California’s legislature is raring to upset the college sports apple cart once more.
While federal authorities contemplate how and whether to address the unruliness of NIL—three years after the the Golden State passed the nation’s first name, image and likeness bill—a powerful California legislator wants to move the athlete-rights goal posts with a new law that would create a pathway for direct compensation from schools to players.
The proposed legislation by Assemblymember Chris Holden revives an effort he previously pursued and follows two other California pay-for-play bills that failed to make it to the floor for a vote. The most recent of those bills, which was introduced last February by state Sen. Steven Bradford, passed both the state Senate education and judiciary committees before getting snagged in appropriations amid aggressive lobbying from schools such as USC and UCLA.
Conceivably, Holden, a former basketball player at San Diego State, would have a leg up politically, given that he now serves as chair of the appropriations committee in the California state assembly.
Holden’s new bill (Assembly Bill 252), christened the College Athlete Protection Act, requires that each Division I institution in the state establish a “degree completion fund” as a means of paying their head-count scholarship athletes their “fair market value,” which the bill defines as an equal share of half their team’s annual revenue, minus the cost of the athlete’s grant-in-aid. Holden planned to publicly unveil his legislation Thursday afternoon during a press conference at the Rose Bowl, UCLA’s home football stadium.
In a statement, Holden couched the rationale for AB 252 in educational terms.
“My goal is for athletes to play hard and study harder without fear of losing access to what they’ve trained and worked for,” he said.
The law would serve to provide cover for schools to contravene the NCAA’s prohibition on players getting compensated beyond their scholarship, a $4,000 cost-of-attendance stipend and the $5,980 in education-related benefits established by the Supreme Court’s NCAA v. Alston ruling. The amount would be determined by a revenue-sharing formula based on figures schools report annually to the Department of Education.
The bill could pave the way for a number of football and men’s basketball players to receive six-figure payments each year from their institutions. It would also create a state government agency called the College Athlete Protection Program, which would be tasked with making sure schools don’t fudge their revenue numbers and, if they do, issuing punishment.
As with its predecessor legislation, AB 252 is being backed by the National College Players Association, the athlete advocacy group that spearheaded the state-based NIL reform effort. This law-making bid represents the latest salvo in the NCPA’s ongoing war against college sports amateurism, which includes its pending effort to have the National Labor Relations Board classify USC football and basketball players as joint employees of their school, the Pac-12 Conference and the NCAA.
Holden’s bill, however, attempts to sidestep the labor question entirely, stipulating that its provisions do not, one way or the other, “serve as evidence of an employment relationship.”
NCPA executive director Ramogi Huma said in an interview that while politicians on both sides of the aisle have proven wary of granting college athletes employee status, he is confident that there is sufficient support among California legislators for athletes to receive additional compensation from their schools. If passed and signed into law, Huma says, this bill has the same potential as the 2019 NIL push to “sweep the nation.”
The bill relies on financial figures that all post-secondary schools participating in federal student aid programs are required to report as part of the Equity in Athletics Disclosure Act. Athletes whose sports report spending less than half their earned revenue on athletic scholarships would therefore not be eligible for this compensation, even if their schools wanted to provide it. Huma said that these limitations are necessary for the bill’s core prerogative of establishing fair-market value.
Based on EADA data, in the pre-pandemic academic year of 2019, the legislation would have paved the way for UCLA to pay each of its men’s basketball players $389,000, football players $185,000, women gymnasts $5,500 and volleyball players $871, assuming the school availed itself of the NCAA’s maximum scholarship limits for those sports. No other sport, including women’s basketball, would have triggered payments under the formula.
If a school chooses this revenue-sharing approach, it would be required to distribute the aggregate sum of these distributions, though it would have discretion in how it divides it up. For example, the school could decide that because of Title IX, it would have to give the money in equal shares across all sports.
For schools unwilling to split their pies in this manner, AB 252 offers them a far cheaper alternative: They can instead agree to split whatever surplus revenue their athletic department earns in a given year with each of their athletes earning below their fair market value. Thus, if no new athletic department revenue is reported—as is often the case—a school would not owe any athletes payments that academic year. Then again, with USC and UCLA due to earn tens of millions of dollars more in 2024, when they join the Big Ten Conference, this option would potentially facilitate a massive windfall for Trojans and Bruins sports participants—at least for one, 12-month period.
Whichever revenue-sharing path a school takes, eligible athletes would be entitled to receive the first $25,000 of their monies within the year they were deposited, with the balance of the earnings only made available—as the fund’s name indicates—upon their graduation. Barring a “severe medical condition,” an athlete would have six years from their initial full-time enrollment to earn their diploma, before their title to remaining funds would lapse.
Whether the bill would comply with federal law is likely to spark heated debate and potential court challenges.
Title IX requires that schools provide roughly equal benefits to men and women athletes. Any state law that requires colleges to pay their athletes would be scrutinized to ensure the athletes are treated equally on the basis of sex.
Bradford’s College Race and Gender Equity Act introduced last year had initially attempted to go full throttle on both fronts, simultaneously mandating revenue sharing for athletes along with stringent Title IX enforcement language, which included punishments for athletic directors whose schools were out of compliance. But those features of the bill were promptly ditched before its first committee hearing.
Bradford later told Sportico that having any Title IX language in the legislation, despite the good intentions, made it too easily susceptible to “fear-mongering” from its opponents. The bill died in the Senate appropriation committee’s Suspense File last May. Though Bradford had said he planned to reintroduce the bill again in December, he has yet to do so thus far. California’s legislature does not require companion bills to be filed in both houses.
Beyond Title IX, Holden’s bill could impact how athletic departments qualify for federal tax exemptions. Universities rely on education requirements found in the Internal Revenue Code to avoid classifying revenue as taxable income. Paying athletes to play sports could pose questions about the practice.
Further, the bill’s attempt to fend off employee recognition may not work. A court or labor agency could find that, despite the bill’s language to the contrary, the pay mechanisms create an employment relationship.
Distribution of payments among athletes is also a possible tension point. For example, should the starting quarterback be paid the same as the backup punter?
Holden initially proposed the idea of a degree completion fund as part of the Student Athlete Bill of Rights legislation he introduced in February 2019. However, the fund language withered over the course of the legislative session, with the final draft merely offering it as a suggestion.
If Holden’s new bill passes out of the assembly, it would then head for a vote before several committees in the state Senate, most likely around September. If successful there, the legislation would head to the desk of Gov. Gavin Newsom, who in September 2019 signed the Fair Pay to Play Act during an episode of LeBron James’ HBO Show, The Shop.
Huma acknowledges that, more immediately, the bill could incentivize some in Congress to push forward with creating federal NIL legislation that may seek to bar direct compensation. In a Sportico guest column earlier this month, Rep. Gus Bilirakis (R-Fla.), the chair of the pivotal House Consumer Protection and Commerce Subcommittee, said he plans to introduce a bill with a “preemptive standard” that would supersede any individual state’s college athlete compensation bills.
But at least one member of Congress is fine with Sacramento continuing to carry the ball: Rep. Sydney Kamlager-Dove, who proposed a college athlete revenue-sharing bill two years ago while she was serving in the California assembly.
“Student athletes give their time, energy and their bodies to these schools, and on the other side, colleges and universities make billions of dollars off of their names and images,” Kamlager-Dove told Sportico in a statement. “It shouldn’t just be an option to compensate them for their labor, it should be required. I’m glad to see the California State Legislature continuing the fight for these young student-athletes.”