July 29, 2024

Will We Soon See the NCAA Paying Athletes Directly?

By CJ Green

Athelo Group

Over the last decade, college sports have undergone significant transformations, particularly concerning the payment of student-athletes. These changes are driven by intense legal battles and evolving public opinions on whether college athletes should be recognized as employees and receive direct compensation.

The concept of the NCAA paying athletes directly could come sooner than we think. A game-changing new NCAA proposal aims to tackle the fairness issues within the billion-dollar industry of college sports, challenging the long-standing notion of amateurism. It marks a pivotal moment, promising to change how college athletes are compensated and challenge the traditional model of college athletics.

Historic Settlement and Its Effects

On May 24, 2024, the NCAA and Power 5 conferences agreed to a major legal settlement in the House v. NCAA class-action lawsuit. This deal, if approved by a federal court, could change the amateur status of college athletes by allowing schools to pay them directly. The settlement includes two key points: distributing $2.75B to athletes who played before July 2021 and enacting a revenue-sharing model that permits schools to grant nearly $20M a year to athletes.

However, not all athletes will benefit equally from NCAA paying athletes directly. Football and men’s basketball players at NCAA Division I schools with large athletic programs are the main winners because their sports bring in the most revenue. While women’s basketball players may also get a payday, athletes in less popular sports may not see any money. This could potentially widen the gap between wealthy, high-revenue schools and smaller institutions.

The Employee Status Debate

A key component of this changing landscape is whether or not college athletes should be recognized as employees. On July 11, 2024, the U.S. Court of Appeals for the Third Circuit ruled against the NCAA’s motion to dismiss Johnson v. NCAA, a case where athletes argue they are employees under the Fair Labor Standards Act. The ruling requires a new test to determine if athletes are employees, which could have big financial impacts on colleges and the NCAA.

If athletes are considered employees, they would be entitled to minimum wage and overtime pay, challenging the NCAA’s long-standing amateurism model. The case, led by former Villanova football player Ralph “Trey” Johnson, highlights the extensive control schools have over athletes’ time and labor and strengthens the argument for their recognition as employees.

Broader Legal and Financial Implications

The new test introduced by the Third Circuit’s ruling is designed to distinguish between students who play sports for fun and those whose efforts resemble work. The test would analyze three factors: whether the athletes’ services primarily benefit the schools, the level of control exerted by the institutions, and whether the athletes receive compensation.

These legal battles are part of a broader scrutiny of the NCAA’s practices. Just three years ago, the Supreme Court ruled in NCAA v. Alston that the NCAA’s restrictions on education-related benefits violated antitrust laws. This decision paved the way for athletes to earn money from their name, image, and likeness, adding pressure on the NCAA to adapt to a rapidly changing environment.

Future Directions and Ongoing Challenges

As these legal cases progress, unforeseen challenges are sure to arise for athletes, conferences, and schools alike. Schools will need to navigate the complexities of Title IX, ensuring gender equity in payments, and addressing the financial disparities between different sports and institutions. The potential designation of athletes as employees could lead to extensive changes in how college sports are managed and funded.

Moreover, the NCAA’s appeal to Congress for a federal antitrust exemption underscores the challenges it faces in maintaining its current model. The evolving legal landscape suggests that college sports are on the brink of significant transformation, with far-reaching consequences for athletes, schools, and the NCAA itself.

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