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California colleges can now pay athletes directly. Why taxpayers may foot
some of the bill | AP News
By ADAM ECHELMAN/CalMatters

Starting Tuesday, California's top universities can pay their athletes
directly - a dramatic shift in college sports that blurs the line between amateur and professional play. Schools have yet to say how much individual students will actually make or when checks might arrive, though a
CalMatters estimate suggests some student-athletes at UC Berkeley could
make roughly $200,000 a year.

In some ways, these payments are unprecedented. As part of a settlement to
a class-action lawsuit, which goes into effect Tuesday, a school will be
able to dole out up to a combined $20.5 million this year in payments to
any or all of its athletes. Almost all of the money will go to football
players and to a lesser extent, men's basketball players.

At public universities, such as UC Berkeley or UCLA, schools could use
taxpayer dollars to make these payments. State or institutional funds
already support roughly 30% of UC Berkeley's athletic budget, according to
one analysis by Syracuse University and the Knight Commission on Intercollegiate Athletics.

Student athletes are already compensated, albeit indirectly. Many college athletes receive full scholarships. They've also been able to earn
additional money since 2021, when the state passed a first-in-the-nation
law allowing athletes to make brand deals or receive gifts.

Up until now, those deals, known as "name, image and likeness"
compensation, were only allowed if they came from a third party, such as a company or a group of private donors, and the payments had to be in
exchange for services. CalMatters found that some top athletes have made
nearly $300,000 in a single deal by posting company advertisements on
social media, though most students, especially women, make very little.

The settlement allows universities to pay students directly, and it comes
with a number of restrictions on students' compensation and colleges'
athletic programs. Students in top athletic programs will now need
approval to receive compensation from brands or donor groups. Colleges
will also be able to give out more athletic scholarships, but in exchange, schools are required to further limit the numbers of players on each team
who are eligible for tuition aid.

UCLA, UC Berkeley, Stanford and the University of Southern California are required to participate in the settlement, since they're defendants in the lawsuit. Other colleges and universities in California can opt in.

UC Berkeley currently has about 900 athletes but will eventually need to
cut roughly 100 players to meet the requirements of the settlement,
Chancellor Rich Lyons said in a statement on June 11.

Using a mix of current revenue and new fundraising, he said the university hopes to pay $12 million to its football players, $3 million to men's basketball players and $1 million to women's basketball players. If UC
Berkeley were to divide it evenly - which is unlikely - that means this
year, each men's basketball player would receive roughly $200,000, each football player would receive roughly $100,000 and each women's basketball player would receive around $60,000. Lyons did not mention paying any
other athletes, though they could still receive a scholarship and, if
approved, certain brand deals or donations.

UC Berkeley declined to respond to CalMatters' questions seeking further clarification. Stanford has yet to comment publicly on the settlement and
did not respond to CalMatters' request for comment.

UCLA is not saying how much it will allocate to each of its athletic teams
but Athletic Director Martin Jarmond hassaid that the school will
distribute a total of $20.5 million, the maximum yearly amount allowed.
USC said it will do the same, said Cody Worsham, the university's senior associate athletic director. He said USC "will increase investment in all
23 (athletic) programs," which could include additional scholarships as
well as direct payments.
‘The settlement doesn't advance California athletes' rights at all'

This new payment system may not last for long, as at least two groups have already filed legal challenges.

In addition to allowing schools to pay students directly, the settlement
also includes a provision requiring the National Collegiate Athletic Association to divide up roughly $2.8 billion and give it to former
student athletes who never had the opportunity to get paid because of the previous NCAA rules. Most of that money, 75%, is supposed to go to former football players. Former basketball players are set to receive 15% of the
total payout, women's basketball players will receive 5% and the remaining
5% will go to all other athletes.

Female athletes from across the country have appealed that payout plan,
putting any payments on hold. The women claim that the settlement payouts violate the federal non-discrimination law, known as Title IX.

"The settlement doesn't advance California athletes' rights at all," said Ramogi Huma, the executive director of the NCAA, which advocates for the
rights of college athletes. "It just stifles it."

Huma sponsored the California bill that first allowed athletes to profit
off their name, image and likeness in 2021. That bill expressly prohibits schools and athletic associations, such as the NCAA, from preventing compensation for college athletes, but "this settlement would do just
that," said Huma. Under the settlement, combined compensation to all
athletes cannot exceed $20.5 million, and students may not be able to
receive compensation from certain donor groups, known as booster clubs or collectives.

By participating in the settlement, Huma said California's colleges and universities may be violating state law.
Where will the money to pay college athletes come from?

Often known as "revenue-sharing," these new direct payments are no
different from any other kind of expenditure. "Schools can use any dollars
that they have to pay their athletes," said Mit Winter, an attorney specializing in college athletics - it doesn't matter whether the athletic programs earn any revenue at all.

Some of the money for sports at California's public universities comes
from TV deals, ticket sales and parking fees, but some also comes from the college's general fund, which is taxpayer-supported, and from fees that
all students pay to their university. In some cases, such as at Fresno
State, the portion of athletic revenue that comes from taxpayer dollars or student fees has increased over the past 15 years, according to analyses
by the school's student newspaper.

"The school itself may say we'll use this money over here, that comes from ticket sales or donations from donors, but the money is fungible," said
Daniel Rascher, a professor of sports finance at the University of San Francisco. Student-athletes could receive payments based on the revenue of ticket sales, for example, but the office staff who administer those
payments may rely on general fund dollars for their salaries.

While paying athletes directly may seem like a change for the university
and the taxpayers who may foot the bill, Rascher said it isn't really a
new expenditure at all. "They were already spending this money on getting students to show up - expensive coaches, high quality training
facilities."

He said athletic programs benefit all students by helping to market the university. "One way we know it's a net positive is that schools are
continuing to join the Division 1," said Rascher. Division 1, which
includes more than 350 schools across the country, is the most elite and
costly arena for college sports.

Colleges get three weeks to figure million-dollar payment system

Although universities will be allowed to distribute up to $20.5 million to
its athletes, many won't be able to dole out that much. At Cal State Bakersfield, Athletic Director Kyle Conder said the school will also participate in the settlement, though it doesn't have "any revenue to
share" at the moment.

UC San Diego joined the NCAA Division 1 last year and Associate Athletic Director Jeff Tourial said it already plans to join the settlement and pay
its athletes. He said the school won't be able to pay out the maximum and
that the university is "still working out the specifics," such as how much money it will spend or who it will go to.

"Everybody in our world is hesitant to commit to anything because there
could still be appeals," Tourial said. "There's still so much uncertainty.
It's hard to pin down a number in a relatively short period of time."

California District Judge Claudia Wilken finalized the settlement on June
6, giving schools just over three weeks to decide how they would
officially respond. "There are many people in our department who are
thinking about this all day, every day," said Tourial. "The college
athletics landscape is shifting very rapidly. Seemingly every day it's something else."

For Karson Gordon, an incoming sophomore at UCLA and a member of the
football and track and field teams, today's settlement is hardly on his
mind.

Along with a full scholarship, Gordon also made over $20,000 over the last academic year by signing trading cards and through deals with a sunglasses company, a beverage company and various nonprofit organizations. Those
deals will now be subject to approval under the new settlement. Gordon
said he doesn't know yet if he will be paid directly by UCLA or how much
he will make, but he's not concerned.

"It'll all iron itself out," he said. "I'm honestly blessed just to get compensation for myself and my athletic abilities." His focus, he said, is
on the field.

___

This story was originally published by CalMatters and distributed through
a partnership with The Associated Press.
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