The Ground Shifts Under College Sports

The Ground Shifts Under College Sports

By Nick Fouriezos

By Nick Fouriezos

College athletes have completed the ultimate Hail Mary. Last week, the U.S. Supreme Court unanimously affirmed that the NCAA was violating antitrust laws by limiting the benefits schools could provide to their athletes. Then on Monday the NCAA Division I Council recommended that from tomorrow, schools in certain states should be allowed to decide whether college sports stars can make money from their personal brands. What does that mean? Basically, it paves the way for college athletes, hundreds of whom are sports stars in their own right, to one day get paid. It’s a decision that will likely upend the billion-dollar collegiate athletics industry not just economically, but academically and culturally, given the way sports touch upon every sphere of American life. Want to know more? Today’s Daily Dose dissects the ruling and then sprints forward, considering the future of a post-amateur sports world for casual fans and professional athletes alike.

storming the court

What’s Changing?

Soon, everything could. Colleges around America make billions of dollars from game tickets, merchandise, television deals and other avenues — all off the sweat of their athletes. The unanimous June 21 Supreme Court decision technically only dealt with the issue of colleges limiting the academic-linked benefits they offer their sports stars. But if there had been any lingering doubt whether other payment restrictions would be accepted by the highest court in the land, it was laid to rest in a concurring opinion from Justice Brett Kavanaugh — a famously avid sports fan himself (so much so that in 2016 he reportedly piled up thousands of dollars in credit card debt purchasing season tickets to the Washington Nationals baseball team). “The NCAA’s business model would be flatly illegal in almost any other industry in America,” Kavanaugh wrote. While no other justices were willing to be aggressive in their judgment, Case Western Reserve University constitutional law professor Jonathan Adler tells OZY, “The underlying rationale of the court’s opinion certainly raises serious doubt about the lawfulness of what the NCAA does.”

What’s Coming?

First, more litigation. The earth-shattering decision opens the floodgates for cases that will challenge a central tenet of the 115-year-old athletic association — that college athletes are amateurs and should not be paid. Mark Rifkin, an antitrust lawyer who represented athletes seeking payment in a case against the NCAA and PAC-12, lost that case in a federal appeals court because under California law, college athletics wasn’t really a labor market. “That decision seems to be different now, in light of what the Supreme Court had to say in this case,” Rifkin, a senior partner at Wolf Haldenstein, tells OZY. His firm, and assuredly others across the country, are looking back at past cases and considering future ones that may now find a more sympathetic ear in the courts.

Goodyear Cotton Bowl Classic - Oklahoma v Florida

Will Congress Save or Kill the NCAA?

At least 19 states have passed laws that will allow athletes to make money off endorsements that were previously restricted — part of the reason, according to The New York Times, why the NCAA Division I Council felt pressured to make its recommendation. In July, Florida and Alabama will become the first states to allow college athletes to profit off their own brand. It’s been a hot topic in the halls of Congress as well, with a number of bills being debated over how to properly reform college athletics. Among them: a bill sponsored by Sen. Bernie Sanders allowing athletes to become university employees and form unions. The tenor of those bills is bad news for the NCAA, considering the sports body now must rely on legislative approval if it wants to claim an exception to antitrust laws. “A narrow set of rules … in a way that is clearly focused on education, might be able to produce some sort of a compromise politically.” Adler says.

Reshaping the Pros

Amateur athletes won’t be the only ones affected. The Supreme Court’s chipping away at the NCAA’s stranglehold on college athletics could lead to significant changes in pro sports leagues too. The NBA’s “one-and-done” rule — which prohibits teams from drafting athletes straight out of high school but in turn can lead to them playing just one year of college ball — could face more scrutiny for violating antitrust laws as well. The prevalence of labor unions protecting professional athletes will likely gain steam too: The PRO Act, passed in the U.S. House of Representatives in March, could help currently non-unionized leagues (such as Minor League Baseball and those of combat sports) get more organizing leverage with team owners.

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The Last Time This Happened

It’s been nearly four decades since the Supreme Court weighed in on college sports to this extent. In the 1984 antitrust case NCAA v. Board of Regents of Oklahoma University, it was determined that the NCAA had illegally restricted how often specific schools could appear on television. The decision led to an explosion of media revenue (and to today’s proliferation of TV rights deals that include nearly every major conference, with the SEC or Big Ten, having their own dedicated networks). This time, it’s individual athletes, not colleges, who could soon find themselves showered in cash.

a new playing field

Stars of Sport … and TikTok Too

In January, DIY enthusiast Chloe V. Mitchell became what many believe is the first college athlete to make money from their likeness in at least half a century. The freshman volleyball player at Michigan’s Aquinas College built up 2.7 million followers on TikTok (plus nearly 50,000 on Instagram) to command sponsorship deals worth thousands of dollars — a significant amount for an athlete who knows she will never play in the pros. Playing in the NAIA ultimately benefited Mitchell; the lower-tier collegiate association changed its rules so that players could accept sponsorships even as the NCAA dragged its feet. Other athletes, even high schoolers, accrued massive, potentially lucrative, social media followings during the pandemic: Katie Feeney, a cheerleader and sprinter on her way to college, has reportedly earned more than $1 million after amassing nearly 6 million TikTok followers. Previously, athletes couldn’t make money even if their pursuits were completely unrelated to their sports.

Paid for Their Sweat, Blood and Tears

Five-star recruit Brandon Wimbush could have made thousands, if not millions of dollars in endorsements in the free market at the height of his fame as Notre Dame’s starting quarterback in 2017. But the next year, he flamed out, was replaced and never became a pro. Now, Wimbush is leading a Florida-based startup, MOGL, which aims to connect college athletes with profitable advertising deals. Those deals likely will be smaller scale: think car dealers and restaurants in college fan-friendly locales. However, even small-dollar deals would represent big bucks for the majority of athletes, particularly those in less-profitable sports that don’t benefit from massive media deals. Wimbush told CNBC that 500 athletes have already signed up, ready to jump on sponsorship opportunities as soon as new conference rules and court precedents allow.

Emerging Social Revolutionaries

Today’s college athletes are tightly controlled by university athletics departments that limit access to the media and police their social media accounts. But with increased bargaining power likely to transpire through labor unions representing their interests, athletes could fight for their right to speak up without reprisal. Many already are using their voices to stand up against social injustice, although they risk their careers, scholarships and college educations by doing so. Some are calling out coaches for using racist language — as Gonzaga guard Rasir Bolton did in accusing his former head coach at Penn State of inappropriately using the word “noose” to describe a pressure situation — while others are creating groups like College Athlete Unity to amplify calls for social change.

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A Precedent Beyond Sports?

In the coming years, the Supreme Court is likely to pick up a number of critical antitrust cases, particularly regarding tech behemoths like Apple and Google. Rifkin — who represented consumers in the 2019 Apple v. Pepper case that determined Apple could be sued for monopolizing the market by those who purchase its apps — says the NCAA ruling mostly deals with issues specific to the college sports governing body. However, the decision does affirm the Supreme Court’s recognition of the importance of “vigorous enforcement of the antitrust laws in maintaining a competitive economy,” as Rifkin says, which could have some tangential impacts on other cases. Considering antitrust lawyers have long griped that the United States and Supreme Court has only reluctantly enforced its laws against market monopolies, that is no small step forward.

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the global arena

More Like the UK?

Almost no other nation faces questions about paying amateur athletes, simply because university-level competition doesn’t exist in the same way. The closest similarity is likely in England, where the British Universities and College Sport organization overseas more than 170 institutions participating in over 50 sports. However, scholarships are rare and limited (ranging from about $700 to $7,000) and there are no noted restrictions on players receiving outside income. Athletes at NCAA schools could soon see a similar equation. Realistically, even if direct payments become common, the average athlete won’t earn more than a few thousand dollars — yet could now subsidize their college athletics experience with outside work, from internships to endorsements to social media cultivation.

Growing International Flavor

Nearly 13% of male Division I athletes are international students, making up their largest shares in tennis (61%), ice hockey (37%) and soccer (35%). Right now, more than a third of those students come from three English-speaking countries: Canada, the United Kingdom and Australia. That is partly because those nations’ share societal similarities with the United States, but it is also because residents of those nations are simply wealthier — more able to afford the costs of studying in America, costs the NCAA doesn’t fully support at this point. Opening the door to paying students could make American athletes more diverse, making it easier for students from less-wealthy African or Asian nations to afford the transcontinental move. As of 2019, the year for which data is most recently available, neither continent had a single country in the top 10 for representation in NCAA athletics. In fact, the only non-European countries on that list are Australia and New Zealand.

Filipino Fairness

The University Athletic Association of the Philippines is an international facsimile of the NCAA — boasting a strong college sports system yet without any rules governing payments or compensation. Predictably, athletes are offered a range of incentives to join universities, from cars to condos, particularly in the most lucrative sports: men’s basketball and women’s volleyball. These same allurements exist in the United States, just cloaked in the shadows by boosters trying to evade NCAA detection. Above-board payments could be monitored and matched with labor and workplace protections. Shouldn’t the home of capitalism and the free market follow the Filipino way? The current model is “not in keeping with market forces,” Henry Boyd, a University of Maryland marketing professor and lawyer who has consulted for the NFL, tells OZY. “If you have the talent, you should be able to work with people to be compensated.”

Will Club Teams Rise?

If paying college athletes truly proves to be prohibitively costly, as some NCAA supporters have argued, we may see college athletics get deemphasized altogether. That would lead to a sports scene more akin to Europe or South America, where top athletes play on club teams but academic institutions rarely offer competitive programs. Smaller schools in particular may ax programs if they are required to pay players — the vast majority of schools already don’t turn a profit on their athletics programs — which could steer athletes toward burgeoning semipro leagues.

how universities could capitalize

Could Employee Athletes Save Colleges Money?

Universities sign billion-dollar streaming deals and pay coaches millions — there’s plenty to go around. Still, it is true that college administrators will need to get more creative about how they distribute that wealth. Athletes should get more of the pie, but in one critical way, universities may actually benefit by them being classified as employees. The number of lawsuits filed against the NCAA has risen in recent years, with hundreds of claims, many focused on long-term injuries (such as concussions) sustained by athletes. If students were to be considered employees, however, colleges could be in a position to purchase workers’ compensation insurance to head off such lawsuits. While such premiums may be pricey — some experts estimate they could cost as much as $1 million annually per school — that seems less onerous when you realize that Ohio State paid Oregon State $1.7 million just to play them at home in 2019.

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Goodyear Cotton Bowl Classic - Oklahoma v Florida

Getting Gold Medals and Gold

Student athletes getting paid could lead to more Olympic stars choosing to compete at the collegiate level. Simone Biles, one of the most accomplished gymnasts of all time, verbally committed to UCLA in 2014 but ultimately didn’t join the team. Her pocketbook was likely a major reason: the 24-year-old now has an estimated net worth of $6 million, built mostly from endorsement deals that would have been prohibited by the NCAA. Katie Ledecky, another Olympic star and five-time gold medal winner, did choose to compete collegiately (at Stanford University) — a decision that reportedly cost the swimmer an estimated $5 million annually in lost endorsements. Revoking payment restrictions could improve the quality of college athletics, allowing star athletes to make money while representing universities in competition.

Agents to Their Own Stars?

While still a special teams football player in college, former Notre Dame walk-on Mick Assaf co-founded YOKE Gaming — an app connecting fans to their favorite athletes in video game competition. Partnering with hundreds of NBA, MLB and NFL athletes, the model could soon expand to college students as well. Similarly innovative business ideas are hardly the province of only for-profit entrepreneurs though. What if Notre Dame had partnered with Assaf on his idea while he was creating it at school? Expect universities, home to research labs and top academics, to start building partnerships to earn revenue hand-in-hand with their students. College sports departments already spend small fortunes promoting their players — forming marketing relationships and agent deals could come next. Doing so would be a strong recruiting tool too, allowing them to pitch athletes on an all-inclusive collegiate experience with support both on the field and in their professional endeavors.