In 2014, a former UCLA basketball player filed an antitrust class action against the NCAA, challenging the organization’s use of former scholarship athlete’s names and likenesses for commercial purposes. Since 2003, the organization had licensed former athlete’s personas for use in EA Sports video games. After a district judge found that the NCAA rules and bylaws operate as an unreasonable restraint of trade, the NCAA lost the court case, and was required to thousands of former athletes a total of about $40 million. The NCAA is a non-taxable, nonprofit organization – with a billion dollars in annual revenue and a $3 million a year CEO.
I met a young man a week ago who received $3,500 from the settlement. Shockingly, the check didn’t diminish the value of his college experience or cause the entire collegiate athletics industry to collapse. Not a penny came out of any athletic department coffers, no schools were bankrupted, and no swimming or softball budgets were cut. In short, decades of dire warnings about the ills of college athletes receiving anything more than a scholarship were completely unfounded.
California Gov. Gavin Newsom recently signed a law allowing college athletes in the state to earn endorsement money while still in school. In response, the NCAA called the bill unconstitutional. Unconstitutional? A Stanford wide receiver charging a dollar a piece for autographs belongs in the same category as women’s suffrage and religious freedom?
The NCAA and California will litigate this for years. A college president recently told me that if the California law is upheld, it would “end college athletics as we know it.”
Television already changed college athletics as we know it. So did integration, Title IX, social media, beer advertisements, divisional play in the SEC and ESPN.
In my opinion, the NCAA is one of the three most morally corrupt organizations on earth. The organization’s board recently rejected proposed rules that would have imposed some minimum academic integrity requirements at its member institutions. The NCAA requires that athletes pass enough classes to remain eligible, but it’s okay if the classes are a farce.
The California legislation wouldn’t require or even allow colleges to pay players. It would only allow players to earn money in the private marketplace. They could do things like monetize their YouTube channels showing off their humor and athletic skills. (A UCF kicker was declared ineligible in 2017 because his private YouTube channel identified him as a college athlete.) None of it would cost the schools a penny – except to the extent that First Tennessee Bank might choose to hire Tennessee offensive lineman Trey Smith as its spokesman rather than Jeremy Pruitt – a move I would highly recommend.
David Moon is president of Moon Capital Management. A version of this piece originally appeared in the USA TODAY NETWORK.