How California Is Changing College Sports

New Law Allows Student-Athletes To Cash In

Oct 08, 2019
Marketing

SMITH BRAIN TRUST – A new California law enabling college athletes to profit from their name and image has put the state at odds with the NCAA. Despite furthering a just cause, delicately balancing the various stakeholders presents an entirely new challenge, says Maryland Smith’s Henry C. Boyd III

The law, dubbed the Fair Pay to Play Act, is the latest development in the national debate over student-athlete compensation. Taking effect in 2023, the law not only permits college athletes to use their likeness for financial gain, but also to sign brand endorsement deals and hire agents.

Its passage marks a significant shift in the power dynamic between the NCAA and college athletes who generate billions in revenue for both the organization and its universities across the country.

Boyd, a marketing professor at the University of Maryland’s Robert H. Smith School of Business, argues that California’s intervention was necessary given the economic evolution of college sports. 

“The student-athlete model is outdated,” he says. “College sports used to be local and didn’t have the television rights or level of money that is currently flooding in. Now it has to change.” 

Solely receiving a scholarship is no longer enough when compared to the marketability prominent college athletes garner for schools in terms of merchandising and media attention, Boyd says. “A scholarship sounds good in theory, but when we start talking about this type of money, these athletes should be compensated,” he says. 

In being able to sign with an agent out of high school, Boyd believes that college powerhouse schools will ultimately benefit from this change with the ability to attract recruits through emphasizing the school’s brand and media prominence. “The advantage has to go to the bigger schools if they have a stronger platform and media presence,” Boyd says. “The athlete is going to be thinking in terms of visibility, and so will the agent.”

The heightened success of larger schools could be at the expense of lesser-known schools as well, Boyd notes. Smaller schools could struggle to offer athletes the same level of visibility as their counterparts. “There is a Darwinian undercurrent where the strong will survive and the weak will fall by the wayside,” Boyd says.    

Moving forward, despite the law’s influence, Boyd argues that athletes must still solve the “hard calculus” of figuring out the best situation for themselves, which might include ascending to the professional level. “If we think of an athlete at that level where they’re that gifted and talented, they’ve become an artist. We have no ceiling on what we pay artists if there is a demand for it. That’s where we’re headed.”

The NCAA has since suggested banning California schools from participating in NCAA Championships in response to the law’s passage, but it also acknowledged that adjustments to its name, image and likeness rules are needed.

Other states such as South Carolina, New York and Washington are expected to introduce similar pieces of legislation in the near future. Boyd expects the NCAA to continue to fight, but believes the tide is turning and sweeping changes are inevitable.

“There’s a great sports quote that says, ‘winning isn’t everything, it’s the only thing,’” Boyd says. “That’s the mindset now. If you’re a winner then you want to be compensated. That’s how we set up the system, winner take all.”

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About the Expert(s)

Henry C. Boyd is a Clinical Professor in the Marketing Department at the Robert H. Smith School of Business. He is also a managing director and principal at Ombudsman LLC, a diversified consultancy. He is licensed to practice law in Maryland, Wisconsin, and the U.S. District Court, Western District of Wisconsin.

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