California put the NCAA on its heels earlier this fall when Governor Gavin Newsom signed the revolutionary SB 206 bill into law. Known as the “Fair Pay to Play Act,” the bill is the first to allow college athletes to be compensated for their name, image, and likeness (NIL). From a name on the back of a jersey sold to a commercial to an Instagram product placement, starting in 2023 when the bill goes into effect, college athletes will finally be able to receive compensation in California without any ramifications to their athletic eligibility.

The NCAA originally declared this legislation unconstitutional and an “existential threat.” However, the NCAA swiftly reversed course later announcing that it had unanimously voted to “permit” student-athletes “to benefit” from NILs. But, make no mistake, the NCAA has not made any concessions. At least, not yet. While the organization received a lot of positive press for finally evolving their policies, the NCAA never officially said it would allow compensation. Instead, their press release used vague language, noting the NCAA must “immediately consider” changes to add “additional flexibility” to the student-athlete experience as long as this modernization is “in a manner consistent with the collegiate model.”

Essentially, the NCAA released a wordy statement that essentially said “eh, we’ll think about it.”

Nonetheless, with several other states considering a similar version of California’s bill, it’s important to note what the legislation actually says…and, perhaps more importantly, what it does not.

What’s in the Bill

The bill lays the foundation regarding NIL compensation protections for student-athletes. California already has an existing law known as the “Student-Athlete Bill of Rights,” which requires intercollegiate athletic programs that earn on average $10 million or more in annual revenue from media rights to comply with certain state regulations relating to student-athlete rights. This bill is meant to build upon and expand these provisions.

The California legislation applies to all colleges and universities within the state, except community colleges because the California legislature has declared that two-year community college institutions are not governed by the NCAA and require a different evaluation. However, language also notes that a committee will be formed to review whether these same protections should be broadened to include community colleges (Florida, Illinois, and Washington’s proposed bills will apply to community colleges).

Here are the actual protections outlined in the California bill:

– A post-secondary educational institution shall not prevent a student-athlete from receiving any compensation as a result of the use of the student’s name, image, or likeness. Furthermore, earning this compensation will not affect the student’s scholarship eligibility.

– Any conference, association, or organization cannot prevent a student or that student’s educational institution from participating in an event because that student received NIL compensation.

– An educational institution, athletic association, conference, or organization with authority over college sports cannot provide a prospective student-athlete with compensation related to NIL.

– An educational institution, conference, or other group cannot prevent a California student-athlete from obtaining professional representation relating to contracts or legal matters (this includes representation by athlete agents or attorneys).

– Agents and attorneys representing student-athletes must be officially licensed according to California law. Agents must also comply with the federal Sports Agency Responsibility and Trust Act.

– A scholarship from an educational institution is not considered compensation under the bill and a scholarship cannot be revoked for earning NIL compensation.

– Student-athletes shall disclose potential NIL contracts to their college or university.

– A student-athlete must not enter into a contract that is conflict with the athlete’s team contract. Upon disclosure, if the educational institution finds a conflict, the institution must disclose to the student-athlete the relevant contractual provisions that are deemed to be in conflict.

What’s NOT in the Bill

While the California legislation is a giant step forward for student-athletes rights, there are a few flaws and notable absences within the bill that could cause potential problems in the future.

First, there is no enforcement mechanism. The bill does not state who will be in charge of overseeing these regulations, where to report potential violations, or who would mediate potential disputes. Since the bill does not go into effect until 2023, California has time to put the appropriate infrastructure in place. However, an enforcement body will likely be one of the most important pieces of protecting student-athletes rights and is noticeably absent from the current legislation.

Next, the California legislation does not describe what would be the punishment for violating the bill. Is it a criminal or civil violation? What type of potential charges can be brought? Can a student-athlete bring a lawsuit against an institution for refusing to comply with the bill? For example, Washington’s House Bill 1084 asserts that a violation of their student-athlete compensation bill can be considered a violation of other state laws, including unfair competition laws and deceptive trade practice laws. So, how will California handle violations?

Another potential issue revolves around the exact meaning of the clause that states student-athletes cannot enter into a contract that is in conflict with the athlete’s team contracts. When exactly is meant by “in conflict” and what provisions of a team’s contract does this relate to?

One potential presumption arises when looking at Florida’s version of the bill. In HB 251, Florida’s proposed legislation is written with more precision when it comes to potential conflicts, saying that student-athletes are prohibited from signing contracts with companies that are competitors of companies that have contracts with the school and/or team. In other words, a student-athlete could not have an endorsement deal with Nike if his/her university has a contract with Adidas. Is this what is meant by the conflict language in California’s bill? And, what other potential conflicts might arise?

What’s Next?

California’s initiative has created a domino effect as several other states have begun to put forward their own versions of legislation. Florida, New York, Illinois, Washington, and New Jersey have already proposed similar laws, while Colorado, Minnesota, Michigan, Pennsylvania, and South Carolina are reportedly planning to forward their versions down the road.

While a state-by-state approach has its advantages, it could also be a kryptonite used by the NCAA to subvert state legislators. If the NCAA decides to fight this type of compensation for players, it will likely argue these state laws are unconstitutional because they violate the Commerce Clause. The US Constitution’s Commerce Clause gives Congress the exclusive power to regulate interstate commerce. Similarly, it also prevents states from enacting laws that unduly burden interstate commerce (even in the absence of federal legislation). Thus, the NCAA likely will argue that college sports is interstate commerce and individual state laws are a burden to college athletics and its governing body, the NCAA.

In response to this potential challenge, former Ohio State football player and current Congressman Anthony Gonzalez is rumored to be working on federal legislation that would allow NIL compensation for student-athletes. By having a federal option echoing state proposals, Gonzalez’s bill could be crucial in avoiding potential constitutionality challenges by the NCAA.

Either way, the California legislation is certainly just the beginning, not the end, of the journey in the fight for student-athlete right.

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