In August 2018, Zion Williamson might have been one of 1,740 incoming freshman at Duke University in Durham, North Carolina, but the 18-year old, who was recruited to play on Duke’s Blue Devils basketball team, was hardly your average college freshman. In a single season, the 6’6’ Salisbury, North Carolina native averaged 22.6 points per game and won an array of awards, all while amassing hundreds of thousands of Instagram followers, covering sports magazines, and even appearing in an ESPN commercial.
In a sign of Williamson’s striking talent and large-scale appeal, during the March 2019 National Collegiate Athletic Association (“NCAA”) Tournament, CBS specifically devoted a camera – which it called the "Zion Cam" – to record him throughout the basketball competition.
In his single year as a Duke Blue Devil before being drafted by the New Orleans Pelicans, Williamson – like other college level basketball players and student athletes across the country – was at the center of the U.S. college sports machine. Thanks to the fervent coverage of college sports on television and given the rise of social media, individual players, such as Williamson, find fans – and oftentimes, a lot of them – even before they make it to the NBA (or the NFL, or the NHL, etc.), further bolstering the momentous appeal of the collegiate sports industry.
And it is a sizable industry. In 2017, revenues for the NCAA – the nonprofit organization is responsible for regulating student athletes and organizing the athletic programs for colleges and universities in the U.S. and Canada – topped $1 billion.
Schools are also making money from student sports. The athletic department for Texas A&M, for instance, reported $212 million in operating revenue for 2017, largely tied to its football team. Meanwhile, the University of Texas at Austin saw more than $214 million that year in connection with its athletic endeavors. Other top sporting colleges similarly drive tens – if not hundreds – of millions of dollars in revenue from things like ticket sales, which could top out at about $4,000 for NCAA championship games; team merch, which is often created in conjunction with sportwear giants like Nike, adidas, and Under Armour, all of which have formal deals with colleges; and $50 million or so television partnerships with cable networks.
As a whole, the college sports industry has “swelled into a behemoth that generated at least $14 billion last year,” the New York Times recently revealed.
To date, while billions of dollars are flowing to schools, coaches, brands, and the NCAA in connection with college sports, the athletes, themselves, have been the outliers. The NCAA permits student athletes to receive scholarships and small stipends (i.e., $5,000 at most), but it strictly prohibits players from entering into endorsement deals. In other words, the organization – in furtherance of its emphasis on collegiate athletes being students before athletes – bars student athletes from being paid or otherwise commercializing their likeness, from their often well-known names to their images, leaving on the table "billions of dollars in television revenues and licensing fees,” according to ESPN-owned site Grantland.
The state of California wants to change that.
On the heels of the California state legislature approving a bill that will allow college athletes to earn money through athletic endorsements beginning in 2023, Governor Gavin Newsom signed the bill into law on September 30. In doing so, Newsom told the New York Times that “every single [college] student can market their name, image and likeness; they can go and get a YouTube channel, and they can monetize that.” So, why is it, he asked, that “the only group that can’t [do so] are athletes?”
The new legislation – called the Fair Pay to Play Act – gives the green light to college athletes to hire agents and earn money from sponsorships and other deals. California is the only state in the country to pass such a law, making its tenets limited exclusively to schools and athletes in the state. However, the Times’ Alan Blinder says that the law likely “sets up the possibility that leaders in college sports will eventually change the rules for athletes nationwide.” That is assuming, of course, that the bill is not shot down by the courts first, should stakeholders file suit to challenge it.
Already, the NCAA has threatened to ban all California colleges from partaking in national championship events, according to Marc Edelman, a law professor at Baruch College’s Zicklin School of Business, who notes that the new California law and the schools whose athletes it applies to have … well, the law on their side. He is referring to a 1984 decision from the Supreme Court. In NCAA v. Board of Regents, the nation’s highest court found that the NCAA’s plan to punish member colleges that failed to abide by its longstanding limit on the number of football games that any school may broadcast on national television ran afoul of federal antitrust law.
In turn, in a 7-2 decision authored by Justice John Paul Stevens, the Supreme Court prohibited the college sports association from taking action against colleges that exceeded its set limits.
Fast forward 35 years, and as Edelman aptly states, “The composition of the U.S. Supreme Court is different today.” Yet, “the basic principles of federal antitrust law still forbid a monopolist trade association from banning one of its members for refusing to accede to restraints on free market competition,” potentially making it a “a perilous perch [for the NCAA to] threaten to ban member colleges for non-compliance with financial-based restraints.”
Your move, NCAA.