Student-Athletes Getting #Sponsored?: A Look at the NCAA’s Vote to Modernize Name, Image, and Likeness Bylaws
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On Tuesday, October 29, the governing board of the National Collegiate Athletic Association (NCAA) voted unanimously to begin the process of “modernizing” their bylaws to allow student-athletes the opportunity to benefit monetarily from the use of their name, image, and likeness. The decision comes after years of discussion by NCAA officials and the formation of an official “working group” to evaluate the issue in May of this year.
Recent legislative pressure from numerous states likely forced the NCAA’s hand in making this decision. On September 30, California Governor Gavin Newsom passed SB 206, the “Fair Pay to Play Act,” which directly contradicts the current bylaws of NCAA by allowing college student-athletes to profit off of their name, image, and likeness. New York, Illinois, and Florida have proposed similar legislation and more than a dozen states have expressed interest in creating similar laws in recent months. This state-by-state approach not only complicates and confuses the NCAA’s application of its own rules and exceptions for member universities, it brings about concerns related to fund distribution, recruiting, and sponsorship. Additionally, some of the proposed legislation threatens to blur the line between collegiate and professional programs.
The NCAA’s decision to amend its bylaws demonstrates an attempt to embrace change while maintaining a uniform national law or rule that applies to all members of their association. “As a national governing body, the NCAA is uniquely positioned to modify its rules to ensure fairness and a level playing field for student-athletes” noted NCAA President Mark Emmert. The NCAA Board of Governors additionally directed each of its three divisions to immediately consider updates to their bylaws while keeping in alignment with the NCAA’s guiding principles of fairness, opportunity, academic success, and well-being of student-athletes.
Historically, collegiate student-athletes have been prohibited from receiving money in relation to their participation in athletics. Receiving payment for such activity would result in the loss of amateur status and, therefore, the ability to compete in collegiate athletics. Under NCAA Article 12, this restriction primarily applied to competition prize money and to money earned via promotional activity using the name, likeness, or image of the student-athlete.
The present-day definition of amateurism and restrictions on student-athlete compensation arise from several important court cases. In the 1984 case, NCAA v. Board of Regents of University of Oklahoma, the Supreme Court, in adopting a plan for televising college football games, emphasized the key distinction between professional and collegiate sports. In his dicta, Justice Stevens specifically clarified that athletes should not be paid: “… moreover, the NCAA seeks to market a particular brand of football – college football. The identification of this ‘product’ with an academic tradition differentiates college football from and makes it more popular than professional sports…. In order to preserve the character and quality of the ‘product,’ athletes must not be paid, must be required to attend class, and the like.” In the 2015 antitrust class action case, O’Bannon v. NCAA, the Ninth Circuit Court of Appeals held that while certain NCAA amateurism rules violated antitrust laws, the remedy for this would be to provide scholarships up to the full amount of tuition to student-athletes. The court noted, “[t]he difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap.” This court also emphasized that the divide between collegiate and professional athletics is an important one: “Once that line [between educational and non-educational expenses] is crossed… the NCAA will have surrendered its amateurism principles entirely and transitioned from its ‘particular brand of football’ to minor league status.”
It’s easy to see why these restrictions have been controversial. According to the NCAA, as of 2019, nearly half a million student-athletes compete in 24 sports per year. In the 2016-2017 school year, the NCAA generated over $1 billion in revenue. Revenue in NCAA sports continues to grow exponentially. Between 2005 and 2015, revenue generated by the five major conferences (ACC, Big 10, Big 12, PAC-12, and SEC) increased by 266 percent and is projected to increase 391 percent from 2005 levels by the year 2020. That revenue comes primarily from ticket sales, marketing rights, tournaments, and championship games. Unsurprisingly, football and men’s basketball garner the majority of that pool, bringing in about $31.9 million and $8.1 million respectively. In fact, during the 2016-2017 school year, football brought in more money than all other sports combined at the Division I level.
But the NCAA is not just pocketing all of that money. Roughly 60 percent of NCAA revenue is returned directly to the Division I conferences and member institutions. Until 1991, money from NCAA championships was distributed among competing teams after expenses were paid. However, in order to address disparities resulting from the enormous amount of revenue generated by the men’s basketball tournament, the NCAA developed a Revenue-Distribution Plan to allocate money among five funds: Academic Enhancement, Basketball, Grant-in-Aid, Student Assistance, and Sports Sponsorship. Generally, under the current structure, Division I members have discretion to allocate their funds as they see fit within the Revenue-Distribution Guidelines. For the most part, Division I schools disperse this money primarily among the categories of athletic student aid, athletic staff compensation, facilities and equipment, and game expenses and travel – all expenditures which effectively serve to better the student-athlete experience.
California’s law and other states’ proposed legislation threaten to abruptly disrupt this carefully constructed Revenue-Distribution Plan. In deciding to pass the SB 206, Governor Newsom reasoned that “[c]ollegiate student athletes put everything on the line – their physical health, future career prospects and years of their lives to compete. Colleges reap billions from these student athletes’ sacrifices and success but, in the same breath, block them from earning a single dollar. That’s a bankrupt model – one that puts institutions ahead of the students they are supposed to serve. It needs to be disrupted.” Newsom has garnered the support of both politicians and athletes for his involvement at the forefront of this issue – even signing the bill on the set of UNINTERRUPTED’s “The Shop” alongside celebrities LeBron James, Maverick Carter, Rich Paul, Diana Taurasi, Ed O’Bannon, and Katelyn Ohashi. During the show, Katelyn Ohashi, a UCLA gymnast who was prevented from making any money off a video of her viral floor routine, remarked, “When my routine went viral, [NCAA President] Mark Emmert called me to congratulate me, and I’m like, “You should be thanking me.’” In the political sphere, Newsom has the support of Senator Steven Bradford, who noted, “While our student athletes struggle to get by with basic necessities such as food and clothing, Universities and the NCAA make millions off of their talent and labor… SB 206 addresses this civil rights issue of today, which is about fairness and equity. Our colleges and universities should no longer treat student athletes as chattel, but as the valued individuals they are.”
Although Newsom’s supporters have valid arguments and concerns, they seem to ignore the larger picture. The NCAA operates systematically to encourage a level playing field for all and to “focus on the best interests of all student-athletes nationwide.” Ohashi, in making her statement, seems to discount the support that she received from her university and the NCAA in the form of a brand new training facility, a world-class coaching staff that provided free choreography and technical training, and athletic gear and uniforms – all resources likely subsidized by a pool of funds generated by former athletes in other, more profitable, sports. Senator Bradford’s claim is unfounded, as the NCAA specifically outlines in Article 12 that meals are included in the definition of “actual and necessary expenses” that may be allotted to a student-athlete. Further, most NCAA member institutions offer a number of perks to student-athletes like nutritional programming, free tutoring, early class registration, medical care, and career training programs. Finally, student-athlete walk away with the most most valuable perk of all – a college education.
The NCAA has made it clear that it intends to be flexible in allowing college athletes the opportunity to make money off of their name, likeness, and image. In the modern world of social media, following the “California model” of a virtually unrestricted market that could mean student-athletes have the same ability to make money off of sponsored content and advertisements as their peers. However, NCAA board member and Ohio State Athletic Director Gene Smith has said that the NCAA will likely not follow the “California model” and is expected to stay involved as the group in charge of regulating future endorsement deals. This is probably for the best. Failure to regulate endorsements could lead to conflicting sponsorship deals – for example, an athlete who sponsors a particular athletic brand on her Instagram could be in violation of her school’s contract with one of the major athletic apparel brands. Furthermore, in constructing new policies, the NCAA is mindful about how paid endorsements could affect recruiting. They must ensure that the promises of “sponsorship packages” or similar deals do not unduly influence a student’s choice of where to attend college. Currently, the NCAA bylaws outline exceptions for Olympic athletes and tennis players in regards to their earning prize and endorsement money and retaining their “amateur” status as student-athletes. The NCAA says that it’s working group will consider future name, image and likeness opportunities for student-athletes and may incorporate elements of the Olympic model that are consistent with the values of college sports within higher education.
The NCAA intends for each division to implement rules that allow college athletes to profit from their names, images and likenesses “in a manner consistent with the collegiate model” by January 2021. However, it remains unclear whether the proposed changes by the NCAA will be enough to appease those politicians who have already formulated new, more expansive legislation. In a call-to-action similar to Governor Newsom’s, U.S. Congressman Mark Walker recently proposed a change to the federal tax code that would likely force the NCAA to give all student-athletes the right to sell their names, images and likenesses. Even after hearing the news on Tuesday, Walker said that he plans to continue moving forward with his proposed legislation to ensure the NCAA follows through on their promises. Similarly, before signing the California law last month, Newsom almost boasts, “this is a major problem for the NCAA.”
While these parties have indicated they might be willing to modify their legislation or help the NCAA formulate new rules, it remains unclear what will actually happen if they are unsatisfied with the NCAA’s resolution and decide not to scale back their legislation. The issue of a “state-by-state” implementation might remain and the NCAA might be forced to simply impose penalties rather than succumb to political pressures. However, the “chaos” created by differing requirements among states and member schools might unintentionally favor granting the NCAA blanket power to apply uniform rules In NCAA v. Miller, the Ninth Circuit held that Nevada violated the Commerce Clause of the U.S. Constitution by creating new procedural rights for college athlete accused of wrongdoing by the NCAA. By impacting the commerce of college sports that crosses state lines, the NCAA could gain back its power to regulate member institutions in the realm of student-athlete compensation as well.
The NCAA working group will continue to gather feedback through April on how to best approach this issue and aims to implement the new bylaws by January 2021. The NCAA seems to already have the support of athletic conferences: After Governor Newsom signed the California law, the PAC-12 Conference, with a third of its member schools located in California, declared that new law would lead to the “professionalization” of college sports, with “significant negative consequences.” Perhaps with the support of the other major conferences, the NCAA will be able to formulate a policy applicable and agreeable to both member institutions and student-athletes, while maintaining its core standards of fairness and equality in college sports.
About the Author: Elleni Avila is a JD Candidate for the class of 2021 at Cornell Law School. She holds dual Bachelor of Arts degrees in Arts Management and Psychology from The Ohio State University. Prior to attending law school, Elleni danced competitively and professionally for 20 years. She is an avid fan of college football, musical theatre, and reality television.
Suggested Citation: Elleni Avila, Student-Athletes Getting #Sponsored?: A Look at the NCAA’s Vote to Modernize Name, Likeness, and Image Bylaws, Cornell J.L. & Pub. Pol’y, The Issue Spotter, (Jan. 31, 2019), https://live-journal-of-law-and-public-policy.pantheonsite.io/student-athletes-getting-sponsored-a-look-at-the-ncaas-vote-to-modernize-name-image-and-likeness-bylaws/.