Gov. Gavin Newsom of California on Monday signed into law a plan to allow college athletes to strike endorsement deals, intensifying the legal and political clashes that could ultimately transform the economics of college sports.
The governor’s signature opens a new front of legal pressure against the amateurism model that has been foundational to college sports but has restricted generations of students from earning money while on athletic rosters.
If the law survives any court challenges, the business of sports would change within a few years for public and private universities in California, including some of the most celebrated brands in American sports. So, too, would the financial opportunities for thousands of student-athletes, who have long been forbidden from trading on their renown to promote products and companies.
“Every single student in the university can market their name, image and likeness; they can go and get a YouTube channel, and they can monetize that,” Newsom said in an interview with The New York Times. “The only group that can’t are athletes. Why is that?”
The measure, he said, was “a big move to expose the farce and to challenge a system that is outsized in its capacity to push back.”
Newsom’s decision, though backed by vast support from the Legislature, was the subject of anxious anticipation by the National Collegiate Athletic Association, the top governing body for college sports, and its critics. The N.C.A.A. told Newsom in September that it considered the measure “unconstitutional.”
The state’s rebuke of a system that generates billions of dollars each year went against powerful universities, including California, Stanford and Southern California. The schools said the law would put their athletes in danger of being barred from routine competitions and showcase events like the College Football Playoff and the men’s and women’s N.C.A.A. basketball tournaments, made-for-TV moments that help some universities log more than $100 million each in annual athletic revenue.
In a Sept. 11 letter to Newsom, the N.C.A.A.’s Board of Governors said that the measure would “erase the critical distinction between college and professional athletics” and that the N.C.A.A. had “consistently stood by its belief that student-athletes are students first, and they should not be employees of the university.”
The board framed the issue, in part, as one of fairness to universities across the country, complaining that a special approach in a single state would create recruiting advantages.
But the N.C.A.A. and its members confronted a statehouse uprising that went well beyond the governor’s office — one that effectively rendered them bystanders, not power brokers, in the debate that led to the first law of its kind. Legislators in other states, including New York and South Carolina, voiced support for similar proposals after California lawmakers passed their plan unanimously.
The California measure, Senate Bill 206, will apply to the state’s biggest college sports programs, as well as many of its smaller ones. The schools and the N.C.A.A. will not be allowed to keep a student from participating in sports if they have been paid for the use of their name, image or likeness, whether in connection with a lucrative shoe contract or a modest endorsement for a local restaurant. Students will also be permitted to hire agents, a move that is restricted under N.C.A.A. rules.
“People are just so aware of the fact that you’ve got a multibillion-dollar industry that, let’s set aside scholarships, basically denies compensation to the very talent, the very work that produces that revenue,” said Senator Nancy Skinner, a Democrat, who wrote the legislation. “Students who love their sport and are committed to continuing their sport in college are handicapped in so many ways, and it’s all due to N.C.A.A. rules.”
Students and universities have been penalized for violations of N.C.A.A. bylaws that typically block students from participation if they reach promotional agreements or work with agents. Yet N.C.A.A. rules did not eliminate a vast undercurrent of illicit activity, some of which has been on public display in the wake of a federal corruption inquiry tied to college basketball.
Sensing the severity of the legislative threats from California, a handful of other states and Congress, the N.C.A.A. announced in May that it had convened a committee to consider changes — a tactic that supporters of the existing model hoped would buy time and stave off legislative action.
The group’s recommendations are expected in October, but California officials, skeptical that the N.C.A.A. would adopt substantive reforms, chose to press ahead with their legislation without waiting.
“People said, ‘You know what, we’ve got to force their hands,’” said Newsom, who was once a regent for some of California’s largest public universities. “They’re not going to do the right thing on their own. They only do the right thing when they’re sued or they’re forced to do the right thing.”
At least on this issue, the sentiment was bipartisan. Senator Brian Jones, a Republican from San Diego County who supported the legislation, similarly doubted that the N.C.A.A. would pull together quick reforms.
“My attitude was, let’s prod them a little bit and see what happens,” Jones said.
The legislation left open the possibility that California could rework its approach once the N.C.A.A.’s plans are made public.
At the same time, it also explicitly declares that it is the Legislature’s intent “to avoid exploitation of student-athletes, colleges, and universities.”
The California proposal drew strong support from some current and former student-athletes who said that it would edge the college sports industry, however reluctantly, toward an era when its players would be compensated for their talents and the risks that they assume.
Only a fraction of college athletes eventually turn professional, and for the rest, “college is the only time they have to profit off their hard-earned athletic successes,” said Hayley Hodson, a former Stanford volleyball player, during legislative testimony in July.
But others who have taken the field for their universities, like Michael Pittman Jr., a wide receiver at Southern California, were more ambivalent and said they expected to earn their compensation in professional leagues.
“The N.C.A.A. has given us a great opportunity to play football,” Pittman, a senior whose father played in the National Football League, said in an interview. “I think it would be great for players to get paid, but honestly, that’s way past me. I’m just going to keep playing every week until I reach that level that actually pays me.”
The N.C.A.A. has signaled that it may ask the courts to block the law before it takes effect in 2023. A legal challenge could hinge on the constitutional provision that grants Congress the authority to oversee interstate commerce.
Earlier legal skirmishes have allowed the N.C.A.A.’s business model to stand with limited modifications, and the association has adjusted some rules in recent years to allow students to receive limited stipends and unlimited food from their universities.
If the courts ultimately back the measure, N.C.A.A. members in California could face a series of wrenching prospects, including leaving the association or openly defying the N.C.A.A.’s rules, risking fines and their access to competition. (An analysis by the California State Assembly’s staff said some public universities could have losses “potentially in the tens of millions of dollars,” but acknowledged that it was not clear whether the N.C.A.A. could lawfully punish members for complying with a state statute.)
The N.C.A.A. would also have to decide whether — and how — to penalize California universities, including four members of the Pac-12 Conference, among the wealthiest leagues in college sports.
But the governor, himself a former baseball player at Santa Clara, effectively dared the N.C.A.A. to expel the schools. The N.C.A.A., he and other supporters of the legislation argue, simply cannot afford to let the California universities — and their popularity in major media markets — slip away.
And that, he said, gave California leverage.
“Media cannot afford not to have California at scale being participatory in tournaments. They know that, we know that, it’s a threat,” Newsom said. “I don’t necessarily take it to heart.”
Billy Witz contributed reporting.