The NCAA Goes to Washington

In mid-December, the U.S. Supreme Court signaled their intent to wade into the student athlete compensation debate.

The Supreme Court combined two cases, National Collegiate Athletic Association v. Alston and American Athletic Conference v. Alston, and plans to hear oral arguments this spring.

The NCAA, Congress and state legislatures have been doing a regulatory “dance” on student athlete compensation since California passed the Fair Pay to Play Act in 2019. California’s law allows student athletes being able to use their “name, image, and likeness” for compensation.

According to the Ringer, the California law “prevents universities from punishing athletes for being paid for the use of their name, image, and likeness (NIL) and allows athletes to sign with licensed agents.”

The California law was a monumental regulatory departure from the status quo that locks NCAA amateur student athletes out of compensation.

Besides their scholarship and the NCAA’s Student Assistance Fund (a heavily regulated set of funds given to each conference as a copay for expenses like tutoring, medical expenses, and travel), student athletes are prohibited from benefitting financially while playing.

The NCAA pushed back against California, and other states proposing student athlete compensation laws, with their own guidelines on name, image, and likeness. A couple of the leaked provisions of the NCAA’s plan shows it will continue to keep a tight leash by monitoring the types of products athletes endorse. Their plan would also allow them to stop deals in conflict with existing sponsorships.

As I’ve previously written, the Fair Pay to Play Act is simple economics at work. If a student athlete has great talent, there should be no limits on their market value.

The NCAA and colleges have hidden behind the student athlete moniker while pocketing billions. In 2018 alone, college sports generated $14 billion in revenue; Clemson University’s national championship-winning  coach Dabo Swinney signed a ten-year, $93 million contract, and the University of Washington inked a new apparel contract with Adidas for $7.89 million a year.

If policies were to change, top NCAA players could earn between $1.3 million and $2.4 million per season according to the National Bureau of Economic Research. Another study puts the four-year market value of an average NCAA Division I football player between $1 million and $1.5 million. NCAA Division I basketball players could earn between $1.5 million and $2.7 million, depending on their school’s conference.

Yet if that student were a social media influencer, they would be able to earn millions while attending school.  Nine-year-old Ryan Kaji became the highest-earning YouTube influencer of 2020 by earning $29.5 million. That was on top of his estimated $200 million in additional earnings a line of branded toys and clothing. Imagine if Kaji’s school declared him an amateur “YouTuber,” and restricted his earnings to only a small percentage of his estimated market value.  There would be rightful outrage.  The same principle should apply for college athletes.

As California lawmakers push back against the NCAA with legislation introduced to protect a student’s “athletic reputation,” Congress continues to shepherd their own proposals on student athlete compensation with the support of the NCAA.

The highest-profile measure, authored by Sen. Roger Wicker (R-MS)  would allow student athlete compensation but colleges and the NCAA would be able to block compensation deals before students enroll, schools would be protected from antitrust lawsuits, and an independent group would be created to oversee compensation issues.

The pending Supreme Court case comes from the U.S. 9th Circuit Court of Appeals decision on National Collegiate Athletic Association v. Alston. In that decision, the court held that the NCAA and colleges are essentially operating a monopoly and education-related benefits violated the Sherman Act.

I think the Supreme Court will pave the way for the normalization of student athlete compensation. The student-athlete label was created to shield the NCAA from federal worker compensation claims in the 1950s. The current claim that the collegiate model is threatened by compensating student athletes, the same individuals who provide the value that the NCAA is built on, is barbaric as an economic argument.

Boosters, sports companies, and others will also target student athletes, especially superstars at top universities. But think about the athletes at smaller schools or who are fan favorites who could earn extra money starring in a local commercial, attending a local sports camp, or signing autographs. Fewer than two percent of college athletes turn professional. The NCAA, Congress, or colleges should not stop the other 98 percent from earning a living.

Evan Harris is the media relations and outreach manager at PRI.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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