A Guide to the Fair Pay to Play Act and How It Impacts UCLA Athletics

Today, California Governor Gavin Newsom signed into law SB 206, more commonly referred to as the Fair Pay to Play Act. In short, the law provides a way for student-athletes in California to profit on their name, likenesses, and image. It’s a huge new law that is going to have massive repercussions for the entire NCAA and UCLA Bruins athletics, in particular. So, it seems like a good idea to do something of an explainer on some of the big ideas going on.

You might have noticed Ed O’Bannon in that video. We’ll get to him in a bit.

So, what’s in the law exactly?

SB 206 legalizes a few different things, which are:

• It prevents colleges and institutions (read: the NCAA) from prohibiting student-athletes from earning compensation from the use of their name, image, or likeness. It also states that these groups cannot punish student-athletes for doing so by barring them from competition.
• Notably, the law also prevents schools and member institutions from being the ones to directly pay athletes for their name, image, or likeness. In essence, student-athletes are now free to make licensing and endorsement deals, but prevents the schools from directly paying the players (it also makes sure to note that scholarships are not considered a form of payment in this regard).
• As part of this, student-athletes are barred from signing endorsement deals if they conflict with deals signed by the colleges. So, for example, UCLA student-athletes could not sign endorsement deals with Nike because it would conflict with UCLA’s contract with Under Armor.
• Beyond paying players for their name, image, and likeness, the law also allows student-athletes to hire agents without fear of reprisal from the NCAA and member-institutions.
• The law does not go into effect until January 1, 2023.

How did the law come into being?

The Fair Pay to Play Act actually came into being as a result of former UCLA basketball star Ed O’Bannon’s successful lawsuit against the NCAA. As a reminder, O’Bannon sued the NCAA, alleging that the organization had broken federal antitrust laws by essentially setting the price for student-athletes images and likenesses to $0. He pointed to the wildly-profitable NCAA Sports video games, replica jerseys, and rebroadcasts of classic games, the profits of which went to the NCAA and member schools and not to the players. U.S. District judges agreed, and the NCAA was forced to accept the results of the lawsuit, as it quietly went about making it so that schools could provide full cost-of-attendance scholarships and an annual stipend.

But California lawmakers did not feel that the ruling went far enough to provide for student-athletes. A bipartisan group led by Nancy Skinner (Democrat) and Scott Wilk (Republican) introduced the Fair Pay to Play Act earlier this year, and passed both chambers of the California legislature with relative ease, going through the Assembly 31-4 before being passed unanimously by the Senate. Despite protests from the NCAA, it was only a matter of time before California Governor Gavin Newsom signed the bill into law, which he chose to do on an episode of Lebron James’s The Shop.

So how does UCLA play into all of this?

First off, look up at that tweet above and notice that not only was Ed O’Bannon present for the signing, but also Katelyn Ohashi. In addition, one of the major forces behind the push to pass this legislation was Ramogi Huma, former UCLA football player and executive director of the National College Players Association. UCLA’s fingerprints are all over this thing.

UCLA itself is caught in the middle of the entire debate surrounding the law. Due to its location, UCLA is beholden to California law, and must follow it regardless of what the NCAA wants. But it is also at risk of losing membership in the NCAA, Pac-12, and other organizations because the California law is out of sync with NCAA laws regarding player compensation.

Interestingly enough, while many coaches around the country have expressed dislike for the law, including Mike Leach, UCLA’s Chip Kelly was mostly positive towards the law, as noted in his Monday press event.

What are the repercussions of this law?

Well, the most obvious one is that, starting in 2023, student-athletes attending college in California will be eligible to receive compensation for the name, image, and likenesses. This has a lot of different implications, from allowing local businesses to contract with student-athletes in advertisements and sponsorships, to providing a door for the ever-popular NCAA Football video game series to return. Similarly, student-athletes in the state will be able to get agents to represent their interests without the NCAA cracking down.

If no other events take place, the law would create an interesting scenario where California schools would have an inherent recruiting advantage. Recruits considering where to play college sports, especially football and basketball, would perhaps give extra thought to the extra money they could earn in endorsements should they choose to attend UCLA, Southern Cal, UC Berkeley, Stanford, or any of the smaller mid-major colleges. Critics argue this would essentially ruin college sports by essentially allowing schools to indirectly pay for top recruits, though that argument tends to ignore that top end recruits tend to get paid already.

Proponents and critics of the law have focused on the effects this law would have on college football and basketball, but Cecelia Townes at Forbes made the argument that the Fair Pay to Play Act would indirectly help women’s athletes (and by proxy, all non-revenue athletes). She mentions former UCLA gymnast Katelyn Ohashi in her argument, pointing out that Ohashi was not able to earn anything in the way of endorsements while her floor routines went viral, and that the earning power of high-level gymnasts tends to drop off quickly after college. Essentially, for many of these athletes, their potential athletic earning power will never be higher than it is while they’re in college, so the Fair Pay to Play Act allows them a way to actually take advantage of that fact.

On a more macro level, the new law creates an inflection point for the NCAA. The law is very popular among lawmakers around the country; Washington was debating a similar law, South Carolina lawmakers are preparing to copy SB 206 for their own state, and even the federal government is seeing bipartisan efforts to implement similar ideas. The NCAA sees the way this battle is heading, and created a working group to look into implementing some changes in line with the law, though not going to quite the lengths the Fair Pay to Play Act does. The long time to implementation gives the NCAA time to come to an understanding, or at the very least time to move its bylaws closer to the California law.

So, is the NCAA ok with this law then?

No, the Fair Pay to Play Act represents a broad shot across the bow of the NCAA and its revenue model. It’s just the latest salvo in the larger PR war over whether student-athletes should receive compensation. The working group formed by the NCAA is mostly filled with administrators who benefit immensely from the current set-up. Consider, for example, that NCAA member public schools spend more on administration than they do on scholarships for their student-athletes.

Various administrators have made noise about taking action against California. For example, Ohio State athletic director Gene Smith, who is a member of the working group, stated that his school would refuse to schedule games with California schools for the foreseeable future, and believed it would be hard to keep those schools as members of the NCAA. But this seems to be bluster at this point. No one believes the NCAA is willing to remove itself from one of the largest economies in the world. UCLA’s deal with Under Armor speaks to the global cache and pull that the major California schools have, to say nothing of the talent drain that could occur.

The NCAA alluded to this reality in a statement they released after Gavin Newsom signed the bill into law:

As a membership organization, the NCAA agrees changes are needed to continue to support student-athletes, but improvement needs to happen on a national level through the NCAA’s rules-making process. Unfortunately, this new law already is creating confusion for current and future student-athletes, coaches, administrators and campuses, and not just in California.

We will consider next steps in California while our members move forward with ongoing efforts to make adjustments to NCAA name, image and likeness rules that are both realistic in modern society and tied to higher education.

As more states consider their own specific legislation related to this topic, it is clear that a patchwork of different laws from different states will make unattainable the goal of providing a fair and level playing field for 1,100 campuses and nearly half a million student-athletes nationwide.

The Pac-12 similarly released a statement.

The Pac-12 is disappointed in the passage of SB 206 and believes it will have very significant negative consequences for our student-athletes and broader universities in California. This legislation will lead to the professionalization of college sports and many unintended consequences related to this professionalism, imposes a state law that conflicts with national rules, will blur the lines for how California universities recruit student-athletes and compete nationally, and will likely reduce resources and opportunities for student-athletes in Olympic sports and have a negative disparate impact on female student-athletes.

Our universities have led important student-athlete reform over the past years, but firmly believe all reforms must treat our student-athletes as students pursuing an education, and not as professional athletes. We will work with our universities to determine next steps and ensure continuing support for our student-athletes.

What happens now?

Nothing, for now.

As noted, the Fair Pay to Play Act does not go into effect until January 1, 2023, which gives plenty of time for the NCAA to potentially figure out a workable solution to keep the California schools in the NCAA. More likely, though, we’ll see a round of lawsuits attacking the legitimacy of the law. The NCAA and Pac-12 could sue California to get the law repealed, with the most likely argument being that the law violates the interstate commerce clause of the Constitution. A victory by the NCAA would only appear to be a delaying act however. With Congress currently deliberating similar changes, it’s hard to see the current system remaining in place in the future.

Of course, if we were to get into speculative territory, there is nothing stopping the California schools from breaking away from the NCAA. The main four schools (UCLA, Southern Cal, Stanford, and UC Berkeley) are uniquely positioned to survive without the NCAA thanks to their history of athletic excellence, and can supplement their new conference with schools like Fresno State, San Diego State, and San Jose State, all of which could see an influx of talent thanks to this law. And this does not preclude other colleges from following suit and joining with the California schools; both Washington schools could easily join considering their state considered passing their own version of the Fair Play to Pay Act, and the other Pac-12 schools could see the benefit to joining along and forming their own organization.

In any case, while the passing of the Fair Pay to Play Act is a big first step, it’s still too early to know how it will affect UCLA beyond speculation.