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Fair Pay to Play Act – College Athlete Endorsement Income

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Under existing NCAA bylaws, a student athlete is deemed ineligible if they accept any form of endorsement compensation. That policy took a hit recently when the California state Senate voted 39-0 in favor of the ‘Fair Pay to Play Act’, and on Sunday, California’s Governor, Gavin Newsom, signed the bill with great fanfare on Lebron James’ HBO show.  The bill makes it illegal for California schools to rescind an athlete’s scholarship or eligibility for accepting endorsements. 

Given the revenue generated from college athletics, the debate over athlete compensation has long been an issue. For perspective, in 2016, the New York Times reported that CBS Sports and Turner had extended the broadcast rights deal for the Division I men’s basketball tournament through 2032 at a rate that will eventually exceed $1 billion per year. 

Los Angeles Lakers star, Lebron James, was quick to voice his support for the measure Tweeting “Everyone is California – call your politicians and tell them to support SB 206!  This law is a GAME CHANGER. College athletes can responsibly get paid for what they do and the billions they create.” 

As explained by the Wall Street Journal “this would violate the NCAA’s bylaws, yet the bill forbids the organization from punishing colleges and athletes that break its rules. Letting California’s college athletes pocket endorsement money would put colleges in other states at a competitive disadvantage, so the NCAA would be under pressure to drop its longstanding pay-for-play prohibition.” 

In its existing form, the bill will not go into effect until 2023. This will allow the NCAA to attempt to find a nationwide solution and avoid a scenario where premier athletes have an economic incentive to play in California. However, California universities would be ineligible for NCAA national championships, post season tournaments, Bowl games or other post season appearances. Other states, like South Carolina are considering similar laws. The upshot is that by 2023, the landscape for college athletics will change and the NCAA will need to adapt to new conditions.