Risk Management

Law Allowing College Players to Profit From Their Image Has Big Implications

California Gov. Gavin Newsom has signed legislation letting college athletes in the state negotiate contracts for the use of their names and images.
Vincent RyanSeptember 30, 2019

We may be about to see the NCAA lose near-total control over athletes at the school with the most college basketball championships, UCLA, and those on the vaunted USC Trojan football team, a national brand, that has helped make Southern California a top-20 region in terms of college sports revenue.

California Gov. Gavin Newsom said Monday he has signed legislation letting college athletes in the state negotiate contracts for the use of their names and images. He was joined at his signing by NBA star Lebron James, who has publicly supported the proposal.

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The measure, if it survives court challenges, likely won’t just change the college sports landscape in California, and already has many observers asking who will be next.

Athletes at Syracuse in New York, which has a similar bill?

Or the quarterback of recent national football champions Clemson, in South Carolina, which is considering the same?

The Fair Play Act

The California bill, known as the Fair Play Act, which was approved unanimously by both houses of the state’s legislature, will let athletes at the state’s colleges negotiate their own contracts with third parties over commercial use of their names, images, and likenesses.

USC Trojans quarterback Matt Fink

The NCAA doesn’t allow this, and had urged Newsom not to sign the bill; it may prevent California schools from competing for NCAA championships.

Newsom’s action puts the California schools — UCLA and USC, Pac-12 universities Stanford and the University of California and 54 other California NCAA schools — in the position of having to make a choice.

“They can break California law or break the NCAA rules,” said John Wolohan, a lawyer and professor of sports law at Syracuse. “They’re in a Catch-22.”

And they’ll likely follow the law, running afoul of NCAA rules.

A Broader Issue

If Wolohan is right, the schools would then endanger an organization that makes some of their huge sports revenue possible: the Pac-12 conference. Without UCLA, USC, and the Los Angeles TV market, do the remaining schools, like Oregon and Washington State, find that conference as valuable?

“I can see something like the Pac-12 basically saying, ‘We’re going to just leave the NCAA and we’re going to create our own organization,’” Wolohan said. “You’ve got some other Power-5 schools (around the country) that are ready to jump with them too.”

If New York and South Carolina and other states pass similar laws, the whole system could change.

“What’s the NCAA going to do?” asks Wolohan. “They can’t stop everyone.”

‘The NCAA Recognizes This Is A Problem’

The organization said as much in its letter to Newsom.

“It isn’t possible to resolve the challenges of today’s college sports environment in this way — by one state taking unilateral action,” the NCAA said.

The NCAA has moved to consider changing the rules on its own, even before the California law passed. An NCAA committee is looking at whether it might make more sense to relax its rules on players’ profiting from their image.

“This group will bring together diverse opinions from the membership — from presidents and commissioners to student-athletes — that will examine the NCAA’s position on name, image, and likeness benefits and potentially propose rule modifications,” said Val Ackerman, who will chair the group.

The California bill doesn’t take effect until 2023, and Wolohan said it’s a good possibility that it never actually will.

The NCAA’s working group may open the door to players being able to control their images rather than a patchwork of states legislating the same development.

As more and more states consider it, the matter becomes more urgent for the NCAA.

“The NCAA really does need to get out in front of this,” Wolohan said.

Companies Watching

Companies that might like to pay athletes to use their likenesses are watching the matter closely.

The possibilities are clear. For apparel companies, a company like Nike could snag college basketball’s biggest stars for a shoe commercial before they go pro.

In video games, the NCAA Basketball Series Electronic Arts used to publish without player names.

“EA sports would sign up all the colleges and all the players tomorrow,” Wolohan said.

Players’ images aren’t as valuable without their associations with their schools. Zion Williamson was one of last year’s best-known college basketball players, but a big part of that was that he wore a Duke uniform.

So if athletes get the chance to make a little money off their image, Wolohan said, “Syracuse and USC and UCLA, all those schools are still going to get a cut of that.”

This story originally appeared on Benzinga.com

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Photo by Jeff Halstead/Icon Sportswire via Getty Images