The economics of intercollegiate athletics generate strong and divided opinions. The NCAA’s Division I manual espouses the view that college sports should be “a vital part of the educational system” adhering to “standards of scholarship, sportsmanship and amateurism” and reflecting “a clear line of demarcation between intercollegiate athletics and professional sports.” That line is not so clear, however, when it comes to Division I men’s football and basketball programs.
To be sure, student-athletes themselves are held to strict standards of amateurism. NCAA Division I Rule 12.1 forbids any student-athlete from using their “athletics skill (directly or indirectly) for pay in any form,” and Rules 12.4 and 12.5.2 prohibit any student-athletes from taking employment or engaging in compensated promotional activities that trade on their fame for athletic prowess. But the programs in which these amateur student-athletes compete are big business, and highly professionalized. According to Knight Foundation data, for example, the top Division I football programs generated over $8.3 billion in revenues in 2017, of which over $2.8 billion went to compensation and other payments to coaches and administrators. These payouts to athletics staff totaled more than twice the amount accounted for by the value of tuition scholarships and other financial aid given to student-athletes. Indeed, a 2017 study by ESPN found that in 39 out of the 50 states, the highest-paid state employee was a football or basketball coach at a public university.
Thus, the rule of amateurism applies only to the players in these revenue-generating programs, not to the coaches and other athletics staff. And as critics of these programs have noted, the uncompensated players are likely to be young men of color, while the coaches and staff who live richly off those young men’s physical exertions are likely to be older white men. This “amateurism-for-thee-but-not-for-me” attitude—which recapitulates broader social hierarchies of race, class, and age—draws substantial criticism on grounds of social justice. As one recent headline bluntly argued: “The NCAA Is a Plantation, and the Players Are the Sharecroppers.”
Perhaps it is not surprising that the general public’s views of the NCAA’s amateurism rules also divide along racial lines. Peer-reviewed research has found that opposition among whites to compensating student-athletes correlates with higher levels of racial resentment, and in a 2017 Washington Post/UMass Lowell poll, 54% of black respondents said that student-athletes should be compensated based on the revenues their universities reap from their labor, while 59% of white respondents disagreed, taking the view that players should be grateful for their athletic scholarships and leave it at that. The breakdown of white respondents in this poll is almost perfectly reflected in the decision of the Ninth Circuit in O’Bannon v. NCAA, in which two of the three (white, male) judges on the panel concluded that although a total prohibition on compensation to student-athletes would violate the Sherman Act, grants-in-aid up to the full amount of the cost of attending university are an acceptable means of balancing the anti-competitive tendencies of a college sports cartel with the supposed pro-competitive benefits of the NCAA’s commitment to amateurism. (Notably, one of only two pro-competitive benefits identified by the panel was maintaining the demand for college sports given a consumer preference for student-athletes to go unpaid.)
But that same 2017 poll identified one issue that unites fans of college athletics more broadly: respondents generally agreed by a 2-to-1 margin that even athletes on full scholarship should be compensated when their names and likenesses are used in video games or to sell merchandise. The legal basis for such compensation—the assertion of a right-of-publicity claim—has been extensively litigated in the video games context by former student-athletes no longer bound by the NCAA’s amateurism rules, as well as by professional athletes, though most cases have ended in settlement and no consistent rule has yet emerged. In cases such as Hart v. Electronic Arts, Davis v. Electronic Arts, and Keller v. Electronic Arts, the Third and Ninth Circuits have generally upheld the rights of former student-athletes (Hart, Keller) and professional athletes (Davis) to compensation for use of their names and likenesses in realistic video games, even against defenses grounded in the First Amendment. In Brown v. Electronic Arts, by contrast, a Ninth Circuit panel rejected such claims when brought by professional athletes under the Lanham Act (the federal trademark statute) rather than as state-law right-of-publicity claims. But regardless of opportunities for monetization after a student-athlete’s college days are over, current student-athletes are still bound by the NCAA’s amateurism rules to refrain from exercising such rights.
H.R. 1804, the “Student-Athlete Equity Act,” (SAEA) seeks to change the NCAA’s position on student-athletes’ rights of publicity. Rather than legislate away the NCAA’s amateurism rules under principles that have been the subject of previous litigation—such as antitrust (as in O’Bannon) or labor law (as in the recent district court ruling in Alston v. NCAA)—the SAEA attempts to give student-athletes the ability to profit off the field or from the fame they win on the field. But it does not purport to directly require the NCAA or its member institutions to allow students to sell their publicity rights without fear of losing their eligibility, as would the “Fair Pay to Play” bill that seems likely to pass the California legislature. Rather, the SAEA seeks to push the NCAA in the direction of allowing more student-athlete compensation by threatening its tax status.
Section 501(j)(2) of the Internal Revenue Code currently exempts from federal taxation “any organization organized and operated exclusively to foster national or international amateur sports competition if such organization is also organized and operated primarily to conduct national or international competition in sports or to support and develop amateur athletes for national or international competition in sports.” Under this exemption (and the Section 501(c)(3) exemption for non-profits), the NCAA paid no federal taxes in its most recent fiscal year, despite generating over $1 billion in revenues. To many critics, it is particularly galling that over $844 million of these revenues represented “[t]elevision and marketing rights fees” for athletics programming in which the NCAA forbids the athletes from being compensated for their labor.
The SAEA would make the 501(j)(2) tax exemption unavailable to any organization “that substantially restricts a student athlete from using, or being reasonably compensated for the third party use of, the name, image, or likeness of such student athlete.” In short, it purports to require the NCAA to choose between its federal tax exemption and those aspects of its amateurism rules that forbid student-athletes from making endorsement deals, entering merchandising contracts, or licensing their names, images, and likenesses to video game companies. What it would not do is require (or, indeed, permit) the athletic programs in which these student-athletes compete to compensate them for their labor. Nor does it seem to apply to the NCAA’s claim to a tax exemption under Section 501(c)(3).
The SAEA is well-intentioned. It seeks to provide some student-athletes with some economic measure of the equity of their labor, and to do so in a way most congenial to the sentiment of the interested public. It seems to sidestep difficult questions about the justification of amateurism as a principle, about whether Title IX either is or is not applicable to student-athlete compensation, or about the university’s role in an entertainment business, by limiting its scope to “third part[ies]” to college athletics programs. In so doing it creates the illusion of pulling economic justice out of thin air by directing resources to student-athletes who produce tremendous wealth for others, while putting the burden of such compensation on secondary players like video game companies and merchandise manufacturers, whose businesses may seem trivial or ancillary relative to the sport or the university. But while I believe that the SAEA is unlikely to do substantial harm, and I strongly support the goal of increased racial and economic (and, for that matter, gender) justice in athletics, I seriously doubt that the right of publicity is the best vehicle to achieve those goals.
First, the “winner-take-all” market for athletic entertainments is beset by staggering inequalities that third-party right-of-publicity licenses will do nothing to address. Just as almost all Division I programs fail to earn enough revenue to cover their expenses, the overwhelming majority of student-athletes in those programs are unlikely to land a rich sponsorship deal. Most of the value in their rights of publicity derives from the use of their name, image, or likeness in the presentation and marketing of NCAA games and broadcasts themselves, and that value is widely dispersed—no one player commands a substantial fraction of it. Moreover, the SAEA’s reference to “third party use” seems to exclude compensation for such uses of student-athletes’ identities from the statute’s scope, and under Rule 12.5.1 of the Division I manual student-athletes must grant such marketing rights to the NCAA itself and to their universities as a condition of eligibility.
Second, while uses of student-athletes’ names and likenesses in realistic video games would seem to offer the promise of broader sharing in the value of student-athletes’ publicity rights by and among the athletes themselves, any effort to effectuate such sharing is likely to be frustrated by massive collective action problems. Professional players have overcome such problems (and used the resulting gains to great strategic effect) by unionizing, but despite sustained efforts the right of student-athletes to unionize has been thwarted by the current administration. Absent the leverage of collective action, no student-athlete is likely to be able to extract substantial compensation from a video game developer, particularly where those developers—who do not face such collective action problems—can credibly threaten to omit a holdout player from their game.
Third, even for those few star student-athletes in a position to monetize their publicity rights individually, it is extremely likely that the lion’s share of the value of those rights will be diverted away from the student-athletes themselves by sophisticated middlemen and arbitrageurs who might take advantage of the budding stars early in their careers. As the nation’s leading expert on the right of publicity, Professor Jennifer Rothman, has observed, creating opportunities for the sale of publicity rights (as the SAEA would do) “may exacerbate unjust enrichment and impoverishment by granting windfalls to publicity-holders who buy up identity-holders’ publicity rights before their value is ascertained or before a dramatic increase in the value of those rights.” Indeed, Rothman cites the NCAA’s acquisition of the right to use student-athletes’ names, images, and likenesses in the marketing of its programs as an example of this type of predatory speculation on the value of rights of publicity.
And finally, at the risk of making the perfect the enemy of the good, the SAEA does nothing to alter the bargaining power between student-athletes in revenue-generating programs and other parties with an interest in the economics of college sports. And it is this imbalance of power which remains the primary obstacle to economic justice in that sphere. Those other parties include not only the managers of universities acting through the NCAA, nor even the professional coaches and staff who reap an outsized share of the material rewards of their sports’ popularity, but also fans, taxpayers, student-athletes in non-revenue-generating athletics programs, and non-athlete members of the university, all of whom are affected by the economic and moral distortions that result from barring compensation for labor in an enterprise that consumes, generates, and distributes substantial resources.
The NCAA, for its part, has announced the formation of a “working group” to “examine issues” raised by the proposed legislation, but in doing so made clear that it “will not consider any concepts that could be construed as payment for participation in college sports.” This position may appear to prejudge the issue the working group is supposed to examine, but that should not be a surprise: any concession that student-athletes have some legitimate claim on some part of the economic value created by their labor would be logically inconsistent with the enforced amateurism that the NCAA’s current business model depends on for its survival. Whether that model ought to survive is the question that college athletics programs ultimately must answer.