The Power 5 Will Be Concerned When the NIL Narratives Stop

Today’s guest columnist is Eastern Michigan University sport management professor Rick Karcher, who serves as the university’s Faculty Athletics Representative.

The big-time college sports enterprise, which today consists of Power 5 football and men’s basketball, has always thrived on narratives: The “student-athlete;” the NCAA is afraid of antitrust lawsuits; the NCAA needs a federal NIL law; NIL payments are leveling the playing field; the NCAA now has “free agency.”

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The narratives allow Power 5 schools, coaches and administrators to exponentially increase their own profits and compensation while keeping the players’ compensation at the value of the university’s cost of a student’s attendance.

The NCAA’s narratives date back to the 1950s when the NCAA created the term student-athlete to prevent college football players from exercising their right to receive workers’ compensation benefits under existing state laws. Some states even adopted statutory provisions to ensure that student-athletes were not entitled to such benefits.

Court rulings in the mid-80s and late 90s led to a narrative—which continues to this day—that the NCAA is scared and powerless to do anything about the perceived out-of-control athletics spending. In the first ruling, the Supreme Court said the NCAA’s television broadcasting policy at the time, which imposed limits on the total amount of televised football and the number of games that any one team could televise, violated federal antitrust laws. In the second ruling, a federal court of appeals ruled that its policy that restricted the earnings of certain coaches was also an antitrust violation.

The NCAA’s loss in both lawsuits resulted in Power 5 schools continuing to exponentially increase profits, Power 5 coaches continuing to exponentially increase their compensation—with boosters asked to help pay for it—and a continuing divide between the Power 5 schools and everyone else. All that means they weren’t really losses for the NCAA.

In 2013, Johnny Manziel, who was then the quarterback at Texas A&M, sued a T-shirt maker for violating his intellectual property rights by using his nickname, Johnny Football, without his permission. When Manziel was paid a cash settlement, some said he would be deemed ineligible and/or lose his athletic scholarship for receiving a payment from a third party even though he was merely exercising his intellectual property rights under state right of publicity and federal trademark laws. That turned out to be incorrect; he remained eligible and didn’t lose his grant-in-aid.

The Johnny Football scenario piqued the interest of class action law firms who followed up with antitrust lawsuits against the NCAA and EA Sports. In O’Bannon v. NCAA, the federal court of appeals ruled that NCAA amateurism rules are subject to antitrust scrutiny and must be tested by the rule of reason, but the NCAA does not violate antitrust by imposing restrictions on schools’ ability to compensate players for the use of their name, image and likeness. While the narrative is that the NCAA lost that case, Power 5 schools can continue capping the compensation of their football and men’s basketball players at the waiver of the obligation to pay the university’s full cost of attendance as a student. Two federal courts of appeals also ruled EA Sports does not have a First Amendment right to use college players’ likenesses in video games without their permission, which violates the players’ right of publicity under state law—rights that college players have always had.

A few years after O’Bannon, states began to pass NIL laws. The narrative is that these laws give college athletes rights they’ve never had, when really, new NIL laws impose restrictions that never previously existed under state law—for example, by prohibiting schools from compensating players. Mark Emmert, who was then the NCAA president, expressed concerns over a “patchwork” of different state NIL laws and hinted at challenging them as a violation of the Dormant Commerce Clause. Perhaps the NCAA never bothered to bring this challenge because it is unclear how any of these NIL laws can even be enforced; to this date, nobody has tried. But the narrative is that only Congress can fix the purported problem of non-uniformity.

In the NCAA v. Alston case, the Supreme Court ruled that the NCAA’s prohibition on schools making education-related cash payments to athletes violates antitrust but only because the NCAA permits schools to make annual athletic-related cash payments up to $5,980. Translation: Schools can make annual education-related cash payments (capped at $5,980) unless and until the NCAA revises its policy on athletic-related cash payments. But the resulting narrative is that the NCAA “lost” the case unanimously, and its amateurism model is now severely threatened, even though the express language in the majority’s opinion makes it crystal clear that nothing in the ruling prevents the NCAA from restricting “professional-level cash payments.”

The D-I Board of Directors adopted an interim NIL policy immediately following the Alston ruling that led to the narrative (once again) that the NCAA is scared of antitrust lawsuits and powerless to do anything. The interim policy, combined with the new rule that allows players to transfer without sitting a year—also created without a membership vote—has led to a narrative of NCAA “free agency” even though the college players still have a non-negotiated, arbitrary cap imposed on their compensation—the university’s full cost of attendance as a student.

Bottom line: Power 5 schools will be concerned when we stop accepting the narratives.

Richard T. Karcher, J.D., a professor in the sport management program at Eastern Michigan University and the university’s Faculty Athletics Representative, teaches courses on sport governance and regulation, sport ethics, NCAA compliance, and international sport. His research and scholarship focuses on athlete labor issues.

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