April DEI – Interview with Jeremy Evans Regarding NCAA Student Athletes

April 2024

Welcome to our interview with Jeremy M. Evans, where we explore the evolving landscape of NCAA student-athlete compensation through the lens of diversity, equity, and inclusion (DEI). At the heart of our DEI efforts lies a commitment to fairness, opportunity, and empowerment for all individuals, including student-athletes.

Mr. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. Jeremy is an expert in best practices and negotiations in entertainment, media, and sports. He represents such clients in contractual and intellectual property negotiations with a focus on dealmaking. His clients range from Fortune 500 corporations to entrepreneurs, advertising and production companies, studios, agencies, talent, and more. You can learn more about Jeremy here.

The O’Bannon v. NCAA case, as Jeremy highlights, serves as a pivotal example of change in collegiate athletics. Jeremy’s examination of the legal evolution surrounding athlete compensation underscores the importance of rights and regulations in college athletics. Join us as we engage in this important dialogue with Jeremy M. Evans, exploring how litigation and legislation have changed the future of NCAA student-athlete compensation and paved the way for a remarkably different collegiate sports landscape.

This interview was conducted by John Robinson, a member of NALA’s DEI Task Force.

Can you please explain the change in pay among college athletes and coaches?

Sports is the one place that has generally always been about performance to determine winners. The NCAA (National Collegiate Athletic Association) cannot take all the credit or blame for the changes in college sports. They are a nonprofit trade organization that brought together universities to organize sports. As college sports became more popular, the television and apparel dollars began to follow.

The O’Bannon case was about gaming, and that was a real turning point. Many athletes at that point in time thought it was a fair exchange to get a scholarship to play and an education, especially since less than one percent of college athletes make it to the professional leagues. However, when money was being made by video games, apparel sales, and television, the narrative began to change, with social media being a huge catalyst for name, image, and likeness (NIL) legislation. Players thought part of that money should be theirs. In other words, “If I’m creating value, then I should be paid.”

The NFL and NBA require players to go to college to enter their drafts. Nonetheless, more recent developments in the NBA draft resulted in five to 10 players coming from overseas and developmental programs like the G-League. In addition, the Overtime Elite league pays high school basketball players, showing the removal of the sport from formal education institutions, which may have lasting effects.

The NBA still has a rule that you have to play for at least one year in college or be 19 years old to play in the NBA. The rule for the NFL is that you have to play college football until you are a junior. If you remove those rules and use other leagues, like the United Football League, for development, there could be a minor league. Then the athletes would not have to attend college to enter the draft, which would relieve some tension for academic institutions. Lastly, money made from March Madness and other television dollars would go into academic programs and help fund other sports and research on campus.

NIL provides an opportunity to get paid via the private market. Athletes are paid according to their social media and star value. However, athletic departments are now taking over NIL management and using collectives to bring in money. Jim Harbaugh (former head football coach at the University of Michigan and current head coach of the Los Angeles Chargers NFL team) talked about splitting television revenue with college athletes, and legislators have also looked into this. The problem with this approach goes back to the money collected being spent on academics and other non-revenue-producing sports. If college athletes are paid directly, a new management, league, and system will also need to be created, or separated from non-revenue-producing sports, to create a mini-NBA or mini-NFL. Whether that is a good idea is up to the viewer.

California’s Fair Pay to Play Act (enacted on July 1, 2021) provides that a college athlete can sign an NIL as long as it does not conflict with any deal with the university where the athlete plays. The legislation was simple in that it allowed for the creation of a private NIL market. The landscape in 2024 looks much different with litigation moving the needle toward NIL being managed and collected by universities.

Realignment – schools going from one conference to another – is about keeping up with the Joneses and making sure that universities receive enough money to compete. The Pac-12 (now the Pac-2) was trying to get a media rights deal for a higher dollar amount per school, but the Apple+ offer on the table did not get to that figure. Universities like UCLA, USC, Oregon, Washington, Texas, and Oklahoma began to leave for the higher-paying Big Ten and SEC conferences.

What is the legal evolution from student-athletes not being paid to how the student-athletes are being paid today?

Ed O’Bannon was a UCLA basketball star. He sued EA Sports for using his image in a college basketball video game. The game was stopped, which was the first priority. The second priority was getting paid, but the payment was not substantial. The case set a precedent as to how college athletes should be treated.

The NLRB matter with Northwestern University was about the unionization of athletes. Ultimately, the case was not successful, but it put further pressure on the NCAA and the industry to make changes.

Then the states passed legislation similar to California’s Fair Pay to Play Act, which was the nation’s first. This stated that athletes can make money off of their name, image, and likeness. There are two interesting points. One, the launch only mattered if the NCAA allowed athletes to accept something of value and sign with an agent – two major prohibitions for a long period of time. Once that changed, the doors opened. Two, California already had name, image, and likeness on the books under the guise of rights of publicity. The NCAA forbade it until later. In other words, the NCAA saying yes to NIL was one of the most important decisions made.

The transfer portal allows athletes to transfer between schools, similar to free agency in professional sports. However, combined with NIL money, it created a wild west of transfer portals and NIL, where collectives are being used to pay athletes to come to the schools. The issue of transfers and the transfer portal is being litigated. Will the transfer portal be completely opened up?

The Alston case was not the reason for NIL. It was really about scholarship money. It was a 9-0 decision by the Supreme Court of the United States. Justice Brett Kavanaugh wrote in the opinion of the court that schools cannot limit scholarships and educational benefits, particularly in a colluding manner that violates antitrust law.

A players union for college athletes is the next question to be answered.

What is the history of revenue and payments in terms of college sports, especially college football and men’s college basketball?

From 1900 through 1950, which was essentially prior to television, there was no big money, even with radio. From 1970 to 1990, college sports gained a lot more traction. It had always been popular, but the branding and marketing made a difference. In the 1980s, college sports really started to become a business.

The University of Miami and their turmoil and championships drew a lot of attention, especially contrasted with the strait-laced image of Notre Dame. Then Southern Methodist University (SMU) received the death penalty for paying players – they were suspended for the 1987 and 1988 seasons from postseason play. More dollars led to more issues.

Colleges were looking for ways to have a competitive advantage. The mindset is, “We are going to pay athletes if we cannot compete otherwise. We are just going to buy the best team.” (Many ESPN 30 for 30s are great to watch – University of Miami and Marcus Dupree are two that come to mind.)

In every sport, it is a balance between team chemistry, players, and leadership, and that cannot be bought. ESPN started in the late 1970s and early 1980s. ESPN was looking for content. College football and men’s college basketball were really popular, so they provided programming opportunities. This led to changes in the conferences and money flowing from television networks to college campuses.

Money was being put into broadcasting and stadiums, and this led to more advertising and sponsors coming in. Michael Jordan started the shoe deals. He created a market that led to enormous deals for professionals, and then the universities followed suit. We cannot blame the universities because they had networks and fans spending money. It was the implementation of it that became an issue – how athletes were being treated, or whether they were being paid, and the fairness of it. The biggest issue for me has always been whether athletes would have a choice if NBA and NFL prohibition rules were not in place.

Mike Vrabel, the former head coach of the NFL’s Tennessee Titans, once said that we (the NFL) do have a minor league system. It’s called the NCAA. It would be less of an argument to pay athletes if they had the option to go pro or go to college. We do not see college baseball players asking to get paid, and the same thing is true for college hockey and soccer.

President Nixon started Title IX, which states that there has to be equal treatment for women in college sports (Title IX of the Education Amendments of 1972 applies to schools, local and state education agencies, and other institutions that receive federal financial assistance from the US Department of Education). Every school takes money from the federal government, so the schools have to follow Title IX. Now it’s a big issue because, when universities manage NIL, they have to do so in accordance with Title IX.

What is the future for college student-athletes, especially in terms of pay?

There are potentially three different pathways.

1. College football and men’s college basketball separate from the other sports, creating independent divisions or leagues that have a College Football Playoff (CFP) or championship tournament for basketball. This is a private entity that gives Division 1 schools flexibility apart from the NCAA. As it is now, starting in 2025, the CFP is expanding to 12 teams that will be competing, and that may be extended to 16 teams in the near future. Chip Kelly, offensive coordinator at Ohio State University, talked about creating a 64-team conference with a tournament where you play each other in football. NCAA owns the March Madness and related trademarks, so college basketball would have some challenges, although an in-season tournament separate from the NCAA begins in 2025.

2. Another option is that the universities pay the college athletes’ salaries and set up a union. Pay could be to scale like in the actors’ union. If you are an elite-status athlete, you get paid more money based on market value, and then you still have NIL. Can Congress come to an agreement about this and whether college athletes are employees? Congress has a commandeering program with national legislation on NIL and employment status. How does this connect to academics?

3. NCAA issues more rules and enforces them. They outlaw or limit the use of collectives and certain NIL practices in recruiting. Universities will no longer manage NIL but instead make sure the agreements are compliant. NIL deals will be limited to those that reflect the market value of the player, in exchange for marketing a product on social media or in person. However, ongoing litigation is fighting against limitations on NIL. Virginia just passed a law removing restrictions on NIL.

As it is, we are moving to the first point, which is basically a private entity. The reason is that the Power 5 (now the Power 4) already has significant autonomy from the NCAA. (The Power 5 refers to the five, now four, athletic conferences that are considered the most prominent in NCAA Division 1 college football – ACC, Big Ten, Big 12, and SEC.) The result would be a National College Conference for football and men’s basketball for Division 1 schools.

I doubt this would ever happen, but you could have a relegation system. At least you would have a process in place for Division 2 schools that move up to Division 1, which is currently an application process with the NCAA. Once they have a certain amount of money and success, a lot of schools move to Division 1. It would be like international soccer, where teams that do not perform are demoted to Division 2, and teams that perform well are promoted to Division 1. Either situation could probably work, but a more privatized entity is probably the future. Even in an open-market system, there still needs to be significant rules, guidance, and requirements for players and universities to avoid under-the-table pay and illegal activity.

Updated on 5/2/2024