Should Universities Share Athletics Revenue With Players? California Bill Sparks Backlash

This article was originally published in CalMatters.

For four years, Stanford student Liam Anderson has gone to what he calls his “full-time job.” He puts on his uniform, laces up his shoes and just runs. As captain of the Stanford track and field team, the public policy major has put in 20 to 40 hours of running, conditioning and physical therapy each week — a pace he’ll continue when he returns to campus this fall to pursue his master’s degree.

It’s a lot of time away from academics, with little financial reward, which is partly why Anderson has been supporting and advising California lawmakers on new legislation that could dramatically alter college athletes’ compensation.

“This is the only labor market where the primary labor input — the players — receive essentially zero compensation from their employers,” Anderson said.  “It is very difficult on a philosophical level to argue that these players do not deserve some form of compensation. To say a scholarship is enough is laughable.”

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Assembly Bill 252, or the College Athlete Protection Act, would require California colleges to put some of their sports revenue into a fund that would pay student athletes when they complete their degrees.  Athletes could earn as much as $25,000 for each year they participate in their sport.

But the bill has been controversial. Last week, its author, Assemblymember Chris Holden, put it on hold until next year after opponents — including the University of California, California State University and Team USA — argued it would further prioritize men’s basketball and football, causing campuses with tight athletic budgets to divert resources away from less lucrative sports. The NCAA has also opposed it.

Supporters say the first-in-the-nation bill, which the state Senate could take up again as early as January, bolsters athletes’ rights by giving them a cut of the revenue they generate. It’s the latest flashpoint in the debate over student athlete compensation, in which California has played a leading role.

As written, the bill would also require colleges to comply with a variety of health and safety standards, including paying all out-of-pocket health care costs for athletes injured on the field, and providing players with financial and life skills training. Sports agents seeking to represent student athletes would need to be certified by the state. A 21-member panel appointed by the Legislature and governor, with seats set aside for former college athletes, would oversee compliance.

The degree completion fund, however, has drawn the most attention since it would be a further blow to the amateurism model in college sports. California already catalyzed change within the NCAA when it allowed student athletes to make money off their name, image and likeness. NCAA policy now permits athletes to sign endorsement deals, but that money comes from private sponsors rather than the universities themselves. Athletes receiving it would be eligible for the degree completion funds, too.

Combined, California’s 26 Division I schools earned $1.2 billion in revenue in fiscal year 2022, according to the U.S. Department of Education. That includes media contracts, ticket sales, investment interest income, student activity fees and alumni contributions.

“Revenue is being generated. There are TV rights that are being negotiated for someone to make a lot of money, and it is not the student athlete,” said Holden, a Pasadena Democrat who played college basketball for San Diego State from 1978 to 1982.

“This is an opportunity to really recognize the kind of sacrifices that many of these athletes put on the line on behalf of universities and the NCAA, institutions that make billions of dollars,” Holden added.

Money for the degree completion fund would come from a university’s existing athletic revenue. Beginning in 2024, if an athletic department makes more annual revenue than it did in the 2021-22 academic year, the difference would be deposited in the fund. Athletes’ payments would depend in part on how much revenue their sport generates and how much their team already gives out in athletic grants.

Football and men’s basketball make up a majority of revenue brought in by athletic departments, and some of those funds currently go to subsidize other sports. That caused some supporters of those lower-revenue sports — such as swimming and volleyball — to worry that the bill would sap much-needed funding from their programs.

“If schools do not have the budget to fund sports, they will cut sports,” says an open letter from Women’s Sports Foundation CEO Danette Leighton to Holden. “If this were the case, we know from history that women’s sports and men’s Olympic sports would be among the first to be cut.”

Of the 21 NCAA Division I sports, 19 will be contested at either the 2024 Summer Olympics or 2026 Winter Olympics.

After initial concerns that the bill would violate Title IX by threatening the funding of women’s sports teams, lawmakers added an amendment to split the allocation of degree completion funds 50/50 between female and male college athletes.

Some opponents, however, still weren’t convinced.

“It’s great that (payments) would go towards some women, but if it becomes infeasible for schools to then support the programs at all, then we’re not really ahead of where we started,” said Maya Dirado, a Stanford graduate and Olympic gold medalist in swimming.

Elise Byun, a UC Berkeley gymnast and member of the NCAA Division I Student-Athlete Advisory Committee, said she believes that NCAA athletes should be financially compensated by their college beyond athletic grants. However, she said the bill as written could jeopardize funding for non-revenue and Olympic sports, as well as programs like mental health counseling that would benefit all athletes.

“If the revenue that’s being taken is just giving back to football and basketball, we can’t advance the student athlete experience,” Byun said. “There’s no money left over to help bring up everyone.”

Also, the bill would not benefit athletes like Byun, who is not on scholarship, because degree payments would only go to those who receive an athletic grant. Division II, Division III and community college athletes would also be ineligible.

The University of California and California State University also raised concerns.

“The bill’s revenue sharing framework also would create broader inequities among our student athletes, as support for non-revenue sports would likely decrease and disproportionately impact women’s programs,” said Hazel Kelly, a CSU spokesperson. “This one-size-fits-all proposal is not appropriate for the broad diversity of size, scope and competitiveness that are the hallmarks of the CSU’s athletic programs.”

Holden said athletic departments shouldn’t be worried about losing money for different programs because the degree completion fund doesn’t tap the department’s total budget, just the “excess” revenue generated above 2021-22 levels. The bill also prohibits schools from cutting athletic programs that were in place in the 2021-22 academic year.

“So we have provisions in it to protect all programs within the athletic department  — men’s and women’s sports, from NCAA Division I football all the way to the rugby players who happen to be on a team if you have a rugby program — so that those programs would be maintained,” he said.

The next frontier in the debate over athletes’ rights

Holden declined further comment on why he had chosen to delay the bill, or the specifics of its formula for funding degree payments. The bill had been scheduled to be heard by the Senate Education Committee on July 5, but was pulled from the agenda that day and has become a “two-year bill,” meaning it can be considered in the second year of California’s two-year legislative session. That’s a common move by lawmakers who want more time to negotiate details of legislation and sway opponents.

While the bill likely faces a long road, its passage could further cement California’s status as a pioneer on college athlete compensation.

Mark Nagel, a professor of sport and entertainment management at the University of South Carolina, said that similar institutional blowback to college athletics reform has been seen before in the past and that prior concerns haven’t really materialized.

“There’s always the idea that college athletics say that any change is going to cause the sky to fall and the world to end,” Nagel said. “We’ve already seen that, whether it’s high-, mid- or low-level programs, Division I universities and colleges have figured out ways to find that money.”

But Andrew Zimbalist, an economics professor at Smith College, said that universities making direct payments to athletes beyond scholarships creates a variety of financial issues because there are Division I schools whose athletic departments run on deficits.

“When they lose money, the school has to raise tuition, it has to raise athletic fees, it has to go to the state legislature for more subsidies, it has less money to provide for the education of the athletes. On all of those grounds, it’s a very problematic proposal,” Zimbalist said.

A previous legislative attempt to establish a mandatory degree completion fund for athletes failed in 2022. The current bill passed the California Assembly before heading to the Senate.

The National College Players Association, one of the forces behind California’s push to allow athletes to sign paid endorsement deals, is co-sponsoring the degree completion fund bill, and the California Labor Federation supports it.

“Athletes throughout the state of CA would gain unprecedented and much needed protections, freedoms and rights.  Every athlete will benefit if AB 252 is approved,”  NCPA President Ramogi Huma said in an email.

CalMatters politics reporter Alexei Koseff contributed to this story. This story and other higher education coverage are supported by the College Futures Foundation.

This story was originally published by CalMatters.