for college athlete marketing?
California College Athletes’ Rights of Publicity
Currently, the NCAA does not allow college athletes to receive any compensation from outside sources related to their participation in sporting activities. The new Law allows each California college athlete to earn money related to “the use of a student’s name, likeness, or image” and will specifically prohibit institutions and the NCAA from penalizing them for doing so. This will allow California college athletes to enter into paid endorsement deals, get compensated for coaching, and/or market themselves on social media for compensation, without having to risk their NCAA eligibility. According to the Law, however, if college athletes do enter into endorsement and sponsorship deals, their contracts may not interfere with any provision of their respective teams’ deals. Additionally, the Law provides college athletes with the opportunity 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.” Considering that only a small fraction of college athletes are well-known enough to be able to monetize their reputations professionally, California would seem to be expending considerable time and effort on this measure. However, California has long been a first mover on many issues and other states appear poised to follow suit. Governor Newsom explained that things need to change: while universities and the NCAA are making billions of dollars from college sports, “the actual product, the folks that are putting their lives on the line, putting everything on the line, are getting nothing.”
The Future of College Athlete Marketing
The Fair Pay to Play Act will not become effective until January 1, 2023. Until that time, considerable changes may be instituted by the NCAA and the respective states of the Union that will affect college athlete marketing. Already, politicians in the states of Colorado, Florida, Maryland, New York, North Carolina, South Carolina and Washington have supported the idea of imposing similar legislation in their jurisdictions, and the NCAA has publicly stated that it will be challenging the constitutionality of the Law under the Interstate Commerce Act. The NCAA’s board of governors is especially irritated because they had assembled a committee of university presidents, athletic directors, and conference commissioners to examine existing Association policies on the compensation issue and planned to report on them this month. While the NCAA may challenge the Law in court, word out of California is that the Law will, ultimately, be upheld and force the NCAA to take proactive measures to update its college athlete marketing rules. If the NCAA does not do so before the 2023 effective date of the Law, California universities will likely reap short term rewards when the Country’s best college athletes follow the money to California.
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The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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