Over time, college athletes in money-making sports have pushed to increase their financial returns from their public images. Most recently, as we have noted on this blog, that push has resulted in a mechanism for taking advantage of so-called NIL (Name, Image, Likeness). A pending California bill would move further in that direction. Note that not all bills become law and those that do are often amended.
See below from the Mercury News:
Bill designed to transform college sports in California will have massive implications for athletic budgets
SB-1401 is in the hands of the Senate Appropriations Committee
Jon Wilner | May 11, 2022 .
A bill designed to transform the economics of major college sports in California continues to move through Sacramento and faces a key upcoming vote in the Appropriations Committee. Senate Bill 1401, the “College Athlete Race and Gender Equity Act,” has been placed in the suspense file, a repository for legislation carrying significant fiscal impact, and could be voted on later this month. As law, SB-1401 would create a revenue-sharing arrangement between California universities and athletes in the money-making sports, football and basketball. Millions of dollars typically used to support athletic department operations instead would be placed in “degree completion funds.”
The requirements could place the California schools in the Pac-12 and Mountain West conferences at a significant financial disadvantage, create Title IX complications and threaten the long-term viability of Olympic sports like softball, gymnastics and swimming. An analysis published by the Appropriations Committee prior to SB-1401 moving to the suspense file projected an economic impact of $34 million to $36 million annually for the University of California and $1 million to $9.3 million annually for the California State University.
According to the analysis: “By requiring institutions of higher education to establish degree completion funds for student athletes, this bill could result in a substantial redistribution of a college’s athletic program revenues. This could then lead to significant local cost pressures for colleges to backfill these resources and balance their budgets to maintain the existing level of services.”
The bill’s lead author is State Sen. Steven Bradford, who represents the 35th District (Carson, Inglewood, Long Beach, etc.) and helped create California’s groundbreaking Name, Image and Likeness (NIL) law in 2019. But the quiet force behind the legislation is the National College Players Association, an athlete-advocacy group founded by former UCLA linebacker Ramogi Huma and supported by the U.S. Steelworkers.
SB-1401 differs from NIL in crucial ways:
— NIL grants all college athletes the opportunity to be compensated by the private sector in exchange for product endorsements.
— SB-1401 permits athletes in the profitable sports to receive payments directly from the same athletic department budgets that support daily operations for dozens of money-losing Olympic sports protected by Title IX.
Football and basketball players would have access to a maximum of $25,000 annually, with the remainder of their revenue shares available upon completion of their degrees. Further, it prevents athletes from being deemed employees even though they would receive direct compensation for services rendered.
Public and private universities alike fear that SB-1401 could devastate the budgets for money-losing Olympic sports that depend on the revenue generated by football and men’s basketball. And with the bill now in Appropriations, the schools have started to mount their defense. The updated analysis of the bill provided to Appropriations Committee members includes the following:
— The University of California (UC) estimates that the bill’s requirement to create, manage, and distribute degree completion funds for qualifying student athletes would have a systemwide impact in the range of $34 million to $36 million each year.
–The California State University (CSU) estimates an impact of $1 million to $9.3 million for its nine Division 1 campuses, or the displacement of between 17-to-34 percent of total athletic department revenues for those campuses. The CSU also indicates that the redistribution of revenues will be disproportional to male and female athletes and could cause its institutions to be out of compliance with federal Title IX requirements.
— Additionally, the UC estimates General Fund costs of approximately $1.44 million each year to hire one full time staff per campus to manage the degree completion funds while the CSU estimates General Fund costs of $3.3 million each year for these activities.
SB-1401 was approved by the Judiciary Committee in late April. According to Appropriations Committee procedures for bills placed in the suspense file, a vote must take place “prior to the deadlines for fiscal committees to hear and report bills to the Senate Floor. Bills will either move on to the Senate Floor for further consideration or be in held in committee and under submission.”
The vote on SB-1401 could come as early as next week.
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The bill is at:
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB1401.
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