California leads the movement in permitting student athletes to profit from endorsements and sponsorships

Posted in Employment, labor and pensions

On Wednesday, September 11, the California Senate unanimously passed S.B. 206, previously entitled the “Fair Pay To Play Act,” which, if enacted into law, would allow college athletes to accept money from sponsorships and endorsements. The bill has garnered support from politicians and athletes, including NBA superstar LeBron James who tweeted his support of the bill, stating that the law is a “game changer” and that “[college] athletes can responsibly get paid for what they do and the billions they create.”[1]  If ultimately approved, S.B. 206 could substantially alter the compensation available to student athletes in California and have potential nationwide implications.    

Under current rules of the National Collegiate Athletic Association (“NCAA”), college athletes may receive scholarships, but are not permitted to be paid by the NCAA or any college or university. College athletes also are not allowed to accept money from third parties or sign endorsement deals and, if they do, they may jeopardize their eligibility to play in the NCAA. The NCAA has slightly changed its rules over the past few years to provide more benefits to student athletes, such as allowing student athletes to receive cash stipends with scholarships and to receive unlimited meals. However, college athletes are prohibited from receiving any compensation for their play or earning money from sponsorships or endorsements. 

If enacted, S.B. 206 would not require the NCAA or schools to pay college athletes a salary. However, California private and public universities would no longer be able to prevent student athletes “from earning compensation as a result of the use of the student’s name, image or likeness.” It also would prevent the NCAA and college athletics conferences from revoking a student athlete’s eligibility because the student athlete earned compensation by monetizing on his or her likeness. 

Opponents of the bill fear that there could be several negative consequences if S.B. 206 is enacted into law. Most significantly, opponents note that colleges in California could be precluded from competing in NCAA championship competitions because they have an unfair recruiting advantage of being able to attract players with endorsements and sponsorships. In contrast, supporters of the bill believe that this recruiting advantage will prompt other states to enact similar legislation. 

As for next steps for S.B. 206, the California Governor must either sign or veto the bill and, if signed into law, S.B. 206 would go into effect in 2023. Meanwhile, the developments in California have had an impact nationwide. Two days after the California Senate approved S.B. 206, legislators in South Carolina said they plan to introduce a similar bill that would allow college athletes to be paid for sponsorships and also require the wealthiest college sports programs in the state to pay college athletes a stipend each semester based on the hours spent on sports.  A few days later, a New York Senator introduced a bill that tracks the language of S.B. 206 and would allow athletes to be paid for sponsorships and endorsements. It would not be surprising for similar bills to be introduced in other states across the US.

 

[1] https://twitter.com/KingJames?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor

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