California’s governor signed a bill that will allow students playing college sports to strike endorsement deals and hire agents, challenging the National Collegiate Athletic Association on a system that has been in place for decades and generates billions of dollars for universities.
Here are answers to some questions surrounding California’s move and its repercussions.
What will the law do?
The law will allow student-athletes throughout California to be compensated for the use of their name, image or likeness, and it will also allow them to hire agents. Unless modified (more on that later), it is scheduled to take effect in 2023.
The law says that universities, athletic conferences and the N.C.A.A. cannot punish students for reaching such deals by stripping them of scholarships or keeping them from playing.
There are some caveats, though. Students won’t be allowed to make deals that “conflict with a provision of the athlete’s team contract.” For example, athletes cannot cut a deal to wear a certain company’s gear during a game if their university has an exclusive contract with another company.
How is this different from current N.C.A.A. rules?
The N.C.A.A.’s Division I manual contains a labyrinth of guidelines. But Article 12, which governs amateurism and athletic eligibility, is about to become especially important in California.
Part of that article forbids student-athletes from accepting compensation in exchange for allowing “his or her name or picture to advertise, recommend or promote directly the sale or use of a commercial product or service of any kind.”
The bylaws forbid sponsorships, but also activities like taking cash for autographs or monetizing social media channels.
The N.C.A.A. also has a “general rule” (with some exceptions) that players cannot participate in a college sport if they have agreed “to be represented by an agent for the purpose of marketing his or her athletics ability or reputation in that sport.”
Both provisions conflict with California’s approach.
Will student-athletes be penalized? What about their universities?
They could be.
If neither California nor the N.C.A.A. changes course, student-athletes with agents or endorsement contracts will be in violation of the association’s rules and cannot be declared ineligible to play.
In a letter to Gov. Gavin Newsom in September, the N.C.A.A.’s Board of Governors said California schools might gain “an unfair recruiting advantage” because of the law, and they would eventually be barred from N.C.A.A. competition.
Colleges and universities could face substantial fines — “potentially in the millions of dollars,” according to a legislative analysis — for N.C.A.A. violations, and the financial losses would be even steeper if universities lose eligibility for their teams to compete.
It is not clear, though, whether the N.C.A.A. could legally enforce any fines. California officials have said they do not believe the N.C.A.A. could punish colleges or athletes for complying with a state law.
Is California crazy?
California is betting that the N.C.A.A. will back down before the law takes effect in January 2023. Given the threats of litigation, fines and competition restrictions, that’s a risky proposition, but state officials contend that the N.C.A.A. and its members across the country simply cannot afford to ban or penalize California’s colleges and universities.
“This is one of the biggest media markets on planet Earth,” Gov. Newsom said in an interview with The New York Times. “Media cannot afford not to have California at scale being participatory in the tournaments. They know that, we know that, it’s a threat. I don’t necessarily take it to heart.”
Is this happening in other states?
No state has gone as far as California — so far.
But the N.C.A.A. is facing pressure, in varying amounts, from the public, Congress and a rising number of statehouses. Just in the last few weeks, South Carolina legislators said they intended to introduce a bill like the one in California.
And a state senator from Brooklyn has filed legislation that in some ways mirrors the California measure. But the New York proposal takes another step: It would compel colleges to pay 15 percent of the money earned from sports ticket sales to student-athletes.
The time before the law takes effect gives the N.C.A.A. or another party (and plenty might be interested) time to go to court. The N.C.A.A. told the governor in September that it believed the measure to be “unconstitutional,” signaling that it could bring a legal challenge connected to the Constitution’s commerce clause.
But there is a twist: By the end of October, N.C.A.A. leaders expect to receive a committee’s recommendations for changes. The California law explicitly declares that the Legislature intends to “revisit this issue to implement significant findings and recommendations” from that group.
So it is entirely possible for California to amend its law before 2023, perhaps avoiding a legal battle with the N.C.A.A. or some of the state’s universities.