NCAA Struggles to Keep Its Hold on College Sports

The NCAA is reaching deep into the playbook in its bid to maintain its ironclad hold on college sports as costly defeats in court and proposed federal legislation threaten its lucrative business model.

The organization makes the rules, provides enforcement, and manages the funding for its 1,200 member colleges and universities. In the 2019 fiscal year, the NCAA’s athletic programs produced $18.9 billion in revenue. The association’s revenue decreased by $600 million in the 2020 fiscal year due to the pandemic but is expected to rebound this year.

However, the organization emerges from the pandemic facing strong headwinds. Last June, the U.S. Supreme Court ruled against NCAA restrictions on education-related benefits for student-athletes. Likewise, proposed legislation in the U.S. Congress would set standards for athlete compensation, create an athlete’s bill of rights, give athletes the right to collectively bargain, manage revenue sharing, and make the NCAA more responsive to student needs.

The NCAA is responding by developing new rules and ramping up spending on lobbyists in Washington, D.C. The process started last July when it instituted a new policy that gives college athletes the opportunity to benefit from their name, image, and likeness. But the NCAA left it up to each university and athlete to follow the laws of their individual states, creating a confusing situation with many different types of rules, requirements, oversight, and enforcement. As of today, dozens of states have laws or executive orders establishing rules related to NIL for college athletics.

The NCAA’s shift to allow athletes to make money off their name, image, and likeness should be considered the floor and not the ceiling, U.S. Sen. Chris Murphy (D-CT) told BestColleges. The Connecticut Democrat is leading the charge to regulate college athletics, working on several bipartisan proposals making their way through the 117th Congress.

“Majority-white executives have long exploited the talents and labor of majority-Black college athletes, but America is finally waking up to the injustices that are inherent in college athletics,” Murphy said. “We must still ensure athletes receive fair compensation for their labor as well as health, safety, and academic protections along with real power in their industry. This is a civil rights issue, and I’ll keep pushing until college athletes get the pay and protections they deserve.”

The NCAA is taking a multipronged approach to preserving the status quo and protecting itself from potential lawsuits.

Internally, the NCAA Board of Governors has called a special constitutional convention for November where it will rewrite its rules, and it has appointed a constitution committee to lead this effort. Final action on new rules would take place during the NCAA’s annual convention in January 2022.

The NCAA is also actively seeking outside help to work the refs, i.e., the U.S. Congress. It spent $250,000 on lobbying during the first six months of this year after spending $480,000 in 2020, according to federal records published by OpenSecrets. The target? New federal legislation that would regulate compensation for athletes and preempt the current patchwork of state laws that now exist for athletes seeking to profit off their name, image, and likeness. The NCAA also wants help from the federal government to improve health programs for athletes, protect its revenue streams, and “modernize” the NCAA.

But perhaps most significantly, the NCAA also wants Congress to protect it from lawsuits, both past and future, that might result from the enactment of any new federal laws. Specifically, it wants Congress to establish “safe harbor protections.”

“While individual states are legislating NIL and pressing the association to provide further opportunities for student-athletes, the NCAA and its member schools are targets by lawyers using the weapon of antitrust laws and serial litigation, which diminish our ability to enact change to modernize rules to enhance opportunities for student-athletes,” NCAA president Mark Emmert said in prepared testimony submitted to the U.S. Senate Committee on Commerce, Science, and Transportation for a June 9 hearing on name, image, and likeness rights.

“Without appropriate, narrow protections, these litigation challenges to NIL enactment will continue and will significantly undermine the association’s ability to take meaningful action and adopt common sense and adequate solutions to support the evolving needs of student-athletes,” Emmert added.

Just 12 days after that congressional hearing, the NCAA was rocked when the Supreme Court unanimously ruled against it in NCAA v. Alston. The June 21 decision upheld a ruling by the U.S. Court of Appeals for the Ninth Circuit. That ruling struck down NCAA caps on education-related benefits for student-athletes on antitrust grounds. The NCAA had argued that its rules were largely exempt from antitrust laws.

Writing for the court, Justice Neil Gorsuch sided with the athletes, saying the NCAA had no immunity from antitrust laws. In a concurring opinion, Justice Brett Kavanaugh said sports traditions “cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student athletes who are not fairly compensated. Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate,” he said. “The NCAA is not above the law.”

Following that decision, Emmert issued a statement that reiterated the organization’s plan to seek help from Washington, D.C.

“Even though the decision does not directly address name, image and likeness, the NCAA remains committed to supporting NIL benefits for student-athletes,” Emmert said in the statement. “Additionally, we remain committed to working with Congress to chart a path forward, which is a point the Supreme Court expressly stated in its ruling.”

The court case cost the NCAA and its members close to $38 million, adding to the organization’s huge legal bill rung up in recent years. Since 2017, the NCAA has spent more than $150 million to wage its high-profile court battles. Those expenses have put financial pressure on the NCAA and raised questions as to whether such court battles are sustainable.

“One of our biggest challenges financially — and by we I mean the NCAA — I’d say for the last five years has been the growth in our third-party legal fees,” Kathleen T. McNeely, NCAA senior vice president of administration and CFO told Inside Higher Ed. “Our third-party legal fees are escalating to the point where it is affecting our ability to provide additional resources for our schools.”

Congress has never directly legislated the governance of college athletics, but proposed legislation by Murphy, Sen. Cory Booker (D-NJ), and Sen. Richard Blumenthal (D-CT) could change that. They’re behind a bill that would establish a bill of rights for college athletes and require schools to share revenues with their athletes. Murphy and Sen. Bernie Sanders (I-VT) also have introduced a bill that would define scholarship college athletes as employees of their universities, thereby granting them the right to collectively bargain.

In 1978, federal oversight of amateur sports was considered and rejected. Instead, Congress passed the Amateur Sports Act, which revamped the U.S. Olympic Committee, creating the committee that exists today. The new law also ended the Amateur Athletic Union’s control of international competition and amateur athletics.

Whether Congress would take similar action to strip the NCAA of its power remains to be determined. For now, all legislation has been stalled by differences over what safe harbor protections, if any, Congress should give to schools, conferences, and the NCAA. Revenue sharing with athletes is also a sticking point. But a congressional aide told BestColleges that discussions are continuing among members of the Senate and House in pursuit of bipartisan legislation. They are focusing on student needs rather than the NCAA’s antitrust concerns, the aide said.

Andrew Zimbalist, an economics professor at Smith College and president-elect of The Drake Group, believes that Congress needs to be involved in fixing college sports, especially on issues such as academic integrity, athletes’ medical and health coverage, equity, and Title IX compliance. But before the passage of new laws that would address these issues, he would first like to see a two-year congressional commission formed to study intercollegiate athletics and make recommendations to Congress.That’s what Congress did before passing the Amateur Sports Act.

“I think that Congress has to be part of the solution, but it’s hard to say that Congress is the answer,” Zimbalist told BestColleges. “I think the NCAA’s posture right now is clearly the result of the chaos that currently prevails, and the generally prevailing attitude is that the NCAA is responsible for that.”

As to what is motivating the NCAA to relent on NIL, revise its constitution, and appeal to Congress, Zimbalist said it boils down to survival in the face of mounting legal expenses and political pressure.

“The NCAA is trying to recover itself and preserve some of its power,” he said. “But I don’t think the NCAA can do this without some intervention. Over the years, the NCAA has perverted itself into a trade organization for coaches, athletic directors, and conference commissioners.”

Zimbalist credits Donna Shalala, a former president of the University of Miami and the University of Wisconsin, as being the first to recently call for a federal commission to study college sports. Shalala made the suggestion in 2019 while serving as a member of Congress. If created, a commission could be similar to the President’s Commission on Olympic Sports that was created in 1975 by then-President Gerald Ford. That 23-member commission conducted hearings nationwide for five months before issuing a final report that led to passage of the Amateur Sports Act.

Ironically, during a hearing on Nov. 12, 1975, the NCAA told members of the commission that it ended its involvement with international competition after the 1972 Olympics because the Amateur Athletic Union and others were “not responsive” to the needs of athletes — a key criticism the NCAA now faces. At the same hearing, then-Democratic Sen. John Culver of Iowa, who played football at the University of Alabama, criticized the NCAA for its “arrogance and smugness.”

The NCAA didn’t respond to a request from BestColleges for comment on its current efforts to influence Congress and to change its constitution. But in an interview with The New York Times, former U.S. Secretary of Defense Robert M. Gates offered some insight into what some NCAA insiders are thinking. Gates, a former president of Texas A&M, is serving as chair of the NCAA’s constitution committee.

“You know, God figured out how to give the rules to all mankind in 10 declarative sentences. You’d think that the NCAA could figure out how to do intercollegiate sports in something short of several hundred pages,” Gates told the newspaper.

“There is absolutely nothing anybody can do to alleviate the skepticism toward this endeavor except to make it work, except basically to come forward with something that people recognize as meaningful and significant. I mean, people’s skepticism is simply based on past history,” Gates added.

Feature Image: Maddie Meyer / Staff / Getty Images Sport / Getty Images