Collegiate Athletes to Share in Sports Revenue in California?
Earlier this year, we blogged about the NLRB’s aggressive moves to try to make revenue-generating college athletes employees, at least for purposes of the National Labor Relations Act. Earlier this month, the California Assembly approved. AB 252, commonly referred to as the “College Athlete Protection Act,” passed the Assembly with a 42-15 and 23 abstention vote. This polarizing bill now moves on to the Senate for review.
AB 252, sponsored by California Assembly Member Chris Holden of Pasadena, a former collegiate athlete – basketball SDSU, does not seek to make California athletes employees, but attempts to give them more rights and more income opportunities. More specifically, the bill seeks to establish a mandatory revenue-sharing arrangement between certain educational institutions and student-athletes participating in major sports and provides other rights for the student-athletes. Although the bill does not address the prevailing issue of whether student-athletes are considered employees, the bill has the potential to considerably alter the relationship between collegiate athletes and educational institutions.
Key takeaways from the College Athlete Protection Act include:
- The bill requires certain intercollegiate athletic programs at 4-year private universities or campuses of the University of California or the California State University that receive on average $10,000,000 or more in annual income from media rights for intercollegiate athletics to establish a degree completion fund for its college athletes. The fund would provide money for college student-athletes to use upon completion of their degrees, provided that the degree is obtained in six years, and to help pay medical costs of student-athletes who are injured and cannot complete their degrees in six years.
- All degree completion funds would be capped at $25,000 per student-athlete. The educational institutions would be required to manage the funds as fiduciaries for the college athlete without charging the college athlete for any costs incurred. The funds would generally be paid to college athletes within 60 days of the college athletes earning a baccalaureate degree.
- If a college athlete does not complete a baccalaureate degree program within six years of full-time college enrollment or submit proof of a severe medical condition that prevents the college athlete from completing a baccalaureate degree program, the college degree completion fund payments could be forfeited.
- Institutions are required to complete an evaluation of its compliance with Title IX in athletics and the Office for Civil Rights’ Title IX in athletics regulations. Among other conditions, the evaluation considers whether the institution’s male and female college athletes receive equivalent nonfinancial aid athletic treatment and benefits.
Even though CDF cannot predict whether AB 252 will pass through the Senate and be signed by Governor Newsom, a similar bill, the College Athlete Civil Rights Act, also introduced by Assembly Member Holden, became law in 2019. In view of these developments, California universities (both private and public) with athletic programs should pay close attention to the progress of AB 252 over the next few months and should continue to watch the moves of the National Labor Relations Board. There is a lot of uncertainty right now, but if one thing is certain, it is that big time revenue-generating college athletics are moving more and more towards an employment-like model and there is a lot of political pressure being placed on this issue by all sides (unions, athletes, agents, universities, NCAA, etc.) so nobody knows what the final score will be.