Good morning, and thanks for spending part of your day with Extra Points.
At the NCAA convention last week, senior NCAA officials, including incoming president Gov. Charlie Baker, made it very clear that the organization wants help from the federal government in crafting new college sports legislation. Without legislative clarification, the NCAA feels that it can't enforce NIL regulations, and are increasingly limited in its ability to enforce other national policy. They also want legislative assistance in heading off legal challenges to the employment status of college athletes.
The conventional wisdom is that the NCAA is highly unlikely to get Congress to act. Numerous NIL-related bills failed to even get out of committee last year, and lawmakers in both parties have expressed skepticism about granting antitrust exemptions. I think anybody outside of perhaps the NCAA's lobbying team would agree that the federal government also has a few slightly bigger problems to address at the moment than college sports regulation. This is not the sort of issue that really excites K St, primary voters, or major donor groups, after all.
I'm more bullish on the NCAA's chances, even if I agree that it's still going to be an uphill climb. There are lawmakers that essentially support what the NCAA is asking for here, after all. Marco Rubio presented a bill in 2020 that would satisfy most of what the NCAA is asking for, and Rep. Gus M. Bilirakis (R-Fla.) just wrote an editorial in Sportico calling for national NIL standards. There absolutely are lawmakers that have sympathy for some of the NCAA's claims, and that number could even grow, depending on what happens with the NLRB and various federal court decisions.
I'm sure I'll be writing several more newsletters this year about the messy legislative sausagemaking process. But rather than handicap the chances of the NCAA getting something passed, I want to ask a different question.
Should Congress do anything here? Is the NCAA asking for something that would make good policy? Could it be changed to become a good policy?
I'm not a lawyer, and one thing I've learned since getting on this beat is that even lawyers often don't agree with each other about these things. So rather than endorse a specific set of legislative or legal remedies that might invite other lawyers to holler at me in my email, let me share a few high-level principles that, in my professional opinion, could inform sound policy.
The opportunities that college sports provide are worth protecting
In a just society, all students, regardless of race, income level, or zip code, would have access to a high-quality K12 education. In a just society, all students would have access to affordable, high-quality postsecondary education. Forgive me for sounding political and all, but I do not believe our society is there yet.
I imagine you'll hear this more from ADs, NCAA officials, and school presidents over the coming year, but already I'm hearing more officials talk about how college sports is a massive "laboratory of human development", one of the largest scholarship programs in the United States, and a critical tool for helping young people grow. For all the industry's faults and flaws, corruption, and exploitation, these statements can also be true.
I don't know for certain if we are there yet, but I can potentially see a world where employment status changes and fear of lawsuits encourage many schools to dramatically limit their athletic scholarship offerings or pare down their departments. There are currently north of 190,000 athletic scholarships given out across D-I and D-II. If, as college sports change, we lose 50,000 of those...will they be replaced by 50,000 academic scholarships? Will those opportunities vanish into the higher education bureaucracy? What would that mean for equity in access to education?
My hope is that whatever solution (be that legislative, legal, etc) is reached, trying to preserve educational access is a key priority. As Michael McCann of Sportico recently noted,
I worry that one of those unintended consequences might be a group of students who might struggle to afford college without athletic scholarships will find themselves in a worse position.
We need to recognize the reality that many athletes have financial value, and asking third parties to pay for that value is dishonest, disorganized, and dysfunctional.
The best recent case study for this principle is the recruiting saga of Florida QB recruit Jaden Rashada.
The Athletic has a great blow-by-blow summary, but here's a quick Tl;DR. Rashada, a high four-star QB recruit, enters into an NIL agreement with a collective supporting Florida athletics for a whopping $13 million, a figure that the collective was unable to actually pay. Spooked because the check didn't cash, Rashada decommits, and where he'll actually end up is currently unknown.
Let us be grownups about this and approach this honestly. Jaden Rashada, a kid with 26K Instagram followers and only seven posts on his account, is not going to provide $13 million in marketing value to any collection of businesses over a four-year college career. Nobody is giving Rashada that kind of money because they think his superior content creation skills and dedicated audience will help sell more energy drinks or increase exposure for a campus dive bar. There is no audience engagement metric that would justify anywhere close to that kind of money.
But if Rashada lives up to his recruiting billing (while not the top QB in his class, his .9742 rating is comparable with other players who have gone on to win the Heisman or have otherwise elite careers), he could very much provide $13 million worth of value to the Florida athletic department. One stud QB can be the difference between the Outback Bowl and the SEC Championship Game, after all. Collectives are willing to shell out this kind of money because they want to win, and they recognize that this is the best way to compensate talent for their athletic labor.
Here's the thing, though. Compensating elite athletic talent via NIL collectives means that the university has no meaningful control or oversight, and the folks writing the checks don't have accountability (which is how you end up with situations like a guy signing off on a contract that he can't actually pay for). It requires everybody involved to lie and pretend that this money isn't an athletic inducement, but a marketing deal. It creates governance challenges, equity challenges, and empowers a whole new class of rent seekers and in-betweeners to capture some of that money.
The entity that will manage Rashada's day to day experience as a college athlete is...the school. The entity that will benefit the most from Rashada's athletic performance is...the school. In my professional opinion, the most honest way to do business is for the school to be the one to pay Rashada, or any elite athlete, rather than boosters laundering money through charities.
Does that have to make the athlete an employee? Maybe, maybe not. Maybe there are contractor-type relationships that would pass legal muster or other legal mechanisms. Certainly, not every college athlete is a high four-star QB that could command seven figures from booster groups.
But let's call a spade a spade here.
The legislative burden should not fall only on the shoulders of athletes
I'm not saying I completely agree with the NCAA's argument here, but I understand it. If Congress grants what the NCAA is asking for, it is possible that the organization will be able to better create and enforce legislation. It is possible some of the worst third-party bad actors will leave the power vacuum that the NCAA could fill. I think it is possible there could be a variety of positive outcomes.
But we should also be honest about what it means. Additional NCAA regulation of NIL will mean that total athlete compensation will decline, especially for the most elite athletes. Removing the possibility of employment status or preempting state laws will make it much harder for future athletes to agitate for better conditions or benefits. On the surface, it would represent a major win for "management."
I don't think that's fair, even if a limited antitrust exemption might be a good policy. The Drake Group, an athletics-reform advocacy group, has previously recommended limited antitrust exemptions for the NCAA to, among other things, limit spending on coaching salaries. Earlier at Extra Points, I interviewed an AD who thought Congress should do the same.
At the NCAA Convention, the Knight Commission shared data on just how dramatically spending on coaching salaries and buyouts have exploded over the last several years:
Any legislative policy that seeks to slow down or more deeply regulate athlete compensation, without doing the same for coaches, ADs or senior personnel, does not seem fair to me. Part of what makes the current system unfair for elite athletes is that so much of their value is locked up in the salaries of other people. Preventing an employment classification and regulating their earnings, without touching expenses elsewhere, just perpetuates that system.
Any lawmaker that takes a meeting with the NCAA ought to ask..."what are you willing to give up to get this passed?" If the answer is "nothing", then that conversation ought to be a short one.
I'm inclined to think that doing nothing isn't a great answer
There is something deeply satisfying about telling the NCAA to pound sand. After all, their own inaction caused this problem, and amateurism is kind of a lie anyway. You broke, you fix it, right?
I could be wrong about this, but I don't think it is realistic for the NCAA to simply throw up their hands and say "okay, we're doing collective bargaining now, you win." After all, management can't create a union to bargain with...labor has to do that, and college athletes will be one of the hardest groups to organize in the world. Clarification from the NLRB and federal courts could also smooth out that process.
Without some sort of brokered retreat from amateurism, I also worry that the unintended consequences could be very significant...for Olympic sports, for women's sports, for educational access, and even potentially for D-II and D-III. I'm not expecting the federal government to step in and create a Ministry of Sport to fill some of those development voids, like most countries do. Without a solid post-amateurism plan, I am concerned that many people could get hurt.
Now, is going to Congress a good plan? Probably not. If you want to play the Woulda Coulda Shoulda game, I'm sure there were plenty of better choices that could have been made a decade ago. But it's 2023, and we're here now.
I don't know what is going to happen when the dust settles. I can only hope for a solution that is honest, compassionate, and as fair as possible.
This edition of Extra Points is brought to you by The Average Joe.
Ikea instructions got you feelin’ like the Steph Curry of furniture? We’ll turn you into the Marie Kondo of investing. Organized, calm and ready to tackle the markets. The Average Joe’s newsletters — the “Ikea instructions for investing” — are short, simple and concise. But you don’t read Ikea manuals in your spare time and you wouldn't read financial publications for fun. Instead, we fill ours with market insights and trends — spiked with that special Kool-aid that makes you go, oh yeah!
Join 40,000+ investors receiving the free newsletters.
This edition of Extra Points is also brought to you by The Gist
Not your dad's sports news 🏈⚽🏀
(It's better, tbh). The GIST is a must-subscribe newsletter that provides a refreshing female voice and perspective on sports. If you want to stay in the loop but don't have time to watch all the games, let The GIST do it for you in just 5 minutes.
Sign up today!
If you have ideas for future Extra Points newsletters or #tips you want to share, our new tips line is email@example.com. To sponsor a future Extra Points newsletter, please email firstname.lastname@example.org. I'm also @MattBrownEP on Twitter, and @ExtraPointsMB on Instagram.