NCAA Pay Plan for Athletes ‘Too Little, Too Late’ to Curb Suits

The National Collegiate Athletic Association’s proposal to directly compensate student-athletes could result in fairer pay for players but fails to blunt continued legal challenges, attorneys say.

The proposal, outlined in a letter by NCAA President Charlie Baker earlier this month, floats the concept of Division I member schools paying athletes, as the organization seeks to stem an onslaught of lawsuits alleging its rules violate antitrust laws and unfairly limit compensation.

Baker’s policy, while a major step for the organization, comes “too little, too late” given the current legal landscape, said Marc Edelman, antitrust professor at Baruch College’s Zicklin School of Business.

A decade ago, such a proposal “very likely would have staved off future litigation and been seen as a substantial step in the right direction,” Edelman said.

“At this point, it might be necessary for him to consider far greater change, including the recognition of college athletes in certain circumstances as employees—if the goal is to reduce the risk of future litigation,” he said.

The proposal, in its current form, also raises questions about potential equity issues around what sports and athletes are ultimately funded by schools competing for the best talent. Schools would have to follow rules under Title IX of the 1972 Education Amendments so that funding would be equally distributed between men and women athletes.

Under Baker’s plan, participating Division I member schools would invest a minimum of $30,000 per year per athlete for at least half of their athletes. Schools could also enter into internal deals for students’ name, image, and likeness, as opposed to those deals being handled by outside parties, as they are now.

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Start of Dialogue

The policy marks a step toward more dialogue about compensating athletes, said Mit Winter, attorney at Kennyhertz Perry LLC.

“Baker isn’t a dictator, he can’t just make this become policy on his own, but this gives a lot of people in college athletics a starting place in this conversation” about revenue-sharing, Winter said.

Absent an NCAA compensation plan, private plaintiffs are turning to the courts to force the association into sharing some of its $600 million annual revenue with the student-athletes and others it profits from.

The lion’s share of NCAA revenue—most of which goes to member schools and conferences—stems from TV and marketing rights for the Division I men’s basketball championship, and ticket sales for all championship games.

Baker, former governor of Massachusetts, took the reins of the NCAA in March, and is trying to “right the ship going forward,” said Kate Buck, a partner in McCarter & English’s sports and entertainment industry team.

“It could definitely help with the NCAA’s image,” she said. “The NCAA has been slow to react in the past to hearing the concerns of its athletes of its member schools. This is an indication that they are listening and understanding.”

‘Still on the Hook’

But legal landmines for the NCAA remain as antitrust lawsuits won’t simply disappear, said Kathleen Bradish, acting president for the American Antitrust Institute. The US Supreme Court’s 2021 landmark NCAA v. Alston case opened the door to student-athlete compensation and left the NCAA open to attacks over how it does business.

“Even if a price-fixing cartel stops price-fixing, they are still on the hook for the time they spent price-fixing,” Bradish said.

College athletes won class status in November in a suit claiming the organization violated antitrust laws by not allowing them compensation for commercial use of their names, images, and likenesses. The case is set for trial in January 2025, with the athletes pursuing up to $4.5 billion in damages.

The NCAA, which appealed the certification, said in a statement that it disagreed with the judge’s class action status ruling, as NIL is “highly specific.”

“The NCAA fully supports all student-athletes profiting from their NIL rights and the Association is increasing benefits for student-athletes—including new health and well-being requirements and guaranteed academic supports for all of Division I,” the association said.

On Dec. 13, a federal judge granted Ohio and six other states a two-week restraining order to block NCAA from enforcing a rule that restricts some student-athletes from competing if they transfer between Division I schools. The groups, as well as the NCAA, now seek to extend that order through the academic year.

NCAA disputes allegations that the transfer order violates antitrust law, saying the rule benefits students’ academic performance and fans’ need for consistency.

Bypassing the System

“The NCAA believes that if a member school objects to a rule or policy, that member should propose alternative rules that apply to everyone, not turn to lawsuits to bypass the system they designed,” the organization said in a statement.

Meanwhile, athletes are attempting to gain employee rights under federal wage and labor laws through multiple avenues. One case before the US Court of Appeals for the Third Circuit charges the NCAA with violating the Fair Labor Standards Act by refusing to compensate athletes for their work.

A players’ advocacy group has also filed unfair labor practice charges against the NCAA, Pac-12 Conference, and the University of Southern California, accusing the parties of illegally classifying athletes as non-employees. Hearings before a National Labor Relations Board judge resumed Monday.

Also before the NLRB is a petition from the Dartmouth men’s basketball team, which is seeking to join the Service Employees International Union.

Winter, of Kennyhertz Perry LLC, said Baker’s proposal lends more credence to the argument that these athletes are employees.

“If they’re getting paid unlimited amounts out of some fund, that starts to look an awful lot like a wage payment to me,” Winter said.

Financial Divides

The NCAA has been pushing for more equity in college athletics. However, left unchecked, the proposed compensation policy could lead to more inequity in college sports, especially if wealthier schools commit millions of dollars annually to pay athletes, while schools with less funding pull from far smaller budgets, said Michael Isselin, partner in the entertainment and media group at Reed Smith.

“If you’re putting yourself in the shoes of a student-athlete, and you see the schools that are participating in this program and the schools that aren’t participating, why wouldn’t I look at the schools that are at least guaranteeing half of their athletes $30,000 a year first on my list?” Isselin said. “You’re sort of skewing the most talented athletes to these schools that have more money.”

Unequal funding for various sports could also pose a problem; basketball, for example, brings in millions more than fencing.

“If this proposal becomes regulation by the NCAA, is there a mandate to ensure that there is only X number of athletes from certain sports so that there is true representation from the student-athletes within those universities?” Isselin asked.

Baker’s plan tasks the NCAA with developing a regulation that could leave open “gray areas,” such as which athletes are funded on which teams, he said.

The policy is “not without its pitfalls and legal risk considerations, both at the organization level as well as the school level,” Isselin said.