California Gov. Gavin Newsom took action Monday morning that could disrupt the college sports system when he signed a bill into law that allows college athletes to hire agents and make money from endorsements, like professionals.
The law, which is the first of its kind in the nation, won't take effect until 2023, according to a report from The Associated Press.
However, industry professionals in Oregon say the shift could spur change in the complicated "ecosystem" that is the sports business world — and it could mean impacts to college athletics like at the University of Oregon.
The big deal
The new California law, Senate Bill 206, changed the state's Education Code to note that any college or post-secondary institution cannot prevent a student-athlete from earning compensation off their name or likeness, which includes brand endorsements.
This also is not allowed to affect the student's scholarship eligibility, nor can a scholarship be revoked if the athlete earns compensation.
It also outlines that a student can have agent representation and that no group can prevent a student from profiting off his or her likeness — including the National Collegiate Athletic Association, which is named in the bill.
This change goes against the rules of the NCAA, which urged Newsom to veto the bill.
The Pac-12 also denounced the decision to sign the bill, noting the conference was "disappointed" and believes it will have "significant negative consequences" for student-athletes, according to a statement from spokesperson Andrew Walker.
"This legislation will lead to the professionalization of college sports and many unintended consequences related to this professionalism," the statement said.
"(It) imposes a state law that conflicts with national rules, will blur the lines for how California universities recruit student-athletes and compete nationally, and will likely reduce resources and opportunities for student-athletes in Olympic sports and have a negative disparate impact on female student-athletes."
The new law falls in line with a conversation echoing through the industry as athletics are often major money makers for universities, putting institutions on the map and boosting enrollment.
"Universities generate significant revenue off of collegiate athletics," Whitney Wagoner, director of the Warsaw Sports Marketing Center at UO, said. "One thing that gets lost in translation is the difference between revenue and profit. Yes, the school generates a lot of money on athletics, but they also spend all of it, if not more of it on the enterprise (of athletics)."
The money generated through sale of items like jerseys or posters for the individual athlete, along with ticket sales, go largely back into the programs.
For 2019, UO's athletic department reported a budget of nearly $120.6 million with more than $17.2 million additional money carried over from the previous year. The projected expenditures for the year reflected breaking even, with the bulk of its revenues coming from the NCAA and Pac-12, and gifts or contributions.
But the question is, what are those college athletes owed as their personalities and success boost prestige and brand-recognition of the universities?
“I do think that that’s an entirely fair question,” Wagoner said. “All of us as individuals — me, I get to decide and control if someone puts my face on something. It’s core to be able to say: I own my own name and likeness.”
Where Oregon stands
California could be the first of other states to take the leap on the issue and go against the NCAA.
Two lawmakers in South Carolina already announced their intent to introduce similar legislation, and California Gov. Newsom predicted other states will follow suit, according to the AP.
However, there's no sign right now that Oregon will be the next to jump on the bandwagon.
Charles Boyle, press secretary for Gov. Kate Brown, said in an email Monday afternoon that after making some inquiries, he was not aware of any proposals for similar legislation to that of California.
"(The governor) doesn’t often express her predisposition to sign a bill before that process is complete," Boyle said. "Exceptions might include her own bills or bills she identified publicly as a top priority."
What it could impact at UO
Justin Herbert won’t start making money off his coveted athletic gifts and homegrown hero story until completing his career at Oregon and signing with an agent ahead of the 2020 NFL draft.
But the question remains if future Ducks, perhaps even some blue-chip prospects in high school right now, will be able to benefit from their name and likeness if Oregon is compelled to follow California’s lead.
Oregon football coach Mario Cristobal, who won two national championships at Miami on dominant college teams loaded with future NFL stars, said he needs more information before weighing in on the issue.
“I certainly believe that in any way that we can help the student-athletes, I think it’s our obligation, our responsibility,” Cristobal, who has a $2.5 million salary, said during his Monday press conference inside UO's opulent Hatfield-Dowlin Complex. “We certainly do a lot for them here. I know what it’s like; I’ve been there. I don’t know enough about how, what the rules are, what the format is for that. I’m all for making sure that we maximize what they can benefit or how they can benefit."
Cristobal said he would need a "blueprint" of all the information put together regarding the change in California in order to get a better feel for the issue.
“I would have to have a format and a blueprint of exactly what all (the) recent information that’s been put together regarding that to get a better feel for exactly what it is they’re saying. So pardon my ignorance, I just haven’t taken a deep dive into that,” he said.
However, it's unlikely that the change would directly contribute to more than a few college athletes across the country, Wagoner said.
"The number of athletes who in reality can generate commercial value off their name and likeness is a small number of students.”
So those athletes who don’t garner much attention, in non-revenue Olympic sports like lacrosse and soccer, likely wouldn’t see much gain.
But at an institution like UO that has been home in recent years to top pro picks like Marcus Mariota and Sabrina Ionescu, the option could be more viable, though it would complicate their future prospects.
The NCAA bans students from hiring agents or signing endorsement deals. If they do, athletes are no longer eligible to play, as they are technically a professional.
“Just like any other business, there's the cost of doing business. Who’s gonna do the deals with the various companies?” Wagoner said. “It’s not just, you turn on the hose and money comes out — somebody has to manage that business, and who are those people?”
Senior linebacker Troy Dye, who opted not to enter the NFL draft last year so he could finish his degree and exhaust his college eligibility at Oregon, was pro-SB 206 when asked about the legislation earlier this season.
“It’s big for the guys in California and I hope it can get pushed through so guys can get what they deserve,” said Dye, who is from Norco, Calif.
“When you go out here and you play four years, not everybody has a shot to play in the NFL," he said. "They should be able to get compensated for the time they do put in. It doesn’t make sense to have a guy go four years, put his whole body out there, get hurt, banged up and have nothing to show for it after that except for a degree.
“I think just California is doing the right thing, and hopefully the rest of the nation will follow suit.”
Oregon athletic director Rob Mullens declined a request from The Register-Guard for comment on the bill.
Former Oregon coach Chip Kelly, now at UCLA with a salary of $3.3 million this year, also doesn’t see the harm in players being able to profit off their own name, images and likeness.
“It doesn’t cost the universities, it doesn’t cost the NCAA, and what it did before is it put restrictions on athletes and it no longer does,” Kelly told the Los Angeles Times. “I think it’s progress.”
But there is still far to go to have the college athletics model even remotely resemble the professional model, and conversations about this issue will need to take that into account.
“The public’s heart is in the right place,” Wagoner said. "They want student-athletes to maximize the value that they earn as student-athletes — my heart is in that place as well.”
“The (sports business) ecosystem is very complicated — it doesn't mean we shouldn’t pursue it, it just means when we hear things like this, we have to peel back a lot of layers to reveal what is actionable and what are the mechanisms that would have to exist in order to bring that to reality? That's why I think we're far from something sweeping and something turnkey and easy. But it doesn't mean these little baby steps aren't important.”
Follow Jordyn Brown on Twitter @thejordynbrown or email at firstname.lastname@example.org and Ryan Thorburn on Twitter @RGDuckFootball and email email@example.com. For more Oregon sports coverage, visit DuckSports.com.