SB 206 passes, what next?

Governor Gavin Newsom of California has passed what may probably go down as the most substantive piece of legislation in sports history, since the courts ruled on the side of Oscar Roberston when he sued the NBA in 1970. That case, which allowed for larger contracts via free agency’s implementation in the NBA, completely transformed the league, sending it into a new era.

Similarly, the NCAA has now approached its own fork in the road, where any decision the organization makes will change its future course. The NCAA is at a turning point, but importantly, so too are the athletes. Whatever comes in the next few years as a result of this decision will be a reflection of how we value college athletics.

For the NCAA, this legislation could possibly not come at a worse time, with a recession looming and a movement behind the students. California is one of the few states that they cannot afford to lose, as the universities in the UCal and Cal State system, plus private institutions like Stanford and USC, are responsible for millions of dollars in revenue for the NCAA. With bills nearly identical to California’s being brought up in states like New York and Florida, the NCAA must reckon with the risk of the revenue loss escalating out of control. The NCAA has been given four years by California to either synthesize or antagonize California’s policies within their own policies, but if other states join California, then it is doubtful that they will have that much time. The NCAA must adapt to develop new revenue streams.

Meanwhile, for the athletes, they now enter a world in which there is, for some of them, infinite possibility. A five-star recruit going to UCLA will be able to leverage their talent, if they play football or basketball, to make what could amount to millions of dollars before they even enter a professional league. This would be great for them, but for other athletes who are either not as well regarded in a major sport, or participants in a sport that does not have national popularity (say, water polo) this will have a more muted effect. For some, they may be able to leverage their talents to set up a profitable YouTube channel, or serve as high school coaches. And for others, nothing may happen. College students are now entering into an unregulated market where they are able to hire agents, but now risk hiring an unscrupulous agent, and may end up indebted and worse off than they were before.

More likely than not, it will be a net gain for the athletes. It will allow them to learn and apply business techniques to their brand, and they may be forced to learn key money management skills that are transferable to any walk of life. The protections provided to the students massively outweigh the revenue lost by the NCAA, but now that the students will be able to monetize their brand, the repercussions on student life will be determined along the way.