The immediate lesson from the landmark $2.8 billion agreement approved Thursday by the NCAA and the major athletic conferences is that it cuts right to the heart of the NCAA's cherished model of amateurism. That means schools can now pay players directly.
But another fundamental principle remains intact, and maintaining it will likely be a priority for the NCAA. This means that players who are paid by the university are not employed by the university and therefore have no collective bargaining rights.
Congress must “establish that our athletes are students pursuing college degrees, not employees,” University of Notre Dame President John I. Jenkins said in a statement when the agreement was announced.
This is the NCAA's attempt to salvage the last vestiges of the amateur model, which for decades prohibited college athletes from receiving salaries from schools or anyone else without losing eligibility. That position has come under greater legal and political scrutiny in recent years and led to a consensus, which still requires approval from judges.
On the surface, that claim may seem strange. Over the past decade, public pressure and a series of court rulings have forced the NCAA to lift restrictions on player compensation, not to mention the reality that college athletics generates billions of dollars in revenue annually and athletes receive none of it. Yes. A California law that makes it illegal to block college athletes from trading in their names, images and licenses (NIL) opens the way for athletes to receive compensation, some of which receive seven figures each year.
At the same time, college sports have become increasingly a national enterprise. Regional rivalries and traditions disappeared as schools changed conference alliances in pursuit of TV revenue. Individual meetings can now extend from Palo Alto, California to Chestnut Hill, Massachusetts. This means that many athletes across a variety of sports are spending more time traveling to games and less time on campus.
“I don’t see how you can avoid calling them employees at this point,” said Adam Hoffer, director of excise tax policy at the Tax Foundation and a former economics professor at the University of Wisconsin-La Crosse. “The NCAA is going to look more and more like a professional league than ever before.”
But this position is consistent with the NCAA's long-standing position that classifying athletes as employees could be a potential death knell for college sports. In February, Charlie Baker, the group's president, said Congress should enact legislation to protect the “95 percent” of college athletes who would be harmed by a ruling recognizing them as employees. He said many colleges outside the so-called power conferences have already lost money on athletics, and spending more on salaries for athletes could cause some colleges to drop their teams.
Due to the antitrust lawsuit, there are many aspects of the agreement that are unclear. If a federal judge in California approves it, the school will decide how to distribute up to $20 million in revenue it set aside to share with athletes.
The settlement allows the NCAA to receive antitrust immunity from Congress, which will protect it from further lawsuits over compensation that could harm its ability to make its own rules. In recent years, the organization has spent millions lobbying the government to create antitrust exemptions similar to those enjoyed by professional baseball.
William W. Berry III, a University of Mississippi law professor who has studied college athlete compensation issues, said the agreement is also an attempt by the NCAA to limit the amount of money its institutions must pay athletes. According to the formula presented by the plaintiffs in the case, the settlement would pay players approximately 22% of their future profits. Mr. Berry pointed out that this amount is much lower than the stock paid to players in professional leagues such as the National Football League or the National Basketball Association.
“What they agreed to do was say, ‘We’re going to share a portion of the profits with you,’” Mr. Berry said. And if she had lost the case in court, she would have had more money flowing into the court, she added. It was financially ruinous for the players and the NCAA.
Following the NIL allowance, athletes have sought collective bargaining. Last February, a federal judge in Boston ruled that players on the Dartmouth men's basketball team have the right to form a union and should be considered employees. Dartmouth is appealing this decision. At the University of Southern California, football and basketball players are pursuing the right to unionize and be classified as employees. This agreement could support these claims.
“One of the hallmarks of employment is that you are compensated for your services,” said Matthew Mitten, a law professor at Marquette University and executive director of the National Sports Law Institute.
However, it seems unlikely that this agreement itself will fully promote the formation of a union in college sports. Dartmouth is a small private school in New Hampshire with laws favorable to unionization. Many football powerhouses, like the University of Alabama and the University of Georgia, are in right-to-work states and unionization efforts face stiff legal and political obstacles.
And compensation without unionization may be the preferred route for some athletes at schools that generate the most revenue.
“I don’t think it’s very likely that athletes at Power Four schools would want to form a union,” Mr. Mitten said, referring to the Atlantic Coast, Big Ten, Big 12 and Southeastern Conference.
But the NCAA is facing major changes, even if it stops calling athletes employees.
“The fact that schools have to pay these athletes means that existing business models have to change,” Hoffer said.