NCAA Ruling to Further Divide Haves, Have-Nots of College Sports
(Bloomberg) -- The U.S. Supreme Court decision that upended college sports economics this week threatens to marginalize small schools that already struggle to stand out on the playing field.
The court on June 21 rejected the NCAA’s bid for broad antitrust immunity, opening the door to more compensation for college athletes. But the bigger impact may be to give large, rich and well-regarded schools an even greater edge over smaller ones.
“This creates a big, big wedge for schools to take advantage of in terms of recruiting,” said Martin Edel, who leads the college sports law practice at Goulston & Storrs.
Under the ruling, schools may provide athletes with compensation related to education, including laptops, tutoring and paid internships. They’ll also be allowed to offer academic achievement awards as large as the athletic achievement awards they could already provide, currently with a $5,980 annual cap.
That means programs with money and fame -- like the football team at the University of Alabama or men’s basketball at Gonzaga University -- are in a position to gain from the ruling.
“Gonzaga is in a great position to deal with this,” said Chris Standiford, the deputy director of athletics for the Spokane, Washington, basketball power. “I do worry about some of the lesser-resourced programs throughout Division I and how they’ll respond to it.”
Football players at Louisiana State University, for instance, enjoy a $28 million facility that includes a state-of-the-art locker room with sleep pods. At the University of Oregon, Nike Inc. co-founder Philip Knight largely funded a 140,000-square-foot football facility that cost a reported $68 million.
Schools that aren’t cash rich or don’t compete in conferences like the Southeastern Conference, the Big Ten or the Pac-12, will probably be forced to reevaluate where athletics fit in.
“This should provoke lots and lots of dialogue within conferences and schools about what their real mission is,” Edel said in an interview. “Is it just a platform for the pros? Or is it to get a degree? Or something in between those two things?”
The situation could lead schools to cut programs that lose money and focus on breadwinners like football and men’s and women’s basketball.
Smaller schools already struggle to offer the facilities and perks that come with top-tier programs, even before confronting the idea of shelling out thousands of dollars for new laptops and cash for academic awards.
While the ruling was narrow in nature and will keep unfettered “pay for play” off the table for now, Justice Brett Kavanaugh ripped the NCAA as an organization and appeared to open the door to even more player compensation in the future.
“Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate,” Kavanaugh wrote in a separate opinion.
Monday’s ruling is separate from the ongoing battle between the NCAA, Congress and various states over whether athletes can be compensated for the use of their name, image and likeness, or NIL. On July 1, athletes in at least six states will be able to earn money from things like posts on social media and autographs.
That stands to create a further divide. Not just across states, but for different programs and conferences that are in a better position to offer athletes a marketing platform.
“We have a great plan in place for that,” said Gonzaga’s Standiford, who takes over as director on Aug. 31.
The NCAA is pushing for a national standard that will level the playing field for the states that won’t have regulations in effect at the start of the month, but it is unclear how quickly the organization can piece together a policy.
“The NCAA has traditionally hid behind bureaucracy, and they’ve put their head in the sand,” said Noel LaMontagne, who provides financial guidance to athletes and entertainers at the Verdence/Pro division of Verdence Capital Advisors. “They just have been extremely resistant in doing anything until they are forced to do it.”
NIL legislation will allow athletes who compete in sports that don’t typically generate revenue for their schools to take advantage of their images on social media. This would help gymnastics stars and softball players.
As the door to college athlete pay gets kicked open, schools have another potential worry -- that their rosters come to be seen under law as employees instead of students. That includes a risk of unionization.
That’s one of the ideas being floated as Congress debates a national standard for student athlete compensation. Senators Chris Murphy, a Connecticut Democrat, and Bernie Sanders, an independent from Vermont, have introduced a bill that would give athletes the right to union representation and to collectively bargain with colleges and across conferences.
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