California Assembly passes bill allowing college athletes to be paid by schools

The California Assembly on Thursday narrowly voted to approve legislation that would create the unprecedented opportunity for college athletes in the state to receive payments from their schools based on their respective team revenue.

The bill received 41 votes in favor, the minimum required for passage, with 15 votes against and 24 members not voting. More than half of the members who did not vote are women who are Democrats, the same party as bill sponsor Chris Holden. Holden said during floor debate that he had met Wednesday with the members of the California Legislative Women's Caucus and had amended the bill in an effort to address concerns about the bill's possible impact on women's sports. The actual legislative text of the changes was not immediately available.

There have been concerns that payments to athletes would go overwhelmingly to football and men's basketball players, and that these payments would result in schools having less money for women's teams. Holden said that under one of the new changes, if the bill's financial formula resulted in athletes on any team at a school being owed revenue-sharing payments for any given year, the total amount of money designated for athlete compensation would have to be shared evenly between athletes on men's teams and athletes on women's teams.

So, for instance, if only the football team's revenue triggered revenue-sharing payments, athletes on women's teams would benefit by the same overall amount.

In addition, Holden said schools would be able to use additional institutional funds "to ensure that non-revenue-generating sports such as our Olympic sports are maintained and could receive additional funding" without that money being counted as revenue in the financial formula used to determine whether revenue-sharing payments must be made. Another amendment, Holden said, "would prohibit Division I colleges from cutting any sport or funding for athletic scholarships."

Holden said on the floor the changes create "a first-in-the-nation piece of legislation that acknowledges (the recent) 50th anniversary of Title IX."

The measure still must pass the state Senate and get the signature of Gov. Gavin Newsom, D, but the prospect of this form of compensation for athletes already is causing alarm for the NCAA and administrators across major-college sports. It also has gotten the attention of some U.S. Congress members, as they attempt to craft federal legislation concerning college sports and athletes’ activities to make money from use of their name, image and likeness (NIL).

How much could athletes be paid?

Depending on their individual teams’ revenue, athletes would be able to receive annual payments of up to $25,000. Athletes potentially could be credited with even more money, but amounts above $25,000 a year would be paid only if an athlete completed an undergraduate degree within six years of full-time enrollment.

Other provisions of the bill, much of which would take effect in 2024, also are causing significant concern for the NCAA.

For example, public and private schools in California would subject to a new, extensive regulatory structure overseen by a 21-member panel appointed by the governor, the Assembly Speaker and the Senate Rules Committee. The panel would be required to develop and enforce health and safety standards, as well as a replacement for the letter of intent signed by high school athletes committing them to schools, and it would have subpoena power.

The basic arguments for and against

Holden graduated from San Diego State and played four seasons of basketball at the school. He contends that even with NIL opportunities and other benefits that have been granted through court rulings, new state laws and NCAA rules changes, many athletes in revenue-generating sports are receiving compensation far below what they would get if remaining NCAA restrictions were lifted.

He argues that this disproportionately affects Black athletes, who comprise large portions of rosters in schools’ primary revenue-generating sports: football and men’s basketball. And he says the regulatory and enforcement components are necessary, in part, because the NCAA does not enforce health and safety policies.

The NCAA and schools have said that the team-revenue-based payments would result in schools not having enough money to sufficiently support teams in low- or non-revenue sports, although the amendments Holden cited Thursday seem aimed at this argument.

The NCAA and the schools also say the regulatory structure creates the prospect of micro-management of college sports by the legislature and a bureaucracy of political appointees. And, as an additional financial burden, the regulatory panel annually would get up to $7 million of its operating budget through payments from schools that would be indexed based on their total athletics revenue.

National impact of a California law

In 2019, California’s legislature passed – and Newsom signed – the first law that allowed college athletes to make money from their NIL. This happened at a time when NCAA rules largely prohibited such activity. And it happened under the threat that schools in California would not be allowed to play in NCAA championships and could have trouble scheduling games.

However, instead of isolating California, the law emboldened other states to pass similar laws, in part for competitive reasons.

And unlike the NIL law, this bill could directly impact schools in other states. The provision related to replacing the letter of intent says that the new document would have to be used by out-of-state schools making offers to California residents. In addition, California schools and out-of-state schools that are recruiting in the state would have to submit to the regulatory panel a set of information about their NIL policies.

What else to know about the bill

►Schools in the state would have to annually complete an evaluation of their compliance with Title IX in athletics and make it public.

►The regulatory panel would be required to develop standards under which it would certify college-athlete agents, marketers and financial advisers.

►Schools in the state would not be allowed to uphold any rule that prevents athletes from receiving food, shelter, medical expenses or medical insurance from any source.

This article originally appeared on USA TODAY: College athletes revenue sharing bill passes California Assembly