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A Beginners Guide To Exploiting California’s NCAA Legislation

by on October 03, 2019 4:30 AM

California Gov. Gavin Newsom signed a bill allowing college student-athletes to profit off their own likeness, hire agents and sign endorsement deals. While inevitable change is coming to the college sports business model, this law, as is, fails to anticipate a boatload of issues. Well-intentioned change often fails to understand past mistakes and the huge sums of money looking to corrupt the integrity of the game. We’ve seen this before.

In the early 2000s, the NCAA changed the rules to allow players to have jobs to earn extra money. A wise old coach told me, “The NCAA had this in place before. They’ll be a car dealer that sets up no-show jobs for star players to get commissions.” The very next year a major college team’s starting quarterback was kicked off the team for getting paid for a no-show job at a car dealership. Decades ago players were allowed to sell their free game tickets. During recruiting some schools promised players they’d line up alumni to pay ridiculous sums for their extra tickets every week.

One constant remains in college sports: when rules change, creative minds begin lining up how they will exploit the gaps. Everyone from agents to attorneys to alumni are looking for ways to ride this new wave of money that is about to flood the market. While some argue that most kids could not monetize this, they’re operating under the false assumption that this will be market-driven by corporations. 

If this law stands and goes national here is a list of things that will change immediately. 

1. Players Need Triple A: Players will now need the three ‘A’s: Agents, Accountants and Attorneys.

2. Drastic Recruiting Changes: Make no mistake, this law will be fully exploited for recruiting, before a player even gets to campus. Schools won’t be contacting high school coaches to recruit players. They’ll be dealing with agents and directing agents to people and companies connected with their school to sign the endorsement deals that would come if they attend their school. 

3. The Transfer Portal=Lottery Ticket: Grad transfers in the portal just hit the jackpot. If the next Jalen Hurts could get endorsement deals, think of what a school’s alumni would be lining up to get him. Even the undergraduate transfers will be able to take to the open market.

4. Endorsement Consortiums: Forget alumni donations to the school. Let’s start an endorsement consortium of Penn State alumni and Pennsylvania businesses to arrange endorsement deals. A well-organized and funded group becomes a real weapon in recruiting and retaining players. We contact and negotiate with players’ agents during the recruiting process so that we get the best athletes to sign with us. 

5. The End of The Facilities Arms Race: Why build bowling alleys, laser tag and other over-the-top amenities in football and basketball facilities? Your best move now is to start building an endorsement war chest to win recruiting battles. In this new Wild West, money will beat all.

6. Personal Appearances: How many Alabama fans would pay $20,000 for quarterback Tua Tagovailoa to “crash” a wedding or sweet 16 birthday party for an hour or two of selfies? How many would pay him to appear at a company tailgate after a game? He does 10 of those and he’s got $200,000. Schools will hire appearance coordinators to maximize these events for their players.

7. Athletic Directors Restructure Corporate Sponsorships: If Weis Markets wants to have signage in Beaver Stadium, Penn State could ask them to tack on extra endorsement money to pay current players to be on Weis signage around the state. 

8. Licensing Conflicts: Athletes can’t use the university’s name or logos without permission. School’s licensing fees are often in the 12-14% range. Will schools waive restrictions and fees for athletes? Keep in mind that athletes cannot sign deals with competitors to companies that already have deals with the university. Given that schools have official banks, apparel, snacks, car dealers, soft drinks and many other products, the field narrows significantly. 

9. Shoe-Horned: Players who sign with a shoe company in high school have limited their college choices to the teams that are signed to that same company.

10. IMG, Jay-Z: The IMG Academy in Florida attracts star players from all over the country. Part of IMG’s vast business is as agents representing pro players. This law jumpstarts the agent process, putting IMG in the position to sign these players in high school. Since IMG does college sports marketing as well, there is the potential for them to steer kids to their college clients as well. As for Jay-Z, his Roc Nation firm can sign high school kids but also give them endorsement deals for his apparel company. How much would it be worth to his agency to be able to lock up the next Zion Williamson when he is a sophomore in high school? And when he gets recruited, that agency will be calling the shots.

11. Watch Out For Maryland and Nebraska and...: With Under Armor founder Kevin Plank being a Maryland alum what kind of endorsement deals can he make for potential Terrapin recruits? What about Nebraska fan Warren Buffett, the third-wealthiest person in the world? 

12. Cheaper Access To Your Favorite Players: In recent years Penn State started offering special access and rides on the team plane to football donors who gave a certain level of money to the school. Those “experiential” packages start at $1 million. Now, alumni looking for access to the program could instead hire three or four players to “appear” at a private dinner for much less.

That’s just a partial list of what’s coming…..

Start with this fix: players choosing to take endorsement money then forgo their scholarship, (but still count toward their team’s scholarship limit). Players and their families can decide if the endorsement money is worth the risk of forgoing a full scholarship. This is just a start on the path from this law to the eventual solution that can and will happen.

Reality is that as well-intended as this legislation is, it creates more problems and more potential corruption than exists now. It opens the cans of worms above and dozens of others that space limitations don’t even allow us to get into. The answer will likely be somewhere in the middle in a place where players get compensated. But this law is a far cry from a reasonable solution. 



State College native and Penn State graduate Jay Paterno is a father, husband and political volunteer. He’s a frequent guest lecturer on campus and at Penn State events and was the longtime quarterbacks coach for the Nittany Lions. His column appears every other Thursday. Follow him on Twitter at http://twitter.com/JayPaterno
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