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California is gunning for the NCAA. So what happens next?

Good morning!

I had actually planned on writing about something completely different today, but given how quickly this news story is advancing, I figure we probably ought to spend a teensy bit more time on it.

Let’s get right into it.

California is going to pass this likeness rights bill and boy howdy does the NCAA not like it

California Senate Bill 206, otherwise known as the Fair Pay to Play act, is rapidly approaching becoming law. The TL;DR of the legislation is that would allow athletes to monetize their name and likeness without penalty from the NCAA, something they currently cannot do. On Monday, the bill passed the California State Assembly by a 72-0 vote. On Wednesday night, it cleared the state senate. It is just waiting on the governor.

"If the bill becomes law and California’s 58 NCAA schools are compelled to allow an unrestricted name, image and likeness scheme, it would erase the critical distinction between college and professional athletics and, because it gives those schools an unfair recruiting advantage, would result in them eventually being unable to compete in NCAA competitions”

As if this threat wasn’t enough, the letter also said the NCAA believes this bill is unconstitutional.

Ohio State and former UC Irvine president Michael Drake, in an interview with USA TODAY, echoed those threats, saying:

He said California schools "certainly" would be barred from participating in NCAA championships. Asked whether California schools would be able to compete against other NCAA schools at all, Drake said: "When the bill is passed and fully analyzed, we’d be more clear about its effect on other competitions. Let me say that I know specifically it would restrict their ability to compete in championships because the students would have been competing under a different set of rules.”

Let’s get one thing straight right now. The NCAA is not going to ban all the California schools

I get why they have to say this now, but this falls under a rich history of empty threats from university administrators, right up there with Big Ten commissioner Jim Delaney saying the Big Ten would drop to DIII if they had to share revenues with athletes.

Regardless of what NCAA rules state, lopping off California is a logistical and financial impossibility. Potentially locking themselves out of so many huge TV markets, plus losing so many potential teams for their marquee event, the NCAA Tournament (laugh all you want about the Pac-12, but California also includes regular NCAA participant Saint Mary’s, plus possible conference champions from the WAC, Big West, Big Sky and Mountain West), would make such a harsh penalty a nightmare for the NCAA’s business partners. Not to mention that penalty would also get thrown into the courts on antitrust grounds. USC and UCLA wouldn’t take that lying down.

If the state sponsoring this bill was like, Delaware, South Dakota, or Vermont, maybe the NCAA can get away with muscling them out. But not California (or Texas, or Florida, or any more major population center).

The bill’s sponsor, Nancy Skinner, agrees.

The bill's author, state Sen. Nancy Skinner (D-Berkeley) not only took issue with the NCAA's legal analysis, she also countered-punched.

“Numerous legal scholars assert that SB 206 is constitutional and that an NCAA ban of California colleges from championship competition is a clear violation of federal antitrust law,” she said in a statement to USA TODAY Sports. “The NCAA has repeatedly lost antitrust cases in courts... As a result, threats are their primary weapon."

So yeah, the structural future of college athletics could come down to how other lawyers interpret the interstate commerce clause. Just what sports fans love!

For my money though, I don’t think we’re going to head down this particular road of lawyerin’. After all, SB 206 doesn’t go into effect next week. Or even next year. It’s not slated to kick in until 2023.

That leaves plenty of time for what really comes next. The haggling.

Again, from Michael Drake:

And Drake said: “We are just letting California know that we’re interested in continuing to work with them and we want them to continue to work with us as the association moves forward into the future.”

So what’s going to actually happen next?

The NCAA already has a working group studying changes to the likeness rule, one scheduled to give an update in October. I would imagine the NCAA and various lobbying groups will powwow with lawmakers in California, and other states that could potentially launch similar legislation, to create a unified national policy before 2023.

The key victory from SB 206, in my opinion, is that it forces the NCAA’s hand and sets a hard deadline on finding a solution, rather than letting them dither and hide behind working group committees for the next decade. Nobody wants a patchwork amateurism policy and even more expensive, messy and complicated court cases.

We’ve already seen California make one (potentially substantial) concession, amending the bill to prohibit athletes from accepting deals that would conflict with a school’s preexisting contracts. That already limits a kid’s options to pursue deals with footwear and beverage brands, among others. I imagine there will be others before the final sausage is made.

Here’s a note from law firm Kenny Hertz Perry, that I think sounds awfully plausible:

By using the term “tethered to education” in its release, it’s clear that any NIL rules proposed by the NCAA will attempt to fit within the Ninth Circuit’s O’Bannon decision. As a result, it’s highly unlikely that the NCAA will propose a plan where athletes can be paid directly by third parties (such as for appearing in a commercial or signing autographs) or are automatically entitled to cash payments that they can access after they leave school. Doing so would contradict the O’Bannon appellate decision and put its precedential value at risk. More likely is a plan where athletes may engage in activities where they are paid for the use of their NIL, but any money earned is put into a fund that can be accessed as a result of meeting specified academic benchmarks, such as maintaining a certain GPA, meeting yearly academic progress requirements, or graduating.

Andy Schwarz, an economist who helped with the bill, wrote his predictions on the next steps, and also imagined that the battle here is going to be on what restrictions the NCAA can add to the market. Among other predictions for what the NCAA will be worried about, Schwarz predicts the working group plan will:

will involve some mandatory “tether” to education, such as requiring an endorser to offer a summer internship as part of the contract.

If you’re an economist, or somebody who looks at athlete compensation as more of a civil rights type issue, I’m guessing you’d think any, or nearly any, restrictions on the market by the NCAA would be intolerable. Limiting the potential partners an athlete could work with, forcing the partners to be “tethered” to education in some way, capping the potential awards, etc. are still exploiting athletes, just maybe in a gentler way. I don’t think I’m quite as much a hardliner myself (I’m more of a don’t let perfect be the enemy of good kind of guy), but I do understand this argument.

I don’t know if all of the general public, or even lawmakers, would necessarily see it that way. I suspect if the NCAA’s suits spent less time making laughable apocalyptic projections, and more time hashing out differences and putting credible proposals on the table (i.e. not pretending that any increase in compensation is untenable), this whole thing can be resolved quicker, with less angst, and (probably) more restrictions.

Either way, at some point in the future, more athletes will get checks. We’ll get an NCAA video game again. The political challenges to the status quo will potentially slow down. It’ll be a better setup for everybody. It just has to get done.

I’m glad somebody is finally forcing the NCAA to act. If you care about this issue, I think contacting your state reps and asking them what they think about likeness rights for athletes is a good idea too.

We’ll see if anybody in charge agrees. Change is absolutely coming. The only question is whether the NCAA wants to take the easy way, or the hard and stupid way.

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