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California bill provides for revenue sharing agreement with college athletes

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California bill provides for revenue sharing agreement with college athletes

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Short dive:

  • A the bill goes through the California legislature will require public and private colleges in the state to enter into revenue-sharing agreements to pay for their athletes.
  • Institutions will need to create “degree funds” for players, who will then be able to earn up to $ 25,000 a year. Colleges calculated how much to put in by taking half of the income from each sport and dividing it among the athletes, and then subtracting the amount of the sports scholarship the athlete receives.
  • The proposal does not define athletes as employees and is likely to benefit only those who play in teams that bring in a large amount of income. However, experts say it will help disrupt the NCAA model, which erodes amateur athletics after high school.

Diving Insight:

California was at the forefront of the college’s athlete empowerment movement. It was the first U.S. state to sign a law in 2019 that allowed it to receive compensation for its names, images and similarities.

Observers largely attribute the legislation to the beginning of a wave of similar bills across the U.S. and forcing the NCAA to issue its own rules of name, image and likeness or NIL. The association refused to create a NIL policy, saying players who earn money because of their status as athletes face the dilettantism of university sports.

California’s new bill will go beyond approving NIL compensation. In addition to the fact that athletes can earn up to $ 25,000 a year from graduation funds, colleges will have to pay players any money left in their funds as soon as they graduate.

Athletes will lose their funds if they transfer to a public college or institution outside of California, if they do not complete a bachelor’s degree within six years, or if they leave their athletics program.

The California Senate Appropriations Committee this week introduced a bill in what is known as file in advance, a repository of legislation that is believed to have a significant fiscal effect. This still allows him to get a vote in the Senate.

A financial analysis of the bill by the Senate committee said it would cost the University of California system $ 34 million to $ 36 million a year. The University of California’s system said it would cost $ 1 million to $ 9 million a year for its nine Division I campuses involved in athletics, representing 17% to 34% of athletics revenue in those institutions.

The UC system said hiring an employee on each campus to manage the funds would cost about $ 1.4 million a year, while the state of California said it would cost $ 3.3 million a year.

The state of California has also shown that male athletes will receive more money than female players, which is potentially inconsistent with Section IX, a federal law that prohibits sex discrimination and requires equality in athletics.

B. David Ridpat, a professor of sports business at Ohio University, said he did not believe the proposal was of concern to Section IX. He said he views the California state’s statement as a tactic of intimidation to oppose the bill, and that many athletes have a high market value.

Ridpat called the proposal a positive step and a “destroyer” of the college’s athletics space and said he expected other states to follow California’s example.

The NCAA will soon reach a point where it will need to trade directly with athletes, Ridpat said.

“It comes down to the NCAA trying to keep that initiative going,” he said.

Ridpat said the NCAA was unclear on the matter. This adopted the NIL Interim Policy in June 2021 and updated them this month in an attempt to ensure that boosters will not try to encourage future and current athletes to attend certain colleges with money disguised as NIL-related transactions. It is reported that this happened.

NIL’s government accounts also differed sharply from each other, creating a complex legislative patchwork and effectively stimulate the arms race to be competitive in the athletics space. The states did not want to lose the advantage in athletics by taking strict measures or bills that came into force later than others.

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