Will Paying Student Athletes Save College Sports—or Kill the NCAA?

October 8, 2019, 3:30 PM UTC

Ramogi Huma’s phone hasn’t stopped ringing for a week.

Huma, the National College Players Association’s executive director, played a central role lobbying for California’s landmark “Fair Pay to Play Act,” a law that will soon allow college athletes in the state to make money off their name, image, and likeness, and sign endorsement deals—currently a major no-no in collegiate sports. Now, an inescapable question keeps popping up:

What happens next?

“They’re probably going to come after us in some way,” Huma tells Fortune, referring to the National Collegiate Athletic Association (NCAA), which is objecting to the new rule. “There could be all sorts of lawsuits, stalling, who knows? This is a partial celebration. There’s no time to rest.”

The reaction has been intense since California Gov. Gavin Newsom signed State Senate Bill 206 into law on Sept 30, during an episode of NBA star LeBron James’ show, “The Shop.” If the “Fair Play to Pay” measure, slated to go into effect in 2023, outlasts anticipated court battles and other disputes, Newsom’s self-described “game-changer” could make the NCAA’s current landscape unrecognizable.

“At the end of the day, it’s about rebalancing the power, and the power structure now is dominantly in the hands of a few, in the institutions and the NCAA themselves,” Newsom said on The Dan Patrick Show the day after signing the bill. “And I just think too many athletes…have given up everything, body, and mind in some cases, for a sport that they love and they were let down.”

Since Newsom’s signing, lawmakers in as many as 11 states—Florida, Pennsylvania, New York, Maryland, North Carolina, South Carolina, Illinois, Minnesota, Colorado, Nevada, and Washington—have proposed similar legislation.

And one Ohio Congressman, a former college football star, is now proposing a federal law to give college athletes a chance to make endorsement money.

NCAA reaction

When the California State Assembly passed the bill earlier in September, the NCAA called it “unconstitutional,” and speaking Friday, for the first time since the bill’s signing, NCAA President Mark Emmert continued in the same vein.

Emmert said the law constituted “a new form of professionalism” that would convert “students into employees.” Plus, Emmert told the Indianapolis Star, student-athletes are already being “paid in a fashion different than a paycheck [from the school]. But that doesn’t make them not paid.”

The new law opens up a series of complex questions for the NCAA.

Can student-athletes get paid, for example, by signing a deal with a clothing company for promotional purposes, while not losing their amateur status and eligibility? Can student-athletes hire agents, who must be licensed by the state, without facing repercussions? How will the NCAA will handle the prospect of schools in different states having different rules around college athletes getting paid?

And, perhaps most importantly, with potentially billions of dollars in revenue on the line, could there be a win-win situation? (During the 2017 fiscal year, the NCAA, a nonprofit, reported $1.1 billion in revenue.) Can the NCAA and colleges still bankroll their football and basketball teams—the two sports that create the most revenue for the NCAA—and other sports teams and academic programs, if students are getting paid directly?

Ohio State University Athletic Director Gene Smith is one who’s been charged with answering those questions.

Smith, who is on an NCAA-assembled working group of administrators that is scheduled to release its own recommendations on the issue this month, has big decisions to make. Those recommendations could lead to a compromise with California, or the NCAA could also sue the state, or follow through with previous threats to ban California teams from tournaments.

“My concern with the California bill, which is all the way wide open monetizing (players’) image and likeness, [is that it] moves towards pay for play and it is difficult for us—who are practitioners in this space—to figure out how do you regulate that?” Smith said Tuesday. “How do you ensure that unscrupulous bad actors do not enter that space, and ultimately create an unlevel playing field.”

‘You must be so rich’

The NCAA will try to block any immediate course of action, said Adam Earnheardt, chair of the communications department at Youngstown State University and co-author of the book, ESPN and the Changing Sports Media Landscape. But, he says, it comes down to people being paid for their work.

One camp of people “don’t agree with paying student-athletes and argue, ‘They’re getting a free education, room, and board,’ that’s all well and good,” said Earnheardt, who played college basketball at Roberts Wesleyan, a small college in upstate New York. “But, when you think about how their talents and image are being used to potentially help their schools make multi-millions of dollars, that just doesn’t equal out.”

One who would agree is former star UCLA gymnast Katelyn Ohashi, who also appeared on “The Shop” episode with Newsom and James. Ohashi shared her feelings when a video of her flawless floor routine in January went viral and was seen by tens of millions on YouTube and other sites without her getting paid for it.

“Here’s the fame, but then there’s no compensation and it’s so crazy,” Ohashi said. “People are like, ‘Oh, you must be so rich,’ and I’m like, ‘You must not know the NCAA.'”

The new law led three-time NBA champion and Golden State Warriors star Draymond Green, who was a late-round draft pick out of Michigan State University to reminisce about his own life as a student-athlete.

“You spend so much time hella broke, with no money and yet, everyone else was living well,” Green told reporters during the Warriors’ media day on Sept. 30. “Universities [are] making a ton of money off your likeness. It does not make any sense. Someone needs to force this dictatorship to change.”

A federal law?

Ohio freshman Congressman Anthony Gonzalez, a Republican and former NFL and star wide receiver at Ohio State University, has one suggestion on how to level the playing field. Gonzalez is proposing a federal law to give college athletes nationwide a chance to make endorsement money.

“One, should players be able to capitalize on their image and likeness? I am a firm ‘Yes’ on that, I’ve been a ‘Yes’ on that for a long time,” Gonzalez told ESPN’s Outside the Lines on Thursday. “I think the next question is equally important: ‘How do you do it?'”

Gonzalez said the way California has set up its Fair Pay for Play law would give that state an unfair advantage over others at the time of college selection. “You would have a situation I’d argue right now where players would be making decisions [choosing a college] based on the states with the most favorable laws,” he said.

“I think what we need is a national standard that levels the playing field for everybody, has the appropriate guardrails in place so that it makes sense for everybody,” Gonzalez continued.

Gonzalez said he’s going to wait for Smith’s report as well as proposals from other states before he puts his plan together. “We are early in the process as I know there’s a rush to do this, but it’s more important to get it right than anything else,” Gonzalez said.

“We’re in unchartered territory, right?” Gonzalez said. “So with no action whatsoever, you will have a situation, I believe, where each state will have different laws, and we will have players making decisions on where to go to school, not based on what academic program makes sense…but based on which state has the best regulatory environment for the players.”

Coming reform

Comments from the NCAA suggest that the organization agrees, albeit grudgingly, with Gov. Newsom when he says that, “Reform is coming.” But it would prefer that change comes slowly.

“The NCAA’s endgame is to slow this down because they can’t stop it over the long haul with the way the winds are currently blowing,” said David Carter, executive director of the Marshall Sports Business Institute at the University of Southern California.

NCAA president Emmert said a major concern for most NCAA-affiliated schools is that the schools will get involved with setting up endorsement deals. Emmert said if third parties are involved in helping prospective college athletes figure out what type of endorsements they could get during the recruiting process, it would be similar to an employee picking an employer.

Emmert said he will continue to work with pro leagues like the NFL and the NBA which require that student-athletes wait three years (NFL) or one year (NBA) after graduating high school to play in their leagues, something not required with pro baseball.

“If you look at baseball, for example, a young man at 18 can go out and be a professional baseball player. He can say, ‘I can go here or I can go to college, and if I go to college I can live by those rules. And then everybody goes by those rules,” Emmert said.

“If he goes to launch his life, he can say, ‘I’m not going to get an education, I’m not going to go to campus, I’m not going to play in the College World Series,'” Emmert said. “And that’s a free choice they can make.”

Disruptive moment

A day after signing the bill into law, Newsom stole a term from his state’s Silicon Valley as he called taking on the NCAA a “disruptive moment.” He said if the athletic association stands its ground and threatens to pull its access to schools in states seeking fair pay to play, its 113-year reputation—and its existence—will be on the line.

“I think they will lose the public opinion and, ultimately, their moral authority will wane as well as their formal authority and the whole system will collapse,” Newsom said.

Huma, who played college football at UCLA two decades ago and is a longtime advocate for compensating for student-athletes, agrees change is inevitable—but not without a fight.

“The NCAA’s power is hanging by a thread, and if they fight it, that thread snaps,” Huma said. “But they may be willing to go down a ‘Winner takes all,’ road. This thing is far from over.”