The Olympic-Sized Loophole in California’s Fair Pay to Play Act

Abstract

On September 30, 2019, California adopted the Fair Pay to Play Act, which bars colleges and universities within the state from upholding any rules that prevent student athletes from earning compensation for their name, image, and likeness. This historic challenge to the NCAA’s amateurism rules has led more than a dozen other states to consider similar provisions. Observers are suggesting it will force schools to share the massive revenues they generate off of big-time sports with the student athletes.

This Essay suggests that the initial press coverage of the Act skirts over an important loophole in the Act’s provisions. Under a “no conflict” clause, student athletes are not permitted to enter into a contract for the use of their name, image, or likeness if it would conflict with a school’s team contract, such as the large apparel deals big-time sports programs sign with Nike, Adidas, or Under Armour. The Essay compares this “no conflicts” clause to the old Rule 40 provision of the Olympic Charter, which, before it was amended in 2019, prohibited athlete endorsement of non-Olympic sponsors during the period surrounding the Olympic Games. By examining UCLA’s record apparel deal with Under Armour, the Essay finds that, as with Rule 40, the Fair Pay to Play Act’s “no conflicts” provision will significantly reduce any chance it will have of providing any meaningful sharing of the revenue generated in big-time college athletics.

Keywords: Fair Pay to Play Act, Sports Economics, Sports Management, NCAA, University athletics

JEL Classification: I23