Reaction to Pac-12 developments on and off the field (special edition) …
1. Those crazy Californians
Almost two years to the day after the groundbreaking ‘Fair Pay To Play Act’ was introduced into the California state assembly, another bill focused on the rights of college athletes has entered the legislative pipeline in Sacramento.
Say hello to AB-609 — “The College Athlete Race and Gender Equity Act.”
It’s not merely groundbreaking. It prevents breaking ground, literally.
The bill requires California universities to pay football and men’s basketball players tens of millions of dollars in royalties for the use of their name, image and likeness.
One of the stipulations in AB-609 would bar universities from building athletic facilities (locker rooms, weight rooms, arenas, etc.) just to keep up with their peers.
Another stipulation would force universities to suspend athletic directors for three years if their departments fall out of compliance with Title IX.
Overall, AB-609 is a whopper — progressive to the point of radical, punitive to the point of debilitating and, in sections, deeply confusing.
And yes: It requires name, image and likeness payments from schools to athletes even though the NCAA has already approved NIL compensation for athletes from the private sector. (Implementation is awaiting oversight from Congress.)
“The bill is saying that NIL isn’t enough just going through the private industry,” said a source who has read AB-609, “so the schools that exceed the benchmarks cited in there would have to give that money back.”
According to the bill, a so-called Royalty Fund would be established by Jan. 1, 2022:
“From the Royalty Fee Distribution Fund established … an institution of higher education shall distribute a name, image, and likeness royalty fee to each qualifying college athlete in the amount determined.”
2. Echoing #WeAreUnited
The bill was introduced Feb. 12 by Assembly Member Sydney Kamlager, whose 54th district includes Culver City, Century City and … wait for it … Westwood.
UCLA so happens to be the alma mater of Ramogi Huma, executive director of the National College Players Association and the silent force behind the #WeAreUnited players movement.
Neither Huma, who’s aligned with the Steelworkers, or the NCPA itself are mentioned in AB-609.
But in many ways, the bill is an extension of the radical requests made in the #WeAreUnited manifesto that was signed by Pac-12 football players last summer.
That document included calls for enhanced health and safety measures for athletes and an economic overhaul of Pac-12 athletic departments, including this demand:
“Distribute 50% of each sport’s total conference revenue evenly among athletes in their respective sports.”
The core tenant of AB-609 requires NIL royalty payments based on a formula that includes total revenue generated and the amount spent on scholarships:
“This bill would require institutions of higher education with sports in which 50% of the institution’s total sports revenue in the state exceeds the total aggregate grant-in-aid athletics scholarship amount provided to the institution’s college athletes in the sport during the reporting year to pay a (NIL) royalty fee to each qualifying college athlete, as specified.”
The bill doesn’t explain revenue “in the state.”
Does that mean only tickets purchased by California residents, or donations from alumni living in the state?
And what about media rights? ESPN is located in Bristol, Conn.
3. Counting the cash
The bill goes on to sketch the formula for determining the royalty payments to the athletes:
“The (NIL) royalty fee amount for a college athlete shall be determined for each sport, and division or subdivision, by subtracting the total aggregate grant-in-aid athletic scholarships amount provided to the institution’s college athletes in a sport from 50 percent of the institution’s total sports revenue in the state … That difference shall be divided by the total number of college athletes receiving a grant-in-aid athletic scholarship in that sport during the reporting year.”
It’s murky, for sure. But let’s take our best guess at how the royalty payments might be calculated using Cal as an example.
(Yes, private schools would be subject to the bill’s requirements, just like the public universities.)
In the 2020 fiscal year, the Cal football program generated $39 million, according to the university’s NCAA financial report.
Meanwhile, the Bears spent $3.6 million in student aid for football.
Subtract that aid from 50 percent of the revenue ($19.5) million, and the Bears seemingly would be required to allocate $15.9 million to the royalty fund.
With 85 scholarship players, that’s $187,058 per player, per year.
Kamlager, who introduced the bill, was not available for comment.
4. Apparent contradiction
The Hotline sought feedback from two industry sources who have read the bill — both are familiar with the NCAA legislative process and the economics of a major college athletic department.
One source pointed immediately to what appears to be a contradiction:
The ‘Fair Pay To Play’ law that takes effect in California in 2022 (if not sooner) doesn’t allow schools to compensate athletes directly for NIL. Instead, it prevents schools from interfering in payments to athletes from the private sector.
“That’s designed to keep the schools out of it,’’ the source said.
Regarding the direct university-to-athlete payment plan in AB-609, the source added: “Does the state legislature have the power to tell the universities where to put their money?”
Both sources questioned the ability of the state to determine whether a university could punish its employee (the three-year suspension of athletic directors) over the handling of federal law (Title IX).
The sources also questioned the ability of the state to prevent a university from conducting facility projects.
Here’s the language on that issue in AB-609:
“An institution of higher education that receives state funds or state tax-exempt status shall not enter into a contract from January 1, 2022, to January 1, 2032, inclusive, for new facility expenditures, including upgrades, related to intercollegiate athletics unless the facility expenditure is necessary for matters of health and safety, would result in a net benefit to the environment, or is necessary to ensure compliance Title IX of the federal Education Amendments of 1972.”
Notably, the bill acknowledges that its provisions might be flawed:
“The provisions of this chapter are severable. If any provision of this chapter or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.”
5. The impact
The implications of AB-609 are enormous.
If it became law, then Cal, Stanford, USC and UCLA would be effectively paying salaries — potentially more than $100,000 per player, even for second stringers — while other teams in the conference, and across the country, could not.
“If enacted in this form,” the second source said, “it would become infeasible to compete nationally.”
The ‘Fair Pay To Play’ law sparked sweeping change, as state after state followed California’s lead and eventually forced the NCAA to adopt NIL compensation.
Would AB-609 do the same? That could be exactly Kamlager’s intent.
The NIL legislation currently in the pipeline — it could be implemented later this year — creates a means for athletes to be compensated without legally becoming employees.
But with AB-609, the money would come directly from the schools to their athletes. Would that change their status?
The bill says no — the royalty payments would not “establish or constitute evidence of an employment relationship between the college athlete and their institution of higher education.”
But if the starting quarterback is collecting $150,000 directly from his university, he has to be something.
And that money would surely be taxed.
Also, the royalty payments wouldn’t be available to all athletes, and that’s potentially problematic:
Women’s basketball programs are money losers — even Oregon, with all-everything guard Sabrina Ionescu, lost $2.5 million in FY20.
But if a women’s basketball team met the revenue threshold outlines in AB-609, the players would be compensated for NIL.
Meanwhile, softball and baseball players, whose programs also lose money, would receive nothing.
The vast majority of the NIL royalty funds, of course, would be funneled to football, which generates the vast majority of athletic revenue.
But a star tailback receiving compensation from the private sector is much different than the model outlined in AB-609.
“The optics of increased institutional support to fund royalty payments to football players is a non-starter,’’ one source said.
Imagine Sacramento dictating that Cal, USC, Stanford and UCLA make six-figure royalty payments to their players.
“Some of the schools would just say, ‘We’re out,’’’ a source said.
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