California law defies NCAA’s multi-billion dollar business model

Global Business

U.S. college sports is a multi-billion dollar business with millions of followers across the country. But the National Collegiate Athletic Association, the governing body for college sports, prohibits student-athletes from receiving any compensation.

Last month, the state of California set a precedent by passing a bill that allows student-athletes to have the rights over their name, image and likeness.

CGTN’s Ediz Tiyansan reports.


The law will take affect by 2023 and is expected to significantly change the rules of the game at least for Californian student-athletes.

In 2017, American college sports generated more than a billion dollars in profits from advertising, broadcasting rights, merchandise and more. However, thousands of student-athletes who become stars across the nation, are barred from getting paid for their achievements.

But the U.S. state of California is now the first to change that with legislation.

“SB 206 will give our student-athletes who go to college in California the same right that Olympic athletes have, which is the right to their name, image and likeness,” said California State Senator, Nancy Skinner.

After the state assembly unanimously passed the bill, California Governor Gavin Newsom signed it during the cable network HBO’s talk show “The Shop,” hosted by the American basketball superstar Lebron James. 

“It’s going to initiate dozens of other states to introduced similar legislation. And it’s going to change college sports for the better by having now the interest finally of the athletes on par with the interests of the institutions. Now, we’re re-balancing that power arrangement,” said California Governor Gavin Newsom.

The move was largely welcomed by professional and student athletes.

“I always felt as though, even before I was in college, that college athletes should be paid. I mean they put in the same sacrifice the NFL does. In some instances, they did do a little bit more, so why not reimburse them for the work,” said Oakland Raiders Cornerback Daryl Worley.

That means, starting in 2023, college athletes in California would be able to make profits from signing sponsorships and endorsement deals, but it will also lead to a standoff between the state and the National Collegiate Athletic Association.

The NCAA the governing body for college sports, argues the law is unconstitutional and would consider challenging it in court.

“The NCAA argues against this proposal and has basically threatened that should this pass in the state of California, NCAA teams in the state of California, which are numerous, big ones include Cal, UCLA, USC, Stanford, would be ineligible to compete in and NCAA championships,” said Spencer Bowen, from the Goldman School of Public Policy at UC Berkeley.

Other legal opinions suggest the NCAA couldn’t retaliate because doing so would be a violation of antitrust. The new law also intends to encourage more star athletes to stay in school and finish their degrees, and it seems it may also encourage more athletes from other states to favor recruitment by California schools. 

Patrick Rishe on the NCAA’s business model and California’s new defying law

CGTN’s Rachelle Akuffo spoke with Patrick Rishe, director of the Sports Business Program at Washington University in Saint Louis, and the founder and CEO of Sportsimpacts, about a new California law that’s threatening to upset a multi-billion dollar NCAA business model.