California governor signs law allowing college athletes to make money

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NCAA logo in Atlanta, Georgia. (Photo by Streeter Lecka/Getty Images)

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SACRAMENTO, Calif. (AP) — California will let college athletes hire agents and make money from endorsements, defying the NCAA and setting up a likely legal challenge that could reshape amateur sports in the U.S.

Democratic Gov. Gavin Newsom announced Monday he signed the law that would let athletes at California universities make money from their images, names or likenesses. The law also bans schools from kicking athletes off the team if they get paid.

The law will take effect on Jan. 1, 2023. It does not apply to community colleges and bans athletes from accepting endorsement deals that conflict with their schools’ existing contracts

California is the first state to pass such a law.

The NCAA Board of Governors had asked Newsom to veto the bill, saying it “would erase the critical distinction between college and professional athletes.” The board also warned that the law would give California universities an unfair recruiting advantage, which could prompt the NCAA to bar them from competition.

If that happened, powerhouse programs like the University of Southern California, University of California, Los Angeles, Stanford University and the University of California, Berkeley, would be banned from NCAA competition.

But while the NCAA is the top governing body for college sports, membership is voluntary. If the California schools are forced out, it could prompt others to follow and form a new league.

Professional athletes have endorsed the law, including NBA superstar LeBron James, whose 14-year-old son is a closely watched basketball prospect in Los Angeles.

The NCAA has steadfastly refused to pay players. But a committee led by Ohio State Athletic Director Gene Smith and Big East Commissioner Val Ackerman is studying other ways players could make money. The committee’s report is expected in October.

The NCAA does let some athletes accept money in some cases. Tennis players can accept up to $10,000 in prize money per year, and Olympians can accept winnings from their competitions. Plus, schools in the “Power 5” conferences can pay players yearly cost-of-living stipends of between $2,000 and $4,000.

The NCAA reported $1.1 billion in revenue in 2017.

For decades, the NCAA has been ruling on how student athletes utilize their celebrity. Pepperdine sports law professor Alicia Jessop says a few years ago, the NCAA shut down the Youtube channel of a UCF kicker.

“They said people were going to the channel simply because this young man was a UCF football player,” Jessop said.

The NCAA has always argued that student athletes must maintain amateurism and only be allowed to receive scholarship as compensation for their talents.

“They are arguing this is unconstitutional,” Jessop said of the NCAA’s response to SB 206.

In 2009, former UCLA player Ed O’bannon sued the NCAA arguing that the use of his likeness violated anti-trust laws.

“If Ed O’Bannon didn’t take that first step, I don’t think the minds of legislators across the country would be thinking this way,” Jessop said.

Renowned video game maker EA Sports stopped making collegiate games after the O’Bannon case. The NCAA has yet to incorporate scholarships for ESports gamers who generally play in cash tournaments. This has yet to happen, even though some colleges are already giving scholarships to Hoosiers for their gaming talents.

“[The NCAA has] tabled it and talked about it,” said John Robertson, who recently launched an interscholastic ESports league for high schools called the Indiana High School Network. “They are not going to touch it because of the pandoras box that it opens for players making money.”

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