Why Most of the Proposed State NIL Laws Are a Big Step Backward, Part III

Amateurism-is-Whatever-We-Say-It-Is” and “The Local Student Benefit

In the first post on this topic, I said that most of the recent proposed (or passed) statutes affecting college player NIL were deeply flawed, because they allow the player to utilize his Category 3 “Lone Wolf” NIL, but bar him from using or benefiting from his much more valuable Category 1 (Shoe and Apparel) and Category 2 (Broadcast/video) NIL.

In the second post, I described how no other adult citizen in American commerce is singled out, as many of these statutes do, to arbitrarily bar him from using and profiting from his NIL, and effectively give it to another party (here, the school and NCAA).

In this third post, I contend that these many state NIL statutes are unnecessary. To explain why requires a peak behind the sham which is the NCAA’s supposedly clear line between the amateur and the employee.

The NCAA ‘No-Pay’ Sham: The Supposedly ‘Clear’ Line Between Amateur and Employee

Most fans believe that NCAA athletes are not paid. And Article 1.3.1 appears to support this notion, declaring that one of the NCAA’s “basic purposes,” is to “retain a clear line of demarcation [LOD] between intercollegiate athletics and professional sports” – a line which, the NCAA would have the public believe, is ‘No-Pay.’

But other bylaws actually carve two gaping holes in this NCAA ‘No-Pay’ facade.

The AIWWSII Carve-Out: “Amateurism-is-Whatever-We-Say-It-Is

Any Pay or Benefit is Fine, if Approved by NCAA Legislation

First, any pay or benefit is allowed, if approved by NCAA legislation. Bylaw 12.02.10 declares that “pay is the receipt of funds, awards or benefits not permitted by the governing legislation,” and bylaw 12.02.9 defines the “professional athlete” as “one who receives any kind of payment, directly or indirectly, for athletics participation except as permitted by the governing legislation of the Association.” Finally, bylaw 16.02.3 declares that an ‘extra benefit,’ is “any special arrangement by an institutional employee or representative of the institution’s athletics interests to provide a student-athlete or the student-athlete family member or friend a benefit not expressly authorized by NCAA legislation.i The key phrases here — “except as permitted by the governing legislation of the Association,” and “not expressly authorized by NCAA legislation,” together reflect the de facto LOD: any player pay or benefit approved by NCAA legislation is perfectly fine. Here the NCAA pronounces its first rule concerning player pay or benefits: Amateurism-is-Whatever-We-Say-It-Is.

And, starting with the NCAA’s 1956 vote to allow Athletic-Pay, the list of payments or benefits permitted by this provision is long. Tennis players are permitted up to $10,000 in annual prize earnings, and can receive additional money, as long as it does not exceed their expenses for the event. Olympic medal-winners can receive USOC payment-awards, and the USOC can pay for an athlete’s training, equipment, apparel, travel and even health insurance costs. Like Kyler Murray, whose receipt of a $4.7 million signing bonus from baseball’s Oakland Athletics did not bar him from playing quarterback for Oklahoma, two-sport athletes have long been allowed to be paid professionals in one sport, while competing in another. Football bowl game participants are allowed to receive ‘swag’ gifts from bowl sponsors, valued at no more than $550, and most schools now maintain Student Assistance Funds or Academic Enhancement Funds, to reimburse players for unique expenses, which can even include new suits worn by players or, sometimes, travel costs associated with family-member attendance at Final-Four and College Football Playoff events.ii In Alston, in fact, the District Court’s Judge Wilken cited seventeen examples of such NCAA-sanctioned player pay.iii Player benefits and pay are, according to this rule, limited only by the imaginations of NCAA members who, unencumbered by logic or, even, any tradition of amateurism, can vote to allow any pay, fund, benefit, or arrangement. The latitude which the NCAA seizes with this rule is not just ample: it is unfettered.iv

The “Local-Student-Benefit” Carve-Out: Amateurism is Whatever Happens to Some Group of Local Students

This completely ignored carve-out suggests that any benefit is fine, if some student group on campus also gets the same or similar kind of benefit.

Bylaw 16.02.3 says that “the receipt of a benefit by student-athletes or their family members or friends is not a violation, “if it is demonstrated that the same benefit is generally available to the institution’s students or their family members or friends or to a particular segment of the student body (e.g., international students, minority students) determined on a basis unrelated to athletics ability.”

This is a ‘Home Rule’ bylaw, meaning that the NCAA tells each school that, in these specific circumstances, the school has its own ‘ample latitude’ to govern on the issue.

To summarize, then, this carve-out:

1) does not require passage of NCAA legislation; and

2) permits any player benefit which is also “generally available” to students — or some sub-segment of students — on the local campus.

The expansiveness of this ‘local’ standard is, for the casual observer, startling.

It does not require, for example, comparison to a benefit received by some hypothetical average group, or sub-group, of students across the U.S. Instead, it gives each school remarkable leeway to define its own benchmark, based upon a comparison with the experience of students on its own campus.

The provision could also have narrowed its benchmark, by limiting the comparison to some sub-set of solely undergraduate students, or only full-time students, or even just students whose payments or benefits have no possible connection to any employment.

Instead — devoid of any such limitations — this often-ignored provision pronounces a remarkably permissive test, which embraces the full diversity of all student experience, and produces two unexpected results:

1) it clearly expects that the nature and extent of permissible player benefits will vary from campus to campus;

2) because so many D-1 schools now have 30,000 or more students, each with a cornucopia of undergraduate and graduate experiences, each school can likely make a very long list of such sub-groups of students, who receive almost any imaginable variety of pay or benefit: students on scholarship, who are paid to work for the school library or cafeteria, or to usher at football games. Paid interns. Teaching assistants. Work-study students. Students on music scholarships, who play for-pay gigs, on or off campus – and sell their recordings online. Those on fellowships. Students paid to participate in ROTC. Those who work part-time or full-time, on or off-campus, as waiters or bartenders. Inventor-students, who receive income from their inventions.v At Stanford,” David Drummond, a Google Vice President said in 2012, “the policy for licensed inventions calls for one third of the royalties to go to the inventor [often a student], one third to the inventors’ department, and one-third to the inventors’ school. Medical residents who, 75 years ago, received $10 per month, but now are often annually paid $60,000.

Each of such sub-groups of students can be used as a benchmark, to show that some pay or other benefit the player has received, beyond his ‘scholarship’ and COA stipend, does not violate NCAA rules.

More to the point: by showing that some sub-set of students on campus receives NIL-related income, whether from an online or other presence, the player can show that NCAA bylaws permit him to continue to own and profit from, without limitation, his NIL rights.

As a result, the application of this “sub-set of students” benchmark renders completely unnecessary:

1) any new NCAA pronouncement about NIL policy (beyond, perhaps, articulating that this benchmark is the one which will be applied to those issues); and

2) any of these new proposed (or passed) state NIL-related statutes.

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A Related Side Note, about The NCAA’s ‘Current Understanding’ of ‘Tethered to Education’:

Perhaps more clearly than any other bylaw provisions, the two alternative AIWWSII and Local Student standards can be seen as having given precise definition to the NCAA’s “current understanding of amateurism” which, according to Judge Bybee in O’Bannon, so efficiently “preserves the popularity” of the NCAA’s product, as to warrant protection from antitrust scrutiny.

The two standards are the most accurate expression of the NCAA’s ‘current understanding’ of the ‘tethered to education’ benchmark which Judge Bybee defined in his 2014 O’Bannon decision (and which was applied by Judge Wilken in the recent Alston decision) for measuring permissible player payments or benefits: a player benefit, according to this bylaw’s definition, is ‘tethered to education,’ if: 1) NCAA vote has permitted it; or 2) some sub-set of students on the local campus gets something like it.

About brewonsouthu

lawyer, with interest in college sports and NCAA oversight and decisions, and sports generally.
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