NCAA: The Wild Wild West

In the words of musical talent Sisqó, “we’re going straight to the wild wild west.” That’s where all of the commotion about name, image, and likeness (NIL) began. And this commotion may have bigger implications for college athletics in the near future. There are 3 keys that are important to focus on:

• O’Bannon vs. NCAA
• Alston vs. NCAA
• Senate Bill 206

?These three keys serve as the jab, jab, jab that will setup the right hook in the future when, prophetically speaking, college athletes will be paid salaries at some of these larger universities such as (Florida, Georgia, Alabama, etc.)

The NCAA has long stood behind the defense of its “amateurism” claims to protect itself from punches thrown at it about exploiting college athletes. It holds onto the narrative that paying college athletes harms the noble ideals of the NCAA to provide academics and athletics in a way that delivers wholesome development to student-athletes.?

The term amateurism has nothing to do with skill level or age; it just means you play for free. To hold onto its amateurism claims, the NCAA emphasizes that it’s not professional sports and needs to distinguish itself from the pros by not paying college athletes.?

Many don’t understand the NCAA’s rational – including the Supreme Court – that any compensation beyond a full-scholarship changes college sports from amateur to pro sports. The only reason college athletes aren’t paid for play is because the NCAA wants to classify itself as amateurism. There aren’t any federal laws against paying players or any players saying the only way they will participate in the NCAA is if it doesn’t pay players.

Athletes and others have been disgruntled with the NCAA’s model, evidenced by the numerous lawsuits over the years. The thoughts of many are probably “Here’s this non-profit entity generating billions of dollars off of college athletes and then putting a cap on the athletes’ compensation to just a scholarship. That’s not right.”

In 2009, O’Bannon threw the first jab to hit and land versus the NCAA. Coming from the West coast at UCLA, men’s basketball player Ed O’Bannon noticed he was on the EA Sports NCAA College Basketball video game. The avatar looked like him, had his jersey number, bio, and played for UCLA. It was exactly his image and likeness without his last name.?

He never consented to the NCAA using his image and likeness for commercial gain. Hence the lawsuit O’Bannon vs. NCAA heard by Northern California U.S. District Court Judge Claudia Wilken, who has tried multiple antitrust cases, ruling against the NCAA. O’Bannon could see that the NCAA and all the schools were getting paid off of this product due to their trademark logos being used on the video game. However, he nor any other college athletes were getting paid for the use of their images and likenesses.?

This case went all the way to the Supreme Court, where the court declined to hear the case, upholding the U.S. Court of Appeals ruling in favor of O’Bannon. The ruling did two main things: First, it ultimately led to 2013 being the last year EA Sports produced NCAA college basketball and college football video games. The conspiracy by the NCAA to profit off of college basketball and football players’ names, images, and likenesses for commercial purposes but deny them the right to do the same had been exposed.

Second, Sports Illustrated noted, “The court found that certain NCAA amateurism rules violate federal antitrust law. Those rules, the court determined, constituted an anti-competitive conspiracy by the more than 1,200 member NCAA colleges, conferences and affiliate organizations.” This exposed the NCAA and made it vulnerable to attack.

?O’Bannon slipped a jab through the NCAA’s amateurism defense. The courts held that the NCAA was not exempt from antitrust laws. It’s illegal for these competing businesses i.e., universities to offer the same benefits i.e., only a scholarship (grant-in-aid) to its labor i.e., college athletes.?With this weakness exposed, Alston vs. NCAA was able to strike.

With another hard jab, Shawn Alston, a West Virginia University running back, landed a hit on the NCAA. In 2014, Alston filed an antitrust lawsuit against the NCAA. It argued that it is an antitrust violation for the NCAA to enforce rules that mandate all institutions to only offer scholarships – tuition, room and board, fees and course related books – and not cover the full cost of attending schools. Things like transportation and laptops need to be accounted for when attending colleges, also.

The NCAA’s rules were restricting competitive offers being made to college athletes, violating antitrust laws and exploiting young athletes. Sensing that their position was gradually deteriorating, in 2015 the NCAA permitted its college members to offer student athletes scholarships plus the full-cost-of-attendance stipends. Stipends were to be no more than $5,000 per year and would vary from campus to campus based off of financial situations and federal guidelines. This was the least the NCAA could do, but it was a start to a bigger victory. ???

On June 21st, 2021, a big victory came when the Supreme Court ruled in favor of Alston and rejected the NCAA’s claims that providing compensation above the full cost of attendance would jeopardize its amateurism claims and affect the appeal of college athletics amongst fans. Seeing no evidence to support the NCAA’s claims, the Supreme Court ruled in favor of universities offering an unlimited amount of compensation for education-related expenses on top of the full scholarship and the full-cost-of-attendance stipends.

After two solid jabs through the NCAA’s amateurism defense, what does college athletics look like for an athlete now? Well, no longer will schools just recruit a player with a full-scholarship offer plus a full-cost-of-attendance stipend per year, top-tier academics, state-of-the-art facilities, exceptional coaching staff, potential to play for a championship title, and an opportunity to play professional football.

No, schools will now be able to offer all of that plus an uncapped amount of compensation for educational expenses during an athlete’s undergraduate/graduate pursuits. Meaning, if a player needs a laptop, funding for graduate school at another university, funds to cover living expenses while working an unpaid internship, and more funding for educational related expenses, that player can have it covered by compensation given from their university.

But wait…there is one more jab that will leave the NCAA staggering, exposed for a massive right hook coming in the future. That jab is Senate Bill 206. It was passed by California Senator Nancy Skinner in 2017 and was signed by Governor Gavin Newsom in 2019. SB 206 goes into effect in California in January 2023. It allows college athletes to use their NIL for monetary gain. Things permissible for college athletes to earn money from but not in its entirety are sponsorships, endorsements, business ventures, appearances, autograph signings, and such.

When this bill was signed by Governor Gavin Newsom, it sent a ripple effect across the country with a wave of other states forming bills to allow college athletes the right to earn off of their NIL. Coming July 1st, 2021, seven states – Alabama, Florida, Georgia, Kentucky, Mississippi, New Mexico, and Texas – have laws that come into effect for athletes to use their NIL for monetary gain.

The NCAA was so busy projecting and protecting its amateurism claims over the years that it failed to make adjustments to the changing environment. Technology has significantly opened up opportunities for everyone to participate in the United States’ capitalist market. The NCAA has been capitalizing off athletes for a long time. Instead of fearing change, the NCAA should have found ways to innovate. However, the NIL movement has created a shockwave that exposed the NCAA and made the entity powerless against regulating NIL.

The NCAA doesn’t want to face another antitrust lawsuit and lose hundreds of millions of dollars from damages. And because the seven states intend to move forward with their state laws permitting NIL, the NCAA has to waive enforcement of its amateurism policies over all 50 states. It cannot prohibit any universities and their college athletes from profiting off of their NIL.

Schools in states without laws will be able to come up with their own rules to regulate NIL. The NCAA is hands off as of now. It hopes a federal law can be put into place to add uniformity to NIL legislation for all universities. However, the NCAA’s numerous run-ins with antitrust violations may be a concern of the federal government and reason to not get involved.

And here it is, the wild wild west of college athletics. What started in the west with an antitrust lawsuit from UCLA’s O’Bannon, to a Northern California District Court Judge Claudia Wilken hearing multiple antitrust lawsuit, to the California Governor Gavin Newsom signing SB 206 has led to the spread of NIL across the nation. With no uniform rules in place, colleges will use their own discretion on policies for NIL.

The thin guidance given by the NCAA prohibits endorsement deals with incentive clauses that increase pay based off of points score or other performance metrics. According to Front Office Sports, colleges are also prohibited from allowing athletes to receive payments from boosters in exchange for athletic performance or attendance.

College athletics is about to look entirely different. NIL is the starting point to what will eventually lead to college athletes being paid salaries for attending certain universities. Once it’s proven that college athletes earning money off of their NIL isn’t harmful to the players or the fans’ desire to watch college sports, paying college athletes a salary will be more digestible for those unsettled by it. And as these lucrative (billions) media rights contracts continue to skyrocket, coaches’ salaries continue to grow exponentially, and marvelous facilities continue to be constructed, it will be increasingly apparent that everyone is benefitting off of the athletes except the athletes.

More antitrust arguments are coming. Sports Illustrated gives an example of how imbalanced the economics may be for college athletes. A school gives a college athlete a full scholarship that’s worth $100,000 per year, but that athlete makes the school $500,000 per year. That player is missing out on $400,000 worth of economic value being produced. That value goes to the coaches and the athletic department. How is that fair?

The NCAA needs to prepare for the knockout blow coming. With its amateurism defense mechanism down, SB 206 has thrown the last jab to setup the right hook that will result in college athletes at larger (financially) programs receiving a salary to play. Keep in mind that this was California Senator Nancy Skinner’s original intent with SB 206, to have players paid for play. She’s satisfied with NIL for now.

Years ago, it was hard to imagine college athletes getting paid for their NIL, but hear it is, and it doesn’t seem out of place. The same follows for college athletes receiving a salary. It’s hard to imagine, but give it time, and people will wonder why this wasn’t allowed in the first place. With hardly any rules in place to governor universities and college athletes on proper use on NIL for monetary gains, welcome to the wild wild west of college athletics. Anticipate universities to craft nifty ways to utilize NIL for recruiting top talent.

Battle well,

Derek