Starting from July 1, 2021, student-athletes have been able to pursue endorsement deals. However, they haven’t been able to receive payments directly from the universities they represent. Cyntrice Thomas, a professor of sport management at the University of Florida, explains the obstacles preventing college athletes from being paid for their sports contributions. The main hurdle is NCAA rules. Shortly after its founding in 1906, the NCAA banned schools from paying student-athletes for their athletic prowess. In 1948, the NCAA introduced the Sanity Code, which also prohibited athletic scholarships unless students could prove financial need or economic hardship. By 1956, the NCAA allowed athletic scholarships without requiring financial need, but benefits were limited to tuition, room and board, and books.
Over time, the NCAA included additional allowances, such as medical insurance funding and the establishment of the Student Assistance Fund to cover unexpected college-related expenses. In 2009, former UCLA basketball player Ed O’Bannon sued the NCAA over rules restricting scholarships and compensation linked to the use of student-athletes’ images in video games. O’Bannon’s case revealed the illegality of certain NCAA rules, leading to scholarship permissions up to the full cost of attendance. Recently, in NCAA v. Alston in 2021, the Supreme Court determined that colleges should compensate students for education-related expenses up to $5,980 per year, finding NCAA rules violating antitrust laws. Antitrust laws are intended to foster market competition to benefit consumers through competitive pricing. The NCAA rules limited competition because schools were restricted in scholarship incentives to simply covering attendance costs. Currently, several lawsuits like Johnson v. NCAA, Carter v. NCAA, and House v. NCAA, challenge NCAA compensation rules through various legal frameworks. In Carter v. NCAA, plaintiffs claim these compensation restrictions are unlawful and argue they deserve a portion of the multimillion-dollar TV contracts held by conferences and the NCAA.
Some states have enacted laws permitting third-party compensation for student-athletes using their name, image, and likeness. These measures counter previous NCAA rules that banned such compensation due to concerns about maintaining amateurism. Yet these laws don’t affect schools and universities, only covering third parties, such as corporations like Gatorade or sport companies such as Nike. This limitation means schools can continue profiting from college sports without sharing with student-athletes. Universities can still use athletes’ names and images for promotions without providing them compensation, adhering to NCAA rules that forbid direct compensation related to athletic fame or publicity. Barbara Osborne, a sports scholar at the University of North Carolina at Chapel Hill, notes that scholarships represent a form of compensation for student-athletes.
Yet, with Division I schools, particularly Power Five conference schools, earning billions in revenue, other scholars like Mark Nagel and Richard Southall suggest scholarships are insufficient and argue “profit-athletes” should earn fair market wages for their efforts. Instead of compensating athletes, schools reinvest earnings into athletic departments for salaries, operations, facilities, and non-revenue-generating sports funding. The NCAA perceives these changes as a threat to amateurism, reaffirming its desire to regain regulatory authority over college sports at its latest convention in January. It’s pushing for legal protections to shield from ongoing lawsuits and lobbying Congress to clarify that student-athletes are not employees.
Alternatively, Power Five conference schools could consider leaving the NCAA to establish their own leadership, where rules allow paying student-athletes, potentially attracting top talent and generating greater profit. A third route involves federal government action. Facing numerous legal challenges from past and present athletes to its rules, the NCAA has lobbied Congress heavily, spending over $750,000 to push for limitations on athlete pay, regulation of name, image, and likeness deals, and for an antitrust exemption.