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Money, Money, Money: Student Athlete Compensation

Source: ODELL BECKHAM JR. AUTOGRAPHED WHITE LSU TIGERS FULL SIZE REPLICA HELMET BECKETT
Source: ODELL BECKHAM JR. AUTOGRAPHED WHITE LSU TIGERS FULL SIZE REPLICA HELMET BECKETT BAS STOCK #133475, 2019 @ Mandy Webb on Flickr: https://flic.kr/p/2hQaLNk

By: Andrew Hahm*

The battle of the tigers concluded on January 13th, and Louisiana State University (LSU) stood victorious over Clemson, led by their star quarterback, Joe Burrow, who broke the single season passing touchdown record for the NCAA in that game.[1] The LSU team dominated the playoffs and the regular season capping out at a 28 game win streak after their victory in the championship.[2] The crowd went ballistic once the time finally ran out, but one fan got a little too excited and handed out cash to the LSU players.[3] This fan was none other than Odell Beckham Jr. (“OBJ”) current Cleveland Browns wide receiver, who previously played for LSU from 2011-2013.[4]

While this act may seem innocent enough, the NCAA prohibits this kind of compensation to student athletes.[5] The NCAA bylaws state that student athletes who participate in the NCAA may not receive compensation.[6] LSU tried to get ahead of this issue and issued a statement that the money was not real and was rather counterfeit.[7] However, this statement was proven to be false by Joe Burrow who told news sources that the money was in fact real.[8] The NCAA bylaws state that the only penalty, if the cash received was under $200, would be that the players would have to repay OBJ, otherwise they may be subject to a suspension.[9] In this instance a suspension would only affect the non-seniors because the seniors finished their collegiate athletic careers at the final whistle of the championship game.[10] Given the current focus on this issue and the spotlight provided by OBJ’s actions it is relevant to discuss the current state of play and the upcoming changes by the NCAA.[11]

 

Changes are Coming

These compensation bylaws may be loosened in the near future because the NCAA recently announced that they were going to change their policy on student athlete compensation in regard to the student’s name, image and likeness.[12] The announcement enumerated principles and guidelines that the NCAA should follow when they modernize their rules.[13] These principles and guidelines are very vague and will need further clarification so that everyone can understand what is and is not permitted.[14] This large swing by the NCAA did not come from the NCAA Board of Governor’s sole volition, but pressure from state legislation, current and past student athletes, and other commentators that allowed for this type of compensation.[15]

First, the Student-Athlete Equity Act is a bill that Representative Mark Walker introduced into Congress in March that would strip away the tax-exempt status of the NCAA if they did not change their policy.[16] Tax exemption is huge for the NCAA given the amount of tax savings and for that to change would be incredibly damaging for them; therefore, the NCAA had to respond to this threat.[17] This was directly what the proposers of this bill wanted and even though there is uncertainty whether it will become law and uncertainty of how it would be applied, it did its job of pressuring the NCAA to change their policy and gave them that motivation to update their policies.[18]

Second, state legislation pressured the NCAA to update their policy on this matter with California at the forefront.[19] California passed the Fair Pay to Play Act, which permits intercollegiate student athletes the right to receive compensation from use of their name, image, and likeness.[20] Though this bill will not be in effect until 2023, its passing put direct pressure on the NCAA because its bylaws would violate this law.[21] Furthermore, ten other states that have legislation pending for a similar bills to California’s, intensifying the pressure on the NCAA.[22]

 

NCAA Reaction to Change

            Because of the recently enacted and pending legislation, the NCAA could not sit idle.[23] The NCAA had the choice to change their bylaws or fight all of these actions and after weighing their options, they chose to change.[24] The NCAA reacted to this heightened pressure with a statement from their Board of Governors saying that they will change their bylaws to allow for the compensation of student athletes for their name, image, and likeness.[25]  So, what does this change mean?[26] The NCAA generates a revenue of around one billion dollars “from TV rights and marketing fees connected with its most prominent sports and events, such as the highly lucrative Division 1 men's basketball tournament.”[27] The NCAA says that this new compensation of the student athletes for their name, image, and likeness could possibly destroy their business model because they do not hold the exclusive rights over every aspect of marketing and TV rights.[28] While this is likely an overstatement, there is a lot of uncertainty on the road ahead.[29]  One of the biggest expressed concerns from the NCAA with this new change is their desire that student athletes are students first and they continue to stress this point in their ruling.[30] They want to make sure that there is still the distinction between student athletes and professional players.[31]

Finally, the future holds uncertainty in this arena such as are the student athletes really students first anymore because of the new possibility of compensation.[32] They most likely are still students first because the possibility of compensation is solely for their name, image, and likeness and not because of their specific prowess.[33] Even in light of these changes OBJ’s action of handing out money would still be a violation of the proposed NCAA bylaw because it was for the student athletes’ performance, rather than name, image, or likeness and compensation for performance is still a violation under the NCAA’s stated guidelines.[34]

 

*Staff Writer, Jeffrey S. Moorad Sports Law Journal, J.D. Candidate, May 2021, Villanova University Charles Widger School of Law

              

[1] See Wanye Staats, LSU, Joe Burrow Beat Clemson to Win the College Football Playoff National Title, NCAA (Jan. 14, 2020),  https://www.ncaa.com/news/football/article/2020-01-14/lsu-joe-burrow-beat-clemson-win-college-football-playoff-national (describing victory of LSU tigers over Clemson tigers and impressive stats of  LSU team).

[2] See id. (describing season of LSU tigers).

[3] See Ben Baby, Joe Burrow Says Browns’ Odell Beckham Jr. Handed Out Real Cash to LSU Players, ESPN (Jan. 15, 2020),  https://www.espn.com/college-football/story/_/id/28490949/joe-burrow-says-browns-odell-beckham-jr-handed-real-cash-lsu-players (revealing that Joe Burrow stated cash was real money).

[4] See Matt Bonesteel,  Odell Beckham Jr. was Seen Handing Out Money to LSU’s Players. The School Says it was Fake, Washington Post (Jan 14, 2020), https://www.washingtonpost.com/sports/2020/01/14/odell-beckham-jr-was-seen-handing-out-money-lsus-players-school-says-it-was-fake/ (showing connection of Odell Beckham Jr. and LSU).

[5] See Baby, supra note 3 (stating that this conduct puts players in conflict with NCAA bylaws); see also Scott Gleeson, LSU Now Investigating Whether Odell Beckham Jr. Gave Real Cash to Players After National Championship, USA Today (Jan 15, 2020), https://www.usatoday.com/story/sports/ncaaf/2020/01/15/lsu-investigating-if-odell-beckham-jr-gave-real-money-players/4477615002/ (noting that this act violated NCAA rules).

[6] See NCAA Division I Committee on Student-Athlete Reinstatement Guidelines, NCAA (Nov. 2019), https://ncaaorg.s3.amazonaws.com/committees/d1/reinstate/D1SAR_CommitteeGuidelines.pdf  (detailing compensation of student athletes).

[7] See Gleeson, supra note 5 (describing LSU response to incident).

[8] See Baby, supra note 3 (detailing conversation with quarterback Joe Burrows).

[9] See NCAA, supra note 6 (stating rules governing student compensation).

[10] See Dennis Dodd,  LSU, Players Given Cash by Odell Beckham Jr. Unlikely to Face Significant NCAA Penalties, CBS (Jan. 18, 2020), https://www.cbssports.com/college-football/news/lsu-players-given-cash-by-odell-beckham-jr-unlikely-to-face-significant-ncaa-penalties/ (stating seniors are about to leave college and some juniors are likely to go to draft and will not face any potential consequences).

[11] See supra notes 5-10 (describing OBJ’s action in context of NCAA bylaws).

[12]See NCAA, Board of Governors Starts Process to Enhance Name, Image and Likeness Opportunities, NCAA (Oct. 29, 2019),  http://www.ncaa.org/about/resources/media-center/news/board-governors-starts-process-enhance-name-image-and-likeness-opportunities (showing that in October NCAA announced this new compensation scheme).

[13] See id. (listing principles and guidelines that NCAA plans to follow when modernizing their policy).

[14] See id. (talking about how they plan to move forward).

[15] See Greta Anderson, NCAA Votes for Athlete Payment, Inside Higher Ed (Oct. 30, 2019), https://www.insidehighered.com/news/2019/10/30/college-athletes-permitted-be-paid-name-image-likeness (showing different points of pressure NCAA faced); see also Jill Martin, NCAA to Consider Allowing Athletes to Profit from Name, Image, and Likeness, CNN (May, 15, 2019) https://www.cnn.com/2019/05/15/sport/ncaa-working-group-to-examine-name-image-and-likeness-spt-intl/index.html (describing other sources of pressure that NCAA felt about this issue).

[16] See Student-Athlete Equity Act, H.R. 1804, 116th Cong. (2019) https://www.congress.gov/bill/116th-congress/house-bill/1804/text?q=%7B%22search%22%3A%5B%22student-athlete+equity+act%22%5D%7D&r=1&s=1 (“To amend the Internal Revenue Code of 1986 to prohibit qualified amateur sports organizations from prohibiting or substantially restricting the use of an athletes name, image, or likeness, and for other purposes.”).

[17] See Kyle Janer, NCAA Tax Status Tied to Athletes’ Images Rights Under New Bill, Bloomberg Law (Mar. 14, 2019), https://news.bloomberglaw.com/ip-law/ncaa-tax-status-tied-to-athletes-image-rights-under-new-bill (showing NCAA could owe millions if tax exemption status was revoked).

[18] See Janer, supra note 17 (describing spokesman for walker said that this is what they wanted and this was intention all along for bill).

[19] See Colin Dwyer, NCAA Plans to Allow College Athletes to Get Paid for Use of Their Names, Images, NPR (Oct. 29, 2019), https://www.npr.org/2019/10/29/774439078/ncaa-starts-process-to-allow-compensation-for-college-athletes (telling that California passed bill that allowed compensation of student athletes for their name, image, and likeness).

[20] See S. B. 206,  2019 Sess. (Ca. 2019) https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200SB206 (showing exact wording of California statute regulating student compensation for name, image, and likeness).

[21] See NCAA, supra note 6 (showing contradiction in compensation section).

[22] See Dwyer, supra note 19 (listing some of other states that have also started legislative process to pass similar bills).

[23] See id. (describing direct contradiction faced between states and NCAA).

[24] See NCAA supra note 12 (reporting changes coming to NCAA system of student compensation).

[25] See id. (listing guidelines that will govern upcoming changes to NCAA bylaws).

[26] See infra notes 27-31 (describing changes in conjunction with new compensation to student athletes).

[27] NCAA supra note 12 (detailing amount of revenue produced through contracts).

[28] See Anderson, supra note 15 (showing one response that NCAA originally had to these proposed changes).

[29] See Dwyer, supra note 19 (projecting future for NCAA); see also Alan Blinder, NCAA Athletes Could be Paid Under New California Law, NYTimes (Sep. 30, 2019),  https://www.nytimes.com/2019/09/30/sports/college-athletes-paid-california.html (talking about future of NCAA with payment to student athletes).

[30] See NCAA, supra note 12 (listing that athletes should be students first); see also Anderson, supra note 15 (expressing NCAA’s concerns with policy changes).

[31] See Dwyer, supra note 19 (quoting NCAA’s concern that they want to make sure there is an obvious divide between amateur and professional athletes).

[32] For a further discussion regarding conflicting viewpoints, see supra notes 29-30 and accompanying text.

[33] For a further discussion regarding the NCAA’s viewpoint, see supra note 29 and accompanying text.

[34] See NCAA, NCAA Division I Manual, 12.1.2.1, 12.1.2.1.4.1 (Aug. 1, 2019) https://web3.ncaa.org/lsdbi/reports/getReport/90008 (detailing that cash is prohibited form of pay if it is given to student athletes in connection to their athletic ability); see also supra note 12 (showing guidelines for changing the NCAA rules on student compensation regarding their name image and likeness).