untitled

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 1 4-FEB-21 15:06

Third-Party Payments:

A Reasonable Solution to the Legal Quandary

Surrounding Paying College Athletes

Ray Yasser* and Carter Fox**

* Ray Yasser is a Professor of Law at the University of Tulsa College of Law. He

has published extensively in the field of sports law and is a co-author of one of the

nation’s most widely used sports law casebooks.

** Carter Fox is a 3L at the University of Tulsa College of Law. A life-long

sports fan, he serves as a graduate assistant for Professor Yasser, and in this role, Mr.

Fox helped prepare a sports law casebook for a new printing. A native of Tulsa,

Oklahoma, Mr. Fox will begin a career in business transactions and commercial

litigation at the firm Latham, Steele, Lehman upon his graduation from TU Law.

Neither Professor Yasser nor Mr. Fox possessed the requisite athletic skill to

take advantage of the Third-Party Payment System had it been available when they

were in school, but they are both passionate about advocating for the student-

athletes who are.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 2 4-FEB-21 15:06

176 Harvard Journal of Sports & Entertainment Law / Vol. 12

I. INTRODUCTION .................................... 178

II. AMATUERISM IS A CORE TENET OF THE NCAA ..... 184

A. Athletes Have Historically Challenged Aspects of the

Amateurism Model in Court .......................... 185

i. More Recently, Courts Have Been Willing to

Recognize Problems with the Current Amateur

System, but Are Unwilling to Upend a System

That Has Become a Stalwart of American Sport . 187

III. THE “PAY-TO-PLAY” ALTERNATIVE IS NOT A

VIABLE SOLUTION TO THE CURRENT LEGAL

QUANDARY ......................................... 190

A. Even if “Pay-to-Play” Were Imposed, There Are Serious

Issues That Will Arise When It Is Implemented.......... 191

i. “Pay-to-Play” Likely Violates Current Title IX

Regulations .................................. 192

ii. Non-Revenue Generating College Sports Programs

Would be Detrimentally Affected if “Pay-to-

Play” Were Implemented...................... 194

iii. A “Pay-to-Play” Scheme Would Obliterate the

Line Between Professional and College Sports.... 195

iv. Steering Would Be Nearly Impossible to Regulate

Under the “Pay-to-Play” System ............... 196

IV. THE THIRD-PARTY PAYMENT SYSTEM IS A

REASONABLE SOLUTION TO THE LEGAL QUANDARY

SURROUNDING PAYIMG COLLEGE ATHLETES ...... 197

A. The Third-Party Payment System Offers a Reasonable

Solution to the Issues Surrounding “Pay-to-Play” ........ 198

i. Third-Party Payments Would Not Trigger Title

IX Scrutiny .................................. 199

ii. The Third-Party Payment System Would Not

Affect How Universities Fund “Olympic” Sports

............................................. 199

iii. The Third-Party Payment System Maintains a

Clear Demarcation Between Collegiate and

Professional Sports ............................ 201

iv. Steering Can be Regulated When It Is Done in

the Open and Not on a “Black Market” ........ 202

B. The Third-Party Payment System Offers a Reasonable

Solution to the Legal Quandary Surrounding Paying College

Athletes and Can Be Implemented through NCAA

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 3 4-FEB-21 15:06

2021 / Third-Party Payments 177

Amendment, Litigation, or by State and Congressional

Statute ........................................... 204

i. The NCAA Can Amend Its Bylaws to Allow for

NIL Payments ................................ 204

ii. The Third-Party Payment System Can Also Be

Implemented Through Litigation ............... 205

iii. Third-Party Payments Can Be Implemented

Through State or Congressional Statute ......... 206

V. CONCLUSION ....................................... 208

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 4 4-FEB-21 15:06

178 Harvard Journal of Sports & Entertainment Law / Vol. 12

I. INTRODUCTION

The National Collegiate Athletic Association (“NCAA”) is a billion-

dollar industry.

The so-called “money” sports

—

men’s basketball and foot-

ball

—

generate most of this revenue through the men’s championship bas-

ketball tournament and post-season games in football.

While the majority

of these funds are dispersed back to member schools and conferences who

perform well in championship events,

the athletes

—

who play the vital role

in generating revenue

—

do not receive any compensation beyond their schol-

arship award, room and board, books, and a cost-of-attendance stipend.

For

generations, the NCAA has required student-athletes to forgo opportunities

to monetize their athletic prowess to participate in college sports.

As college athletics evolves into big business, coaches and administra-

tors receive large salaries that stand in stark contrast to the benefits athletes

can receive. For example, in 2018, Duke’s men’s basketball coach, Mike

Krzyzewski (colloquially “Coach K”), brought home $8.98 million in sal-

ary;

his best player and one of the most dominant college basketball players

of the twenty-first century, Zion Williamson,

received a financial aid pack-

age that capped compensation at the calculated full cost of attendance. Full

See Darren Rovell, NCAA Tops $1 Billion in Revenue During 2016-2017 School

Year, ESPN (Mar. 7, 2018), https://www.espn.com/college-sports/story/_/id/

22678988/ncaa-tops-1-billion-revenue-first [https://perma.cc/437W-6XDY]; Brent

Schrotenboer, College Football Playoff Business is Booming at Halfway Point, but Expan-

sion Looms, USA Today, (Jan. 9, 2020), https://www.usatoday.com/story/sports/

ncaaf/2020/01/09/college-football-playoff-financial-success-expansion-future/2838

495001/.

See id.

See Len Simon, NCAA Won Big in Case vs. Athletes, San Diego Union-Trib-

une (Mar. 10, 2019), https://www.sandiegouniontribune.com/sports/sd-sp-ncaa-

lawsuit-athletes-money-analysis-20190309-story.html [https://perma.cc/WH3F-

7JJC].

See Nat’l Collegiate Athletic Ass’n, 2019–2020 NCAA Division I Man-

ual § 2.9 (2019), available at http://www.ncaapublications.com/productdownloads/

D120.pdf [https://perma.cc/3SYA-6WV8] [hereinafter NCAA Division I

Manual].

See Abigail Hess, The 10 Highest-Paid NCAA Basketball Coaches, CNBC (Mar.

10, 2019), https://www.cnbc.com/2019/03/08/the-10-highest-paid-ncaa-basketball-

coaches.html [https://perma.cc/4DH7-RRQ].

See Josh Planos, Zion Williamson is the Best College Basketball Player in at Least a

Decade, FiveThirtyEight (Dec. 12, 2018), https://fivethirtyeight.com/features/zion-

williamson-is-the-best-college-basketball-player-in-at-least-a-decade/ [https://

perma.cc/8Q4P-6E24].

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 5 4-FEB-21 15:06

2021 / Third-Party Payments 179

cost of attendance at Duke is currently assessed at $78,828.

After ending

his college hoops career and entering the NBA Draft, Zion was drafted first

overall,

and he subsequently signed a shoe deal with Jordan brand

—

a sub-

sidiary of Nike

—

worth $75 million over five years.

In September 2019, Tim Tebow, a former quarterback for the Florida

Gators and one of the most famous college athletes of recent memory,

spoke on First Take

—

a morning sports talk show aired by ESPN.

On air,

the former Gator great passionately argued that college athletes should not

receive compensation for participating in sports.

The crux of Tebow’s ar-

gument was that athletes should participate for the love of the game and

that if athletes want to be paid, they should be paid in professional leagues

and not as collegiate athletes.

The same day, Dez Bryant, a decorated for-

mer receiver for the Oklahoma State Cowboys

and the Dallas Cowboys,

responded to Tebow on Twitter.

Bryant argued that most college athletes

never receive the opportunities Tebow did as a Heisman Trophy winner,

See Cost, Duke Karsh Office Undergraduate Fin. Support, https://finan

cialaid.duke.edu/undergraduate-applicants/cost [https://perma.cc/RH9H-ATER]

(last visited Oct. 30, 2020).

See Brian Mahoney, Pelicans Select Zion Williamson with No. 1 Pick in Draft, NBA

(June 20, 2019), https://www.nba.com/article/2019/06/20/pelicans-take-zion-wil-

liamson-no-1-pick-draft [https://perma.cc/CP9J-ALRK].

See Darren Rovell (@darrenrovell), Twitter (July 24, 2019, 1:51 PM), https://

twitter.com/darrenrovell/status/1154131926988574721 [https://perma.cc/LS76-K9

GK].

See generally Fred Goodall et al., Tebow, Teammates Reflect on 2008 Loss to Ole

Miss, Promise, USA Today (Oct. 2, 2015), https://www.usatoday.com/story/sports/

ncaaf/2015/10/02/tebow-teammates-reflect-on-2008-loss-to-ole-miss-promise/

73192500/ [https://perma.cc/2593-KEAK].

See First Take (@FirstTake), Twitter (Sept. 13, 2019, 8:51 AM), https://twit-

ter.com/FirstTake/status/1172538239095332864/video/1 [https://perma.cc/7QPM-

G9KS].

See id.

See generally Anthony Slater, Dez Bryant Reflects on his Oklahoma State Career and

the Lie that Eventually Ended It, Oklahoman (Apr. 22, 2013), https://

oklahoman.com/article/3795965/dez-bryant-reflects-on-his-oklahoma-state-career-

and-the-lie-that-eventually-ended-it [https://perma.cc/52EV-W5EV].

See id.

Dez Bryant (@DezBryant), Twitter (Sept. 13, 2019, 3:43 PM), https://twit

ter.com/DezBryant/status/1172642050837221381 [https://perma.cc/G2YT-KQQ

W].

See Tim Tebow, Heisman Trophy, https://www.heisman.com/heisman-win-

ners/tim-tebow/ [https://perma.cc/5VYR-ZWHA] (last visited Jan. 22, 2020).

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 6 4-FEB-21 15:06

180 Harvard Journal of Sports & Entertainment Law / Vol. 12

first round draft pick,

and NFL quarterback.

Bryant also indicated that

many college athletes come from underprivileged backgrounds and that

compensation could greatly help their situations.

Finally, Bryant noted the

vast majority of college athletes never play professionally and thus, would

not be eligible for payment according to Tebow.

Proposed compensation schemes vary, but they can nearly all be placed

on a spectrum. On one end of the spectrum lies the traditional amateur

model used in college sports, in which there is no compensation beyond

financial aid. On the other end of the spectrum lies “pay-to-play,” where the

NCAA member schools directly pay athletes. Allowing athletes to “cash in”

on their Name, Image, and Likeness (“NIL”) and be paid by third parties

falls somewhere in the middle of these two extremes of the spectrum.

Even coaches have waded into the morass and chimed in on the issue of

compensation. Some, like Washington State football coach Mike Leach, ar-

gue that compensation for college athletes would ruin college sports.

Others, like Duke’s Coach K, support allowing athletes to capitalize on their

NIL while in school.

Mike Gundy, head football coach of the Oklahoma

State Cowboys, maintains a more pragmatic approach.

He approves of NIL

payments in theory, but advocates for a uniform implementation scheme so

a certain parity could be maintained in recruiting athletes.

Today, because public opinion has shifted to support some sort of pay-

ment scheme for college athletes,

the NCAA has been forced to respond to

See Aaron Young, Denver Broncos: Grading Tim Tebow and 11 Other First Round

Draft Picks 2000-2010, Bleacher Report (Apr. 27, 2011), https://bleacherre-

port.com/articles/677083-denver-broncos-grading-their-first-round-draft-picks-

2000-2010 [https://perma.cc/8AFU-3Z86].

See id.

See Bryant, supra note 17.

See id.

See Brenna Greene (@BrennaGreene_), Twitter (Sept. 16, 2019, 3:02 PM),

https://twitter.com/BrennaGreene_/status/1173718746222907392 [https://

perma.cc/Z4QX-U7EY].

See Michael Shapiro, Mike Krzyzewski Supports Fair Pay to Play Act: ‘We Need to

Stay Current,’ Sports Illustrated (Oct. 8, 2019), https://www.si.com/college/

2019/10/08/mike-krzyzewski-california-fair-pay-to-play-act [https://perma.cc/X5L

7-2ATK].

See Scott Wright, OSU Football Journal: Mike Gundy Approves of California Law,

but Hopes for Uniformity, Oklahoman (Oct. 1, 2019), https://oklahoman.com/arti-

cle/5642751/osu-football-journal-mike-gundy-approves-of-california-law-but-

hopes-for-uniformity [https://perma.cc/RVX6-DFBL].

See id.

See Rick Maese, Should College Athletes Be Paid? Some Lawmakers, and a Presiden-

tial Candidate, Say Yes, Washington Post (May 22, 2019), https://

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 7 4-FEB-21 15:06

2021 / Third-Party Payments 181

calls to pay athletes.

While traditionally the NCAA has been diametrically

opposed to any movement toward compensation, as things stand now, the

NCAA appears willing to consider some sort of NIL scheme so long as the

payment system is “consistent with the collegiate model.”

To get to this

point, athletes have used the legal system to challenge aspects of “amateur-

ism” and have achieved varying degrees of success.

However, courts have

been hesitant to upend a college athletic system that has become a unique

staple of American sport.

Part of the problem could be that athletes have

typically requested “pay-to-play” in which member schools directly pay

athletes for their participation.

For reasons discussed below, “pay-to-play”

is not acceptable to the courts, nor is it a reasonable solution to the legal

quandary surrounding compensating college athletes.

In 1906, NCAA member schools at the time adopted the “Principle of

Amateurism” as a core tenet of the NCAA system.

This principle forbids

athletes from receiving any compensation or benefit for their NIL, and it

also forbids athletes from receiving any direct payment or benefit for their

athletic prowess.

The NCAA justifies the rule in a twofold manner: first, it

argues that amateurism prevents college athletes from exploitation,

and

second, it argues that amateurism creates a clear demarcation between col-

lege and professional sports.

www.washingtonpost.com/sports/2019/05/22/should-college-athletes-be-paid-

some-lawmakers-presidential-candidate-say-yes/ [https://perma.cc/QK8T-TMKZ].

See id.

See Board of Governors Starts Process to Enhance Name, Image & Likeness Opportuni-

ties, Nat’l Collegiate Athletic Ass’n (Oct. 29, 2019), http://www.ncaa.org/

about/resources/media-center/news/board-governors-starts-process-enhance-name-

image-and-likeness-opportunities [https://perma.cc/TYX3-ATPG] [hereinafter Boa

rd of Governors].

See, e.g., O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir.

2015); In re Nat’l Collegiate Athletic Ass’n, Student-Athlete Name & Likeness Li-

censing Litig., 724 F.3d 1268 (9th Cir. 2013); Marshall v. ESPN Inc., 111 F.Supp.

3d 815 (M.D. Tenn. 2015).

See O’Bannon, 802 F.3d at 1053, 1079.

See O’Bannon v. Nat’l Collegiate Athletic Ass’n, 7 F. Supp. 3d 955, 971–73

(N.D. Cal. 2014).

See O’Bannon, 802 F.3d at 1053, 1079; see also infra Part III.

See NCAA Division I Manual, supra note 5, at § 2.9.

See id.

See NCAA Opposition to Petition for Rehearing en banc at *3, O’Bannon v.

NCAA, 802 F.3d 1049 (9th Cir. 2015) (No. 14-16601), LEXIS 63 [hereinafter

NCAA O’Bannon Brief].

See id.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 8 4-FEB-21 15:06

182 Harvard Journal of Sports & Entertainment Law / Vol. 12

Considering the wide range of ongoing litigation, state and congres-

sional action (or inaction), and a general jockeying for favorable position in

the sphere of public perception, there is little question that the issue of

paying college athletes presents a quagmire lacking an apparent answer.

Athletes are seeking “pay-to-play,” but the courts are unwilling to upend

the current system to such an extent.

Meanwhile, some states are imple-

menting payment systems while other states are not, which will potentially

create an uneven playing field when schools recruit athletes.

Additionally, professional athletes like Los Angeles Lakers star LeBron

James (who bypassed the NCAA by going straight to the NBA)

and San

Francisco 49ers cornerback Richard Sherman (who turned professional after

playing college football at Stanford)

use their platforms to speak out for

compensating athletes with just as much passion as opponents argue that

paying athletes will destroy college sports.

To resolve this pervasive con-

flict, the Third-Party Payment system could fulfill NCAA, member school,

and student-athlete needs by offering a viable legal compromise that pre-

serves the college athletics model and offers student-athletes reasonable

compensation for their valuable talents.

The first part of this Article analyzes the historical landscape behind

the current push for athletic compensation. Athletes have challenged aspects

of the amateur system since the 1940s to varying degrees of success.

To-

day, the bulk of litigation involves antitrust disputes as to whether the

NCAA system violates Section I of the Sherman Act.

See, e.g., O’Bannon, 802 F.3d at 1049; In re NCAA Student-Athlete Name &

Likeness Licensing Litig., 724 F.3d 1268 (9th Cir. 2013); Marshall v. ESPN Inc.,

111 F. Supp. 3d 815 (M.D. Tenn. 2015).

See Wright, supra note 25.

See Marc Stein, Cleveland is Officially Jamestown Now, ESPN (June 27, 2003),

https://www.espn.com/nbadraft/d03/story?id=1573511 [https://perma.cc/FV3E-T5

7Q].

Zac Al-Khateeb, Richard Sherman at Stanford: Revisiting the 49er’s College Foot-

ball, Academic Careers, Sporting News (Feb. 2, 2020), https://www.sporting

news.com/us/nfl/news/richard-sherman-college-football-academic-careers/1xc5bxn

4n0rv4114dnjwwzin1a [https://perma.cc/42M5-VAH6].

See Taylor Branch, The Shame of College Sports, Atlantic, Oct. 2011, https://

www.theatlantic.com/magazine/archive/2011/10/the-shame-of-college-sports/

308643/ [https://perma.cc/S7LE-H7EK].

See, e.g., O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir.

2015); O’Brien, infra note 63; Kupec, infra note 71.

See 15 U.S.C § 1; see also O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802

F.3d 1049 (9th Cir. 2015); Nat’l Collegiate Athletic Ass’n v. Bd. of Regents, 468

U.S. 85 (1984).

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 9 4-FEB-21 15:06

2021 / Third-Party Payments 183

The second part of this Article discusses “pay-to-play.” For reasons

ranging from potential Title IX

violations to general public relations

nightmares, “pay-to-play” is not a viable solution to the current standoff.

This part analyzes the issues plaguing the “pay-to-play” model in turn.

Additionally, this section argues that when confronted with an antitrust

challenge to the current system, the legal system will not recognize “pay-to-

play” as a less restrictive alternative to the current system when applying

the antitrust “rule of reason.”

Furthermore, the NCAA and member

schools will not implement “pay-to-play” on their own. In some ways, the

NCAA is correct in arguing that “pay-to-play” could kill the goose that laid

the golden egg.

Finally, the third part of this Article introduces and analyzes the

Third-Party Payment system.

In contrast to “pay-to-play,” the Third-

Party Payment system is a reasonable solution to the legal quandary sur-

See 20 U.S.C. §§ 1681–1688.

While “pay-to-play” does not implicate equal pay laws directly, one area that

may offer a comparison for universities that pay females less than male athletes is

the current struggle for the U.S. Women’s Soccer Team to achieve equal pay. In a

legal filing, the U.S. Soccer Federation asserted that female players have less skill

and responsibility than their male counterparts. The public outcry has been enor-

mous and the head of the Federation was forced to resign. See Lauren M. Johnson,

US Soccer Claims It Won’t Pay Women Equally Because Being a Male Player Requires

More Skill, CNN (Mar. 12, 2020, 5:52 AM), https://www.cnn.com/2020/03/11/us/

us-soccer-federation-court-document-trnd/index.html [https://perma.cc/2MEZ-HFL

P].

See, e.g., Jane McManus, Pressure to Pay Student-Athletes Carries Question of Title

IX, ESPN (Apr. 19, 2016), http://www.espn.com/espnw/culture/feature/article/

15201865/pressure-pay-student-athletes-carries-question-title-ix [https://perma.cc/

A7YA-URXT]; Brian Burnsed, Athletics Departments That Make More Than They

Spend Still a Minority, Nat’l Collegiate Athletic Ass’n (Sept. 18, 2015), http://

www.ncaa.org/about/resources/media-center/news/athletics-departments-make-

more-they-spend-still-minority [https://perma.cc/ABD9-XWPF]; Michelle Brutlag

Hosick, NCAA Working Group to Examine Name, Image and Likeness, Nat’l Col-

legiate Athletic Ass’n (May 14, 2019), http://www.ncaa.org/about/resources/me-

dia-center/news/ncaa-working-group-examine-name-image-and-likeness [https://

perma.cc/266A-6BHD].

See David A. Grenardo, The Blue Devil’s in the Details: How a Free Market Ap-

proach to Compensating College Athletes Would Work, 46 Pepp. L. Rev. 203, 214

(2019).

See Hosick, supra note 47.

See Len Simon, NCAA Should Allow College Athletes to Cash in on Endorsements,

S.F. Chron. (Dec. 24, 2018), https://www.sfchronicle.com/opinion/openforum/arti-

cle/NCAA-should-allow-college-athletes-to-cash-in-on-13489721.php [https://per

ma.cc/4F86-29MU].

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 10 4-FEB-21 15:06

184 Harvard Journal of Sports & Entertainment Law / Vol. 12

rounding paying college athletes. After discussing how the Third-Party Pay-

ment system can address each issue that plagues the “pay-to-play” system,

we conclude that the Third-Party Payment system can be implemented in a

variety of ways. In particular, it could be implemented through litigation

—

either through a court order or a settlement agreement. Additionally, Con-

gress and state legislatures can implement it within their jurisdictions.

However, the easiest and best way to implement the Third-Party Payment

system is through an amendment to the NCAA Division I Manual.

II. AMATUERISM IS A CORE TENET OF THE NCAA

The NCAA was founded in 1905 when sixty-two member schools

sought to reform college athletics, and in part, to address the issue of schools

hiring professional athletes to play on college teams.

A year later, in 1906,

the member schools adopted the “Principle of Amateurism” as a core tenet

of the NCAA.

To satisfy this core tenet, athletes cannot be paid for their

athletic prowess.

In justifying the need for this tenet, the NCAA states

that the “ ‘basic purpose’ of [the principle of amateurism] ‘is to maintain

inter-collegiate athletics as an integral part of the educational program.’”

Further, the NCAA offers a distinct sports product to consumers separate

from professional leagues and argues that the amateurism rules create a clear

line of demarcation from professional sports.

Thus, the NCAA presents two primary arguments for maintaining am-

ateurism. First, it argues that allowing athletes to be paid would upset the

balance between member schools.

Ideally, sports leagues enforce rules that

keep teams from becoming too good and dominating competition.

The

NCAA argues that amateurism rules fall into this category. The NCAA’s

second primary argument is that college sports in general are distinct from

professional sports and that the demarcation between the two promotes con-

sumer choice.

Under this theory, the NCAA contends that amateurism

rules are a necessary requirement for a sports “product” that is distinguisha-

See NCAA O’Bannon Brief, supra note 36, at *2.

See id.

Id. at *3.

See id.

See NCAA O’Bannon Brief, supra note 36, at *2.

See Nat’l Collegiate Athletic Ass’n v. Bd. of Regents, 468 U.S. 85, 101–03

(1984).

See id.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 11 4-FEB-21 15:06

2021 / Third-Party Payments 185

ble from professional sports.

The thinking goes that college athletes

—

who

are playing “for the love of the game” and nothing more

—

are more passion-

ate than their professional counterparts.

Athletes have challenged the

NCAA on both arguments in court.

A. Athletes Have Historically Challenged Aspects of the Amateurism Model in

Court

Athletes have not been reticent to legally challenge the restrictive ama-

teur rules and the expansive control member schools and the NCAA main-

tain over student-athletes. In the 1940s, legendary quarterback Davey

O’Brien

challenged Pabst Blue Ribbon in court for its use of his photo-

graph without his consent.

The Fifth Circuit framed O’Brien’s challenge

with a biblical metaphor and began its opinion, “[p]laintiff, in physique as

in prowess as a hurler, a modern David, is a famous football player.”

As a

famous football player, O’Brien understood his platform and was a member

of the Allied Youth of America

—

an organization dedicated to eradicating

drinking among young people.

O’Brien received opportunities to endorse

alcohol products after turning professional, which he steadfastly refused.

However, O’Brien also allowed the Texas Christian University publicity de-

partment to take, use, and distribute his photos while he played for the

Horned Frogs.

O’Brien ultimately lost his case because although he did

not consent, Pabst Blue Ribbon paid his school, Texas Christian University,

to use the photograph.

The court distinguished O’Brien’s alleged injury,

that the image advertising beer caused him damages, from a case in which

O’Brien sued for the value of his picture in the advertisement.

While this

See NCAA O’Bannon Brief, supra note 36, at *2.

See id.

See, e.g., O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir.

2015); In re Nat’l Collegiate Athletic Ass’n Student-Athlete Name & Likeness Li-

censing Litig., 724 F.3d 1268 (9th Cir. 2013); Marshall v. ESPN Inc., 111 F. Supp.

3d. 815 (M.D. Tenn. 2015).

Today, the award for best collegiate quarterback is named after O’Brien.

See O’Brien v. Pabst Sales Co., 124 F.2d 167, 168 (5th Cir. 1941).

Id.

See id. at 168-69.

See id. at 169.

See id.

See id. at 168; see also Sean Hanlon & Ray Yasser, “J.J. Morrison” and his Right

of Publicity Lawsuit Against the NCAA, 15 Vill. Sports & Ent. L.J. 241, 260

(2008).

See O’Brien v. Pabst Sales Co., 124 F.2d 167, 170 (5th Cir. 1941).

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 12 4-FEB-21 15:06

186 Harvard Journal of Sports & Entertainment Law / Vol. 12

case did not involve antitrust in any sense, and was instead an early “right of

publicity” case, it is significant that the court determined that the NCAA

member school could provide the necessary consent to use an athlete’s NIL.

In the 1970s, University of North Carolina quarterback Chris Kupec

sued the Atlantic Coast Conference (“ACC”), a collective of NCAA member

schools, partly on an antitrust theory.

Kupec alleged in his complaint that

“[t]he actions of the member institutions of the Atlantic Coast Conference

in combining to set maximum compensation to be received by student ath-

letes . . . have unreasonably restrained . . . commerce . . . in violation of the

Sherman Act.”

While Kupec lost his case, and the court never addressed

his antitrust theory, antitrust has become the playing field for current litiga-

tion battles between athletes and the NCAA.

After the NCAA gave the Southern Methodist University football team

the “death penalty” in 1987 by ending the program for widespread and

systematic violations of NCAA rules,

SMU athletes and cheerleaders sued

the NCAA on an antitrust theory, arguing that by ending the program, the

NCAA unlawfully restricted the benefits the athletes could receive.

Ulti-

mately, this action was dismissed because the court determined that several

plaintiffs lacked standing and the plaintiffs who had standing failed to

“state a claim upon which relief could be granted.”

These early antitrust cases and arguments are important because in

1988, the Supreme Court slammed the door on challenging the NCAA

under constitutional law theories when it determined that the NCAA was

not a “state actor” in NCAA v. Tarkanian.

But, when one door shuts,

another door opens, and athletes have found varying levels of success chal-

lenging the NCAA under antitrust theories.

In the early 2000s, the NCAA determined that skier, model, and ce-

lebrity Jeremy Bloom

was ineligible to play college football at the Univer-

Kupec played at the University of North Carolina from 1972 until 1974.

For more on the complaint, see Ray Yasser et al., Sports Law: Cases and

Materials 253 (8th ed. 2015).

Id.

See Eric Dodds, The ‘Death Penalty’ and How the College Sports Conversation has

Changed, Time (Feb. 25, 2015), https://time.com/3720498/ncaa-smu-death-penalty/

[https://perma.cc/3YPV-TXL6].

See McCormack v. Nat’l Collegiate Athletic Ass’n., 845 F.2d 1338 (5th Cir.

1988).

Yasser et al., supra note 71, at 240.

Nat’l Collegiate Athletic Ass’n v. Tarkanian, 488 U.S. 179 (1988).

See Associated Press, No Football for Bloom While Taking Ski Endorsements,

ESPN (Aug. 24, 2004), https://www.espn.com/college-football/news/story

?id=1867015 [https://perma.cc/U6XH-45V2].

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 13 4-FEB-21 15:06

2021 / Third-Party Payments 187

sity of Colorado because he received compensation and benefits for his skiing

ability.

Bloom filed suit seeking a permanent injunction on an antitrust

theory.

The court determined that the amateur rules did not violate anti-

trust law and subsequently refused to permit an injunction.

Interestingly,

in this case, the NCAA saw the writing on the wall and amended the Divi-

sion I Manual so that athletes who received compensation and benefits for

one sport could still maintain amateur status in other sports.

Former

Oklahoma State University quarterback Brandon Weeden is an example of

an athlete who benefited from this rule change, as he was able to pursue a

collegiate football career after pitching in the New York Yankees

organization.

i. Courts Recognize Problems with the Current Amateur System but

Are Unwilling to Upend a System That Has Become a

Stalwart of American Sport.

A discussion of recent antitrust cases requires an understanding of the

antitrust “rule of reason.” In deciding antitrust claims, courts initially de-

termine whether a defendant’s conduct violates the Sherman Act.

This

1890 Act makes it unlawful for entities to unreasonably restrain trade

within a market.

The first step of this analysis is to determine the unlawful

conduct, and the subsequent step is to determine whether the violation is a

per se violation or is to be analyzed under the rule of reason.

Typically, per se violations are egregious restraints such as price fixing,

group boycotts, collusive geographic sales agreements, etc.

If an alleged

violation does not meet the per se standard, then the rule of reason is ap-

See id; Bloom v. Nat’l Collegiate Athletic Ass’n, 93 P.3d 621 (Colo. App.

2004).

See id. at 622.

See id. at 625–26.

See Tully Corcoran, Jeremy Bloom and the Shifting Sands of the Rules, Sports

Illustrated (Oct. 31, 2019), https://www.si.com/college/colorado/football/jeremy-

bloom-ncaa-rules [https://perma.cc/MP5Q-B7VT].

See John Henderson, QB Brandon Weeden Trades Minor-League Baseball for

Oklahoma State Football, Denver Post (Aug. 8, 2010), https://www.denver

post.com/2010/08/08/qb-brandon-weeden-trades-minor-league-baseball-for-

oklahoma-state-football/ [https://perma.cc/PFY9-BTE2].

Sherman Antitrust Act of 1890, 15 U.S.C §1 (2018).

See id.

See Grenardo, supra note 48, at 214.

See id.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 14 4-FEB-21 15:06

188 Harvard Journal of Sports & Entertainment Law / Vol. 12

plied.

The rule of reason test first requires the plaintiff to show that the

defendant’s conduct restricts competition and in doing so hurts consumers.

If a plaintiff meets this burden, then the defendant has the opportunity to

show that the anticompetitive behavior has a procompetitive justification.

Once a defendant meets this standard, the burden shifts back to the plaintiff

to show that there is a less restrictive alternative that will serve the procom-

petitive justification.

There is a distinct paradox unique to sports antitrust claims. To en-

hance parity among member teams in sport, it is necessary to restrict com-

petition. Courts keep this core principle in mind while analyzing sports

leagues for antitrust violations.

This is because sports competition requires

an even playing field to be most effective, and parity has been achieved

through a variety of anticompetitive means in professional leagues including

salary caps

and maximum levels of compensation.

At the amateur level,

NCAA member schools have a set number of scholarships available to grant

to student-athletes which keeps certain powerhouse schools from cornering

the market on talent.

Due to this paradox, even though many antitrust claims in the sports

setting appear to be per se violations of the Sherman Act, courts instead

apply the rule of reason.

Because of this quirk in sports law, a viable solu-

tion to the legal quandary surrounding paying college athletes should be a

system that satisfies the rule of reason.

O’Bannon v. National Collegiate Athletic Association is, thus far, the most

significant antitrust case regarding compensating college athletes.

The

See id.

See Grenardo, supra note 48, at 214.

See Nat’l Collegiate Athletic Ass’n v. Bd. of Regents, 468 U.S. 85, 101–03

(1984).

See generally Tyler Brooke, How Does the Salary Cap Work in the NFL?,

Bleacher Report (June 10, 2013), https://bleacherreport.com/articles/1665623-

how-does-the-salary-cap-work-in-the-nfl [https://perma.cc/JFT3-9JYP].

See generally Morten Jensen, Mission Impossible: Fixing the NBA Max Contract

System, Forbes (July 10, 2019), https://www.forbes.com/sites/mortenjensen/2019/

07/10/mission-impossible-fixing-the-nba-max-contract-system/#32828633193b

[https://perma.cc/V643-2FDG].

See generally Peter Keating, The Silent Enemy of Men’s Sports, ESPN (May 22,

2012), https://www.espn.com/espnw/title-ix/story/_/id/7959799/the-silent-enemy-

men-sports [https://perma.cc/KCB9-JRGK].

See Bd. of Regents, 468 U.S. at 101–03.

See O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir.

2015).

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 15 4-FEB-21 15:06

2021 / Third-Party Payments 189

crux of this massive class action involved the NCAA’s agreement with EA

Sports to produce lucrative sports simulation video games, and the NCAA’s

subsequent decision to pocket the proceeds instead of compensating the ath-

letes for the use of their NIL.

Ed O’Bannon, an All-American basketball

player at the University of California – Los Angeles,

sued the NCAA on

behalf of all former college athletes who appeared in the EA Sports games.

The district court found that the NCAA’s amateurism rules violated Section

I of the Sherman Act. The court issued an injunction to the NCAA requir-

ing it to cease barring schools from 1) offering full cost-of-attendance sti-

pends and 2) providing deferred payments to student-athletes of up to five

thousand dollars a year for each year the athlete participated in an NCAA

sport.

100

On appeal, the Ninth Circuit applied the antitrust rule of reason and

affirmed in part and reversed in part.

101

While the court determined that the

NCAA violated Section I of the Sherman Act, it was unwilling to approve

“pay-to-play” as a less restrictive alternative.

102

In essence, the athletes car-

ried their burden at step one of the rule of reason analysis (showing the

NCAA’s conduct restricts competition and in doing so hurts consumers),

the NCAA met its burden at step two (showing that their anticompetitive

behavior has a procompetitive justification), and the athletes failed at step

three (failing to offer a less restrictive alternative that would serve the

procompetitive justification).

103

Instead of implementing “pay-to-play,” the

Ninth Circuit affirmed the district court ruling prohibiting the NCAA from

barring schools from offering full cost-of-attendance stipends.

104

Accord-

ingly, the court reversed the lower court’s deferred payment order.

105

date, EA Sports has not produced any subsequent NCAA video games in

light of the NCAA’s refusal to allow EA to negotiate with the athletes

directly.

106

See id.

See id. at 1055.

See id.

100

See id. at 1061.

101

See O’Bannon, 802 F.3d at 1053.

102

See id.

103

See id.

104

See id. at 1079.

105

See id.

106

See Kevin Webb, Electronic Arts Wants to Make College Sports Games Again, But

the Biggest Obstacle is Still the NCAA, Business Insider (Oct. 22, 2019), https://

www.businessinsider.com/electronic-arts-ea-college-sports-ncaa-football-basketball-

2019-10 [https://perma.cc/56P6-KQAX].

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 16 4-FEB-21 15:06

190 Harvard Journal of Sports & Entertainment Law / Vol. 12

In March 2019, the next potential landscape-shifting case, Alston v.

NCAA, was decided at the district level and affirmed at the appellate court

level.

107

Although the Supreme Court has granted certiorari in this case, as it

stands, there will not be a huge shift towards “pay-to-play,” as the lower

courts again proved hesitant to upend the current system.

108

In his synopsis

of the case, Len Simon

109

noted that, if the case were a football game, the

NCAA would have won 55-3.

110

Once again, the lower courts recognized

that the NCAA violated antitrust laws, but only allowed for broadening the

definition of “education-related” benefits.

111

Presumably, this means that

schools could provide benefits ranging from lab equipment to scholarships

for graduate school without violating NCAA rules.

112

While broadening ed-

ucational benefits would be a small step forward for athletes, this remains a

far cry from “pay-to-play.”

Much like O’Bannon, the Alston decision thus far signals that “pay-to-

play” is not a less restrictive alternative palatable to the court.

113

Because

“pay-to-play” fails to pass muster, the NCAA is a big winner in the current

antitrust litigation battles.

114

Nevertheless, the fact that courts are willing

to recognize that the amateur system violates antitrust law means that there

is a possibility that a proposal could ultimately pass the antitrust rule of

reason as long as it presents a less restrictive alternative to the NCAA’s

procompetitive justification.

III. THE “PAY-TO-PLAY” ALTERNATIVE IS NOT A VIABLE

SOLUTION TO THE CURRENT LEGAL QUANDARY

As discussed above, courts thus far have been unwilling to impose

“pay-to-play” upon the NCAA as a less restrictive alternative under the rule

107

See In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Antitrust Liti-

gation, 958 F.3d 1239 (9th Cir. 2019); see also Simon, supra note 4.

108

See In re Nat’l Collegiate Athletic Ass’n, 958 F.3d at 1271.

109

Len Simon, of Counsel with Robbins Geller Rudman & Dowd in San Diego,

is a lawyer and law professor. He has handled sports-related litigation, antitrust

cases, and taught Sports and the Law at the University of San Diego for more than a

decade. See Leonard B. Simon, Robbins Geller Rudman & Dowd LLP, https://

www.rgrdlaw.com/attorneys-Leonard-B-Simon.html [https://perma.cc/D6EU-

HU7E] (last visited Jan. 6, 2021).

110

See Simon, supra note 4.

111

See In re Nat’l Collegiate Athletic Ass’n, 958 F.3d at 1243–44.

112

See Simon, supra note 4.

113

See id.

114

See id.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 17 4-FEB-21 15:06

2021 / Third-Party Payments 191

of reason analysis.

115

In particular, courts consider requiring member schools

to directly compensate athletes for their participation in college athletics to

be too drastic a departure from the current system.

116

Furthermore, if col-

leges are forced to directly pay student-athletes, the clear demarcation be-

tween college and professional sports would be obliterated.

117

Indeed, part of

the hesitance in imposing “pay-to-play” could be that amateur sports in

general present a procompetitive alternative to professional sports that actu-

ally increases consumer choice by offering a collegiate option and profes-

sional option.

118

A reasonable solution to the legal quandary surrounding

paying athletes must be a proposal that allows college sports to be distinct

from professional sports.

119

A. Even if “Pay-to-Play” Were Imposed, There Are Serious Issues That Will

Arise When It Is Implemented.

“Pay-to-play” will implicate concerns regarding Title IX, funding for

non-revenue sports, the payment model itself, and “steering”

—

the practice

of paying athletes to entice them to a certain school. Regarding Title IX,

schools will likely end up paying male athletes more than their female coun-

terparts. This could lead to violations of federal law and expose schools to

litigation. “Pay-to-play” could also create serious issues for athletic program

funding across American universities because the vast majority of college

programs do not turn a profit that could be used to pay student-athletes.

120

Instead, the standard athletic department uses revenue generated by lucra-

tive sports such as football and men’s basketball to fund the plethora of

other sports teams that the university sponsors.

121

In addition to the aforementioned issues, universities directly paying

athletes for their participation on the playing field increases tension regard-

ing the line between professional and college sports, and it also opens the

115

See, e.g., O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th

Cir. 2015); In re NCAA Student-Athlete Name & Likeness Licensing Litig., 724

F.3d 1268 (9th Cir. 2013); Marshall v. ESPN Inc., 111 F. Supp. 3d. 815 (M.D.

Tenn. 2015).

116

See NCAA O’Bannon Brief, supra note 36, at *1-2.

117

See id.

118

See Nat’l Collegiate Athletic Ass’n v. Bd. of Regents, 468 U.S. 85, 101–03

(1984).

119

See generally id.

120

See Burnsed, supra note 47.

121

See id.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 18 4-FEB-21 15:06

192 Harvard Journal of Sports & Entertainment Law / Vol. 12

door for the steering of talented athletes to certain schools by wealthy

benefactors.

122

i. “Pay-to-Play” Likely Violates Current Title IX Regulations

Title IX requires that universities provide financial assistance to men

and women on an equal basis.

123

Should “pay-to-play” take effect among

NCAA member schools, there would be serious issues regarding what ath-

letes and which programs receive compensation for participation.

124

Because

most revenue generated by the NCAA stems from the men’s championship

basketball tournament, men’s basketball players would be able to receive

compensation from their schools for their participation in that sport.

125

However, women’s basketball is not a “money” sport.

126

Should men’s bas-

ketball players receive compensation, while their female counterparts do not,

member schools would potentially open themselves up to Title IX litigation

and a public relations disaster.

127

Title IX ensures equal educational opportunities for men and wo-

men.

128

Because college athletics is considered part of the educational pro-

cess, any attempt to pay men more than women would trigger Title IX

protections.

129

Ironically, the NCAA’s insistence that college athletics is a

part of the educational process and remains distinct from professional sports

actually increases the likelihood that “pay-to-play” would trigger Title IX

scrutiny.

130

While it is true that athletes in “money” sports are uniquely

situated among their peers in “Olympic” sports, courts have not drawn this

distinction when interpreting Title IX.

131

Instead, according to Mary

122

See Marc Tracy, NCAA Coaches, Adidas Executive Face Charges; Pitino’s Program

Implicated, N.Y. Times (Sept. 26, 2017), https://www.nytimes.com/2017/09/26/

sports/ncaa-adidas-bribery.html [https://perma.cc/7NEB-TFJL].

123

See 20 U.S.C. §§1681–1688.

124

See McManus, supra note 47.

125

See Rovell, supra note 1.

126

See generally id.

127

See McManus, supra note 47.

128

See 20 U.S.C. §§ 1681–1688.

129

See NCAA O’Bannon Brief, supra note 36, at *2; see also NCAA Division I

Manual art. 1.3.1 (“The competitive athletics programs of member institutions are

designed to be a vital part of the educational system. A basic purpose of this Associ-

ation is to maintain intercollegiate athletics as an integral part of the educational

program. . . .”).

130

See id.

131

See Mechelle Voepel, Title IX a Pay-for-Play Roadblock, ESPN (July 15, 2011),

https://www.espn.com/college-sports/story/_/id/6769337/title-ix-seen-substantial-

roadblock-pay-play-college-athletics [https://perma.cc/K6K2-VNQS].

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 19 4-FEB-21 15:06

2021 / Third-Party Payments 193

Gambardella,

132

“[w]hat the court would say is, it’s not an equally meaning-

ful opportunity if the experience is richer, for lack of a better word, in some

sports.”

133

Because Title IX arguments cut against “pay-to-play,” some analysts

argue that Title IX is simply a red herring that the NCAA uses to continue

fighting compensation for athletes.

134

In making this argument, advocates

for “pay-to-play” argue that when confronted with an issue of pay, courts

should read Title IX as “coextensive with the Equal Pay Act of 1963 and

the Civil Rights Act of 1964.”

135

When taken together, courts have upheld

greater pay for coaches for men’s teams when that coach’s work involves

greater “skill, effort, or responsibility.”

136

For example, in Stanley v. Univer-

sity of Southern California, the Ninth Circuit “noted that it may be permissi-

ble for the University of Southern California to offer higher pay to its men’s

basketball coach because the men’s team generated far greater annual reve-

nues.”

137

Further support for this argument is found in looking at the cur-

rent pay gap between men’s and women’s basketball coaches.

138

analogizing coaching salaries to college athletes, the argument concludes

that players should likewise be able to receive unequal compensation in ac-

cordance with revenue.

139

This argument is fatally flawed. As previously discussed, Title IX is

triggered when unequal educational opportunities are offered for men and

women.

140

While the issue of paying coaches finds its source in employment

law and the Equal Pay Act, “pay-to-play” would trigger Title IX because

student-athletes would receive compensation as part of their educational

process, and there would almost certainly be a disparate impact felt by fe-

132

Mary Gambardella is an attorney specializing in employment litigation. In

the context of Title IX, Ms. Gambardella represented Quinnipiac University in a

suit brought by the women’s volleyball team. See id.

133

Id.

134

See Marc Edelman, When it Comes to Paying College Athletes, Title IX is Just a

Red Herring, Forbes (Feb. 4, 2014), https://www.forbes.com/sites/marcedelman/

2014/02/04/when-it-comes-to-paying-college-athletes-is-title-ix-more-of-a-red-her-

ring-than-a-pink-elephant/#101d7f6c1bde [https://perma.cc/D5RK-BHDZ].

135

Id.

136

Id.

137

Stanley v. Univ. of S. Cal., 13 F.3d 1313 (9th Cir. 1994); see also Edelman,

supra note 134.

138

See James K. Gentry & Raquel Meyer Alexander, Pay for Women’s Basketball

Coaches Lags Far Behind That of Men’s Coaches, N.Y. Times (Apr. 2, 2012), https://

www.nytimes.com/2012/04/03/sports/ncaabasketball/pay-for-womens-basketball-

coaches-lags-far-behind-mens-coaches.html [https://perma.cc/SJ5B-8NHS].

139

See Edelman, supra note 134.

140

See 20 U.S.C. §§1681–1688.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 20 4-FEB-21 15:06

194 Harvard Journal of Sports & Entertainment Law / Vol. 12

male athletes who would undoubtedly receive less compensation than their

male counterparts in “money” sports. Because the NCAA has determined

that college sports programs are part of the educational experience for stu-

dent-athletes, unequal compensation among male and female athletes would

trigger Title IX regardless of whether or not schools can make business deci-

sions about how to compensate coaches.

Additionally, even if “pay-to-play” was found not to trigger Title IX

protections, universities that paid female athletes less than male athletes

would be skewered by public perception.

141

Given the recent publicity sur-

rounding the fight of the U.S. Women’s National Soccer Team

(“USWNT”) to achieve equal pay,

142

it is a near certainty that advocates

would rally around female college athletes on social media, through demon-

strations and other public displays of support. A college corollary to the

USWNT could occur at the University of Connecticut (“UConn”) should

“pay-to-play” be implemented. Much like the USWNT faring better inter-

nationally than the men’s U.S. National Team, UConn’s women’s basketball

program is perhaps the most dominant sports program in American sports

history

143

—

and the women’s program is certainly more successful than the

men’s program.

144

Should the UConn women be paid less than UConn men,

the public outcry would be enormous.

Because “pay-to-play” likely implicates Title IX scrutiny, “pay-to-

play” is not a reasonable solution to the legal quandary surrounding paying

college athletes. Instead, a reasonable solution is one that can either pass

Title IX muster or bypass it altogether.

ii. Non-Revenue Generating College Sports Programs Would Be

Detrimentally Affected if “Pay-to-Play” Were Implemented

While it is true that the NCAA makes over $1 billion in revenues from

major sports, it is important to note that revenue is not profit.

145

Instead,

141

See Johnson, supra note 46.

142

See David Close & Wayne Sterling, U.S. Women’s National Team Granted Class

Action Status in Equal-Pay Lawsuit, CNN (Nov. 8, 2019), https://www.cnn.com/

2019/11/08/sport/uswnt-soccer-equal-pay-lawsuit-class-action/index.html [https://

perma.cc/53ZD-C97P]; see also Johnson, supra note 46.

143

See Jan Diehm, 111 Wins and Counting: The Numbers Behind UConn Women’s

Basketball, One of the World’s Most Dominant Teams, Guardian (Jan. 30, 2020),

https://www.theguardian.com/sport/ng-interactive/2017/mar/29/uconn-womens-

basketball-ncaa-most-dominant-team-in-sports-interactive [https://perma.cc/

XNL8-VSVG].

144

See id.

145

See Rovell, supra note 1.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 21 4-FEB-21 15:06

2021 / Third-Party Payments 195

the vast majority of these funds are distributed back to the member schools

to fund their athletic programs.

146

It is critical that the monies go to fund

member school programs because most collegiate athletic programs operate

at a deficit.

147

Schools use revenues generated by football and men’s basket-

ball to subsequently fund the other sports programs that do not generate

revenue.

148

If “pay-to-play” were implemented, most of the money generated by

“money” sports would presumably go to paying the athletes competing in

those sports instead of funding other sports programs.

149

This presents seri-

ous concerns regarding the future of these “Olympic”

—

or non-revenue gen-

erating

—

sports. Should schools determine that maintaining a competitive

football and/or men’s basketball team is worth more than funding a wres-

tling or volleyball program, these “Olympic” programs would face the pos-

sibility of being cut from the athletic program. Not only would eliminating

sports have a deleterious effect on the athletes who are impliedly being told

that their craft, and educational experience, is worth less than a football

player or basketball player, but also cutting programs could implicate Title

IX as discussed above. This issue could also affect schools that choose not to

cut programs because they will have to find new programs to compete

against. Because “pay-to-play” would likely result in diminished athletic

programs, it is not a reasonable solution to the legal quandary surrounding

paying athletes.

iii. A “Pay-to-Play” Scheme Would Obliterate the Line Between

Professional and College Sports

The NCAA is willing to discuss potential compensation schemes for

college athletes, but it asserts that any scheme must “maintain the clear

demarcation between professional and college sports. . . .”

150

“Pay-to-play”

does not provide for this required boundary between professional leagues

and college teams because “pay-to-play” would require that member schools

directly pay athletes for participating in college sports.

One hypothetical “pay-to-play” proposal even goes so far as to create a

salary cap for member schools and discuss standard college player con-

tracts.

151

Standard contracts and salary caps are hallmarks of professional

146

See Burnsed, supra note 47.

147

See Simon, supra note 50.

148

See Burnsed, supra note 47.

149

See Simon, supra note 50.

150

Hosick, supra note 47.

151

See Grenardo, supra note 48.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 22 4-FEB-21 15:06

196 Harvard Journal of Sports & Entertainment Law / Vol. 12

sports leagues in America.

152

Furthermore, because the athlete is paid di-

rectly by the school for playing college sports, the payment is tied directly

to athletic prowess

—

which is exactly the same as professional sports.

153

This is a serious problem for “pay-to-play” schemes because the NCAA

refuses to consider them valid proposals,

154

and because courts have long

recognized that college sports are a “product” distinctly different from pro-

fessional leagues.

155

Furthermore, thus far, courts have been unwilling to

recognize “pay-to-play” as a less restrictive alternative to the current sys-

tem.

156

Because the NCAA is unwilling on its own to consider “pay-to-

play” and the courts seemingly find the demarcation argument sympathetic,

“pay-to-play” is likely not a solution to the legal quandary surrounding

paying college athletes. Instead, a reasonable solution is one that maintains

the demarcation between professionals and amateurs.

iv. Steering Would be Nearly Impossible to Regulate Under the “Pay-

to-Play” System

Steering

—

or the use of money to entice recruits to attend specific

schools

—

is a major problem facing the NCAA today.

157

In September 2017,

Adidas executives; major basketball programs including Louisville, Arizona,

Auburn, and Oklahoma State; and middle men were caught up in a massive

fraud investigation led by U.S. attorneys.

158

This investigation found that

Adidas sponsored youth basketball teams and paid coaches and middle men

to nurture relationships with young, promising players.

159

Once those play-

ers reached the age that they were able to be recruited by college programs,

Adidas used the middle men to pay the recruited players and entice them to

attend schools sponsored by Adidas.

160

Obviously, this practice affects competitive balance, as players might

well attend the school that provides them with the best deal

—

even if that

deal is not entirely legal. Under a “pay-to-play” scheme, there would be

nothing stopping wealthy philanthropists or donors like George Kaiser or

152

See id.

153

See id.

154

See Hosick, supra note 47.

155

See Nat’l Collegiate Athletic Ass’n v. Bd. of Regents, 468 U.S. 85, 101–03

(1984).

156

See Simon, supra note 50.

157

See Tracy, supra note 122.

158

See id.

159

See Ray Yasser et al., Sports Law: Cases and Materials 652–53 (9th

ed. 2020).

160

See id.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 23 4-FEB-21 15:06

2021 / Third-Party Payments 197

Michael Case from paying the best quarterback prospect available to attend

the University of Tulsa or well-connected alumni like Jerry Jones from pay-

ing the best point guard to attend the University of Arkansas.

161

Wealthy

donors could have an outsized influence on competitive balance of major

college sports.

162

Additionally, if an athlete is strictly getting paid to play a

sport at a specific school, the demarcation between amateur and professional

sports would be eroded because the athlete is attending a specific school for

the sole purpose of the athlete’s athletic prowess.

In light of all of these issues, “pay-to-play” is not a viable solution to

the legal quandary surrounding paying college athletes. “Pay-to-play”

would trigger scrutiny under Title IX should male and female athletes be

compensated unequally, and stories of unequal treatment could create public

outcry against certain institutions.

163

This payment scheme would also put

“Olympic” sports programs in jeopardy because schools would not be able

to use football and men’s basketball revenue to fund non-revenue generating

sports.

164

On top of these issues, “pay-to-play” would also obliterate the line

between college and professional sports because universities would pay col-

lege athletes directly for their participation on the field.

165

In spite of “pay-

to-play’s” inadequacies in rectifying the legal quandary surrounding paying

college athletes, there is a reasonable solution available: third-party

payments.

IV. THE THIRD-PARTY PAYMENT SYSTEM IS A REASONABLE

SOLUTION TO THE LEGAL QUANDARY SURROUNDING

PAYING COLLEGE ATHLETES

The Third-Party Payment system would allow student-athletes to capi-

talize on their own names and likenesses. Third-Party Payment would allow

athletes to use their own fame to garner endorsements, sponsor products,

and negotiate deals, thus providing a reasonable compromise between col-

leges players and the NCAA.

166

In today’s social media landscape, top col-

161

These men all have the means to participate in steering should they choose to

do so.

162

See Yasser, et al., supra note 159.

163

See McManus, supra note 47.

164

See Burnsed, supra note 47.

165

See Simon, supra note 50.

166

See id.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 24 4-FEB-21 15:06

198 Harvard Journal of Sports & Entertainment Law / Vol. 12

lege athletes are famous before they arrive on campus,

167

and they gain more

notoriety based upon their exploits on the field or court. For example, Zion

Williamson had over 2.7 million followers on Instagram while at Duke, and

his domination of college hoops made him a household name.

168

As the

2019 NCAA basketball tournament ramped up, his picture was plastered on

TV promos advertising the tournament.

169

However, he was forced to relin-

quish his intellectual property rights in order to compete under the current

system.

170

The Third-Party Payment system would allow athletes like Mr. Wil-

liamson to negotiate with third parties for the right to use his NIL in adver-

tising, endorsements, etc. This is a right enjoyed by all Americans

—

except

for NCAA athletes. Critically, “pay-to-play” does not even concern itself

with this issue. While “pay-to-play” would allow athletes to receive com-

pensation for their performance on the court, but no more, Third-Party Pay-

ments would allow athletes to have the opportunity to capitalize on their

own intellectual property distinct from the playing field.

Ultimately, it is fundamentally unfair that athletes like Mr. William-

son cannot take advantage of their own intellectual property rights while the

NCAA rakes in millions of dollars by utilizing their NIL.

171

The Third-

Party Payment System would help address this issue by offering a reasonable

solution to the legal quandary surrounding paying college athletes.

A. The Third-Party Payment System Offers a Reasonable Solution to the Issues

Surrounding “Pay-to-Play.”

As discussed above, “pay-to-play” could create serious issues for mem-

ber schools relating to Title IX; the payment system itself; funding

“Olympic” sports; and steering. However, the Third-Party Payment system

does not have the same legal shortcomings.

167

See generally Matthew Foley, Can Mac McClung Do More Than Dunk?,

Bleacher Report (Mar. 6, 2020), https://bleacherreport.com/articles/2879229-can-

mac-mcclung-do-more-than-dunk [https://perma.cc/4YQS-RZ7S].

168

See Mina Kimes, The Education of Zion Williamson, ESPN (May 8, 2019),

https://www.espn.com/mens-college-basketball/story/_/id/26406892/the-education-

zion-williamson [https://perma.cc/D6ES-8NRF].

169

See id.

170

See NCAA Division I Manual, supra note 5 § 2.9.

171

See Rovell, supra note 1.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 25 4-FEB-21 15:06

2021 / Third-Party Payments 199

i. Third-Party Payments Would Not Trigger Title IX Scrutiny

Title IX prohibits discrimination on the basis of sex in educational

settings.

172

“Pay-to-play” would trigger Title IX scrutiny because the

NCAA justifies the current model as part of a student athlete’s educational

experience.

173

Additionally, if the member schools were required to pay col-

lege athletes directly, Title IX would be directly implicated because mem-

ber schools would likely offer heftier financial aid packages to athletes in

“money” sports than those offered to athletes in “Olympic” sports. Schools

could violate Title IX by not balancing financial aid between male and fe-

male athletes.

174

The Third-Party Payment system avoids this issue entirely. Under the

Third-Party Payment system, the member schools would not pay athletes

beyond what the NCAA and the courts have determined they can currently

give athletes. Instead, athletes could capitalize on their NIL with third par-

ties. These third parties would not trigger Title IX scrutiny because they are

not educational institutions.

175

While the NCAA’s Title IX concerns re-

garding “pay-to-play” are legitimate and not a “red herring,” the issue is

moot regarding Third-Party Payments.

176

ii. The Third-Party Payment System Would Not Affect How

Universities Fund “Olympic” Sports

University athletic programs fund the majority of their athletic pro-

grams with the revenue generated by men’s basketball and football.

177

Be-

cause of this, should schools have to reinvest that money into paying

basketball and football players, at best, the other athletic programs could

face funding shortages, and, at worst, they could risk being cut from the

athletic department.

178

The Third-Party Payment system addresses this issue because it does

not require member schools to pay student-athletes directly. This has two

benefits for athletes in “Olympic” sports that do not generate a profit for

172

See 20 U.S.C. §§ 1681–1688.

173

See id.

174

See id.

175

See McManus, supra note 47.

176

See Edelman, supra note 134.

177

See Burnsed, supra note 47.

178

See Phil Mushnick, Colleges Cutting Sports for ‘Revenue’ Doesn’t Add Up at All,

N.Y. Post (Dec. 28, 2013), https://nypost.com/2013/12/28/colleges-cutting-sports-

for-revenue-doesnt-add-up-at-all [https://perma.cc/3F8K-S3CR].

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 26 4-FEB-21 15:06

200 Harvard Journal of Sports & Entertainment Law / Vol. 12

the member schools. First, the Third-Party Payment system lets these ath-

letes capitalize on their NIL the same way “money” sport athletes would.

179

Under a “pay-to-play” system, “Olympic” sport athletes would almost cer-

tainly not receive any additional compensation from their member school.

180

However, in a Third-Party Payment system, “Olympic” athletes could capi-

talize on their NIL in niche markets.

For example, while Oklahoma State University has a competitive foot-

ball program, its Cowboy wrestling program is one of the most successful

athletic programs in the country.

181

OSU running back Chuba Hubbard

182

would have a national market on which he could capitalize as a potential

Heisman Trophy finalist; wrestler Daton Fix

183

could also capitalize on his

NIL in wrestling-centric markets. Particularly in and around the OSU cam-

pus in Stillwater, Fix would have opportunities to monetize his local fame.

Furthermore, for wrestling fans, his appeal would be even more widespread

as he attempts to make the 2020 U.S. Olympic Team.

The second major benefit the Third-Party Payment system would have

for “Olympic” athletes is that “Olympic” sports would not face additional

funding shortages because universities would not have to change how they

fund their athletic programs.

184

The Third-Party Payment system does not

implicate the current way that sports programs are funded because it does

not require member schools to pay athletes directly and instead moves the

potential compensation to third parties.

179

See Simon, supra note 50.

180

See id.

181

Cowboy wrestling is arguably the most successful wrestling program in

America. By any measure, it is one of the most dominant sports programs in the

country. See Dynasty Defined: Cowboy Wrestling Tradition, Okla. St., https://ok-

state.com/news/2017/3/12/dynasty-defined-cowboy-wrestling-tradition.aspx

[https://perma.cc/7DEB-UCDQ] (accessed Jan. 29, 2020).

182

Hubbard is a celebrated OSU running back who led the country in rushing

yards in 2019. See 2019 College Football Rushing Stats, Sports Reference, https://

www.sports-reference.com/cfb/years/2019-rushing.html [https://perma.cc/ZNP8-9

H7M] (last visited Jan. 6, 2021).

183

Fix is one of the most-decorated amateur wrestlers to come out of Oklahoma,

and he currently wrestles 133 pounds for OSU. In addition to his time with the

OSU Cowboys, Fix also wrestles on the U.S. National Team. See 2020-21 Wrestling

Roster, Okla. St. Univ., https://okstate.com/sports/wrestling/roster/daton-fix/9368

[https://perma.cc/PFJ8-U3BY] (last visited Jan. 6, 2021).

184

See Burnsed, supra note 47.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 27 4-FEB-21 15:06

2021 / Third-Party Payments 201

iii. The Third-Party Payment System Maintains a Clear Demarcation

Between Collegiate and Professional Sports

A reasonable solution to the legal quandary surrounding college players

must maintain a clear line of demarcation between college and professional

sports.

185

While “pay-to-play” would certainly blur the line between profes-

sionals and student-athletes, under the Third-Party Payment system there

would still be a clear boundary between the two.

As discussed above, “pay-to-play” requires member schools to directly

pay student-athletes, which means that compensation is directly tied to ath-

letic performance. Some advocates have gone so far as to propose salary caps,

contract negotiations, and other hallmarks of professional sports for college

athletics.

186

At the least, these proposals would blur the demarcation line

between professional and collegiate sports. At the extreme, it would obliter-

ate the line altogether. However, the demarcation is not a bad thing, and

maintaining a distinction should be a goal for student-athletes, universities,

and the NCAA.

187

The Third-Party Payment system maintains a clear demarcation be-

cause payments are tied to NIL intellectual property rights and are not asso-

ciated directly with play on the field. At the professional level, athletes are

able to capitalize on their NIL and they receive salaries from their teams.

188

Under the Third-Party Payment system, the distinction between profes-

sional athletes and college athletes is that college athletes would not receive

salaries from their member schools like professional athletes do from their

teams. Because courts have been sympathetic to the NCAA’s demarcation

argument, it is important that a reasonable solution maintains the line be-

tween professionals and amateurs.

189

The Third-Party Payment system does

so by allowing athletes to capitalize on their NIL while not requiring mem-

ber schools to directly pay athletes for athletic prowess.

185

See NCAA O’Bannon Brief, supra note 36, at *2–4.

186

See Grenardo, supra note 48.

187

See Nat’l Collegiate Athletic Ass’n v. Bd. of Regents, 468 U.S. 85, 101–03

(1984).

188

See, e.g., Brooke, supra note 92; Jensen, supra note 93.

189

See, e.g., O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049, 1053

(9th Cir. 2015).

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 28 4-FEB-21 15:06

202 Harvard Journal of Sports & Entertainment Law / Vol. 12

iv. Steering Can Be Regulated When It Is Done in the Open and Not

on a “Black Market”

Steering is a major issue regarding college athletics today, and both

“pay-to-play” and the Third-Party Payment system would increase the op-

portunities for athletes to be enticed into attending specific schools for com-

pensation. However, the Third-Party Payment system offers more reasonable

opportunities for regulating the practice.

While steering has become a hot-button issue in college sports, at its

core it is not significantly different from typical recruiting. All schools seek

to entice athletes to attend their school through better benefits, coaches,

facilities, etc.

190

Steering adds in an element of compensation to the recruit-

ment process.

191

Taken to the extreme, steering could seriously undermine

the competitive balance within NCAA member schools, and today it hap-

pens on a “black market.”

192

However, with Third-Party Payments it could

be regulated more easily in the open. Critically, the Third-Party Payment

system requires some tie between NIL and the third-party, which would

keep boosters from simply paying an athlete to play.

Under “pay-to-play,” a wealthy booster could simply make a large do-

nation to the football program to be used to pay athletes. This would allow

the wealthiest schools to recruit the best athletes. However, under the

Third-Party Payment system, the money an athlete receives would be tied to

an athlete’s NIL. Because many major boosters could meet this requirement,

the Third-Party Payment system would not eliminate the problem. How-

ever, by requiring at the outset that third parties tie their compensation to

athletes to their NIL usage, the NCAA could then regulate bad behavior.

Additionally, some steering could actually increase competitive balance

by allowing small schools who struggle in recruiting, like the University of

Tulsa, to entice athletes who otherwise would not be interested in playing at

TU to attend TU.

193

Bringing steering into the open and then regulating

bad behavior would allow the NCAA to cut down on illicit “black market”

190

See Jessica S. Lee, LSU’s Football Team has a New $28 Million Locker Room –

Complete with Sleep Pods, a Pool, and a Mini Theater, Business Insider (Aug. 30,

2019), https://www.businessinsider.com/louisiana-state-university-football-locker-

room-athletic-facility-2019-8 [https://perma.cc/P5WP-9Y5Q].

191

See supra Section III.A.iv.

192

Mark Schlabach, 3 Convicted in NCAA Pay-for-Play Trial File Appeal, ESPN

(Aug. 13, 2019), https://www.espn.com/mens-college-basketball/story/_/id/

27382222/3-convicted-ncaa-pay-play-trial-file-appeal [https://perma.cc/8J9T-PD7

H].

193

For the 2020 football recruiting class, TU ranks 116 out of 130 teams, and it

is tenth in its conference. See Tulsa 2020 Football Commits, 247sports, https://

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 29 4-FEB-21 15:06

2021 / Third-Party Payments 203

fiascos and increase competitive balance.

194

While issues would still arise, it

is clear that the Third-Party Payment system can respond to them more

easily than the “pay-to-play” model.

A reasonable solution to the legal quandary surrounding paying college

athletes must be able to address the issue of steering. The Third-Party Pay-

ment system does this by putting an obligation on boosters to use an ath-

lete’s NIL and by allowing for the regulation of bad behavior.

The Third-Party Payment system is a reasonable solution to the legal

quandary surrounding paying college athletes for all of the reasons that

“pay-to-play” is not a reasonable solution. Unlike “pay-to-play,” the Third-

Party Payment system would not implicate Title IX scrutiny because it

would bypass the legislation entirely.

195

Third parties who negotiate with

college athletes to use an athlete’s NIL would not affect the educational

experience the NCAA provides to athletes.

196

Additionally, because pay-

ments are made by third-parties and not by educational institutions, mem-

ber schools would likely be free of litigation and the public outcry regarding

unequal payments to male and female athletes.

197

Furthermore, under the Third-Party Payment system, “Olympic”

sports would not face extermination by athletic departments that need funds

to pay athletes because the athletic department would not be responsible for

paying athletes. This would allow member schools to continue funding

“Olympic” sports in the way they are currently

—

with revenue from foot-

ball and men’s basketball.

198

Finally, the Third-Party Payment system maintains the boundary be-

tween college and professional sports because third-party payments only al-

low college athletes to capitalize on their NIL

—

college athletes are not paid

directly for athletic participation. Further, the issue of steering can be par-

tially solved by requiring third parties to negotiate for use of NIL instead of

simply paying an athlete to attend a school. By negotiating in the open, bad

behavior could be regulated. For all of these reasons, the Third-Party Pay-

247sports.com/college/tulsa/Season/2020-Football/Commits/ [https://perma.cc/4GQ

5-F7P6] (last visited Nov. 3, 2020).

194

See Will Hobson, Inside the Basketball Black Market that put Adidas in the FBI’s

Crosshairs, Washington Post (Oct. 1, 2018), https://www.washingtonpost.com/

sports/inside-the-basketball-black-market-that-put-adidas-in-the-fbis-crosshairs/

2018/10/01/2a73ba76-c1ad-11e8-97a5-ab1e46bb3bc7_story.html [https://perma.

cc/U3JR-B97U].

195

See generally 20 U.S.C. §§ 1681–1688.

196

See id.

197

See id.

198

See Rovell, supra note 1; Burnsed, supra note 47.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 30 4-FEB-21 15:06

204 Harvard Journal of Sports & Entertainment Law / Vol. 12

ment system is a reasonable solution to the legal quandary surrounding pay-

ing college athletes, and it can be implemented in variety of ways.

B. The Third-Party Payment System Offers a Reasonable Solution to the Legal

Quandary Surrounding Paying College Athletes and Can Be

Implemented Through NCAA Amendment, Litigation, or

by State and Congressional Statute

On October 29, 2019, the NCAA Board of Governors voted unani-

mously to start the process of modernizing amateurism rules, opening the

door to third-party payments.

199

It remains unclear whether the NCAA will

truly embrace third-party payments or pivot towards some other restrictive

scheme that would curtail the rights of athletes to capitalize on their NIL.

200

However, as discussed above, the Third-Party Payment system is a reasona-

ble solution to the legal quandary surrounding college athletes. Because of

this, the NCAA should amend its bylaws to allow for third-party pay-

ments.

201

Even if the NCAA refuses, the Third-Party Payment system can

take effect through a settlement or judgment at the end of litigation or by

state or congressional statute.

i. The NCAA Can Amend Its Bylaws to Allow for NIL Payments

An NCAA bylaw amendment is likely the easiest way to implement

the Third-Party Payment system. Presently, the Division I Manual explic-

itly denies student athletes the right to receive compensation for NIL us-

age.

202

However, even before the Board of Governors decision to begin the

process towards modernization, Condoleezza Rice

—

at the time the chair of

the Commission on College Basketball

—

left third-party payments available

as an avenue to explore after the court battles had ended.

203

If the NCAA is

199

See Board of Governors, supra note 29.

200

See id.

201

See Marc Edelman, NCAA Can’t Figure Out How to Grant Student-Athletes En-

dorsement Rights, But it’s Simple – Really, Forbes (May 10, 2018), https://

www.forbes.com/sites/marcedelman/2018/05/10/the-ncaa-cant-figure-out-how-to-

grant-student-athlete-endorsement-rights-so-i-will-help-them/#38fb2a8d2c01

[https://perma.cc/L5WW-YXYF].

202

See NCAA Division I Manual, supra note 5 § 2.9.

203

See Press Release, Condoleezza Rice, Commission on College Basketball

Chair, Nat’l Collegiate Athletic Ass’n, Independent Commission on College Basket-

ball Presents Formal Recommendations (Apr. 25, 2018), https://www.ncaa.org/

sites/default/files/2018CCBRemarksFinal_webv2.pdf [https://perma.cc/LA8R-WB

WJ].

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 31 4-FEB-21 15:06

2021 / Third-Party Payments 205

truly serious about modernizing the amateurism rules, the Third-Party Pay-

ment system can be legitimized through amendment. One potential amend-

ment has been proposed by Professor Marc Edelman of Baruch College’s

Zicklin School of Business:

“12.01.5 Permissible Student-Athlete Licensing Rights. A payment ad-

ministered by a non-educational institution is not considered to be pay or

the promise of pay for athletics skill, provided the student-athlete does not

use the trademarks of the NCAA or any NCAA member college in any

manner that may be construed as an endorsement, unless such manner is

otherwise protected by principles of the First Amendment or fair use.”

204

By adding this, or similar, language, the Third-Party Payment system

would be officially recognized by the NCAA and athletes could receive com-

pensation for the use of their NIL.

ii. The Third-Party Payment System Can Also Be Implemented

Through Litigation

Presently, the NCAA will continue defending antitrust litigation re-

garding the current amateur model

—

particularly against athletes who pro-

pose “pay-to-play.” The Third-Party Payment system may well be a

solution that satisfies the rule of reason test.

205

Should the litigants present

the court with Third-Party Payments as a less restrictive alternative to the

current amateur system, it could mean the end of the road for those seeking

to implement “pay-to-play” in college sports.

206

The Third-Party Payment system also appears to be a reasonable com-

promise in negotiations between litigants because the NCAA is finally start-

ing to come to terms with allowing athletes to receive some sort of

compensation for participating in college sports.

207

As it addresses the issues

regarding paying college athletes, the Third-Party Payment system is likely

a much more palatable solution for the NCAA because it maintains the clear

line of demarcation between college and professional sports. Whether as a

judgment or as a settlement agreement, the Third-Party Payment system

can be implemented through litigation.

204

Edelman, supra note 204.

205

See Grenardo, supra note 48, at 214.

206

See id.

207

See Board of Governors, supra note 29.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 32 4-FEB-21 15:06

206 Harvard Journal of Sports & Entertainment Law / Vol. 12

iii. Third-Party Payments Can Be Implemented Through State or

Congressional Statute

It appears that state legislatures could have been the catalyst for the

NCAA’s current push towards modernization and evaluation of the amateur

system.

208

This is because several states, including Florida,

209

South Caro-

lina,

210

New Jersey,

211

and California

212

have passed, or are debating the

passage of, bills which would allow athletes within that state to capitalize on

their NIL.

213

Multiple NIL bills have also been introduced in Congress,

though there has been little movement on Capitol Hill regarding the

legislation.

214

While a federal statute would allow for a more uniform application of

an NIL payment scheme across the country, Congress is notoriously slow,

and it does not appear that a bill will be passed anytime soon. By contrast,

states are acting quickly. Upon California’s passage of the Fair Pay to Play

Bill,

215

other states soon followed and began the process of enacting their

208

See Michael McCann, What’s Next After California Signs Game Changer Fair Pay

to Play Act into Law?, Sports Illustrated (Sept. 30, 2019), https://www.si.com/

college/2019/09/30/fair-pay-to-play-act-law-ncaa-california-pac-12 [https://perma.

cc/A92X-27SP].

209

See Charlotte Carroll, Florida Rep Proposes Bill Compensating College Athletes for

Names, Likeness, Sports Illustrated (Sept. 30, 2019), https://www.si.com/college/

2019/10/01/florida-state-representative-proposed-legislation-pay-student-athletes

[https://perma.cc/NH6T-ZS8E].

210

See Dan Murphy, S. Carolina to Consider Fair Pay to Play-Type Bill, ESPN (Sept.

13, 2019), https://www.espn.com/college-football/story/_/id/27607396/s-carolina-

consider-fair-pay-play-type-bill [https://perma.cc/5XVU-RDLN].

211

Justin A. Casey, The Landscape for College Athletes’ Commercial Rights is Chang-

ing, Foley & Lardner (Nov. 23, 2020), https://www.foley.com/en/insights/publi-

cations/2020/11/landscape-college-athletes-commercial-rights.

212

See McCann, supra note 212.

213

See id. In addition, the name of the California bill refers to “pay-to-play.”

However, the bill is actually legislation that allows athletes to receive compensation

for the use of their NIL and is more closely related to third-party payments as

defined in this Article.

214

See Student-Athlete Equity Act, H.R. 1804, 116th Cong. (2019). See also Dan

Murphy, Bipartisan Federal NIL Bill Introduced for College Sports, ESPN (Sept. 24,

2020), https://www.espn.com/college-sports/story/_/id/29961059/bipartisan-fed-

eral-nil-bill-introduced-college-sports. See also Ross Dellenger, In Significant Step

Around NCAA Athlete Rights, New Name, Image, Likeness Bill to Be Introduced in Con-

gress, Sports Illustrated (Dec. 10, 2020), https://www.si.com/college/2020/12/10/

ncaa-name-image-likeness-bill-congress.

215

See Andre Earls, Despite Early Efforts, Student Athlete Equity Act Stalls, Medill

News Service (July 2, 2019), https://dc.medill.northwestern.edu/blog/2019/07/02/

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 33 4-FEB-21 15:06

2021 / Third-Party Payments 207

own legislation.

216

Coach Mike Gundy’s fear of an uneven playing field in

recruiting is most clearly seen here.

217

Because states are enacting their own

laws, there is a lack of uniformity among the different state statutes. For

example, California’s law takes effect in 2023, while Florida’s takes effect in

2020, and currently, Oklahoma does not have an NIL statute.

218

This means

that when recruiting, Oklahoma universities are at a disadvantage because

they do not allow athletes to capitalize on NIL like California and Florida

soon will. Further, in the years between Florida’s enactment of its law and

California’s enactment of its law, California universities would be disadvan-

taged because Florida universities could offer the ability to capitalize on NIL

sooner than California. Because of the lack of uniformity among the states,

should the Third-Party Payment system be implemented by statute, a fed-

eral statute would likely be the best option in order to promote clarity for all

student-athletes and member schools.

However, these state statutes pushed the NCAA to evaluate its options,

putting significant pressure on the NCAA to allow for NIL payments. Even

lacking uniformity across states, the statutes have forced the NCAA into

recognizing the need for third-party payments.

219

Ultimately, the best, and

perhaps most efficient, avenue for implementation is by NCAA

amendment.

220

despite-early-efforts-student-athlete-equity-act-stalls/#sthash.ONuhNNu7.dpbs

[https://perma.cc/Y7SW-MR5E].

216

See Matt Norlander, Fair Pay to Play Act: States Bucking NCAA to Let Athletes

be Paid for Name, Image, Likeness, CBS Sports (Oct. 3, 2019), https://

www.cbssports.com/college-football/news/fair-pay-to-play-act-states-bucking-ncaa-

to-let-athletes-be-paid-for-name-image-likeness/ [https://perma.cc/QNC5-F5CW].

217

See Wright, supra note 25.

218

See Norlander, supra note 219.

219

See Board of Governors, supra note 29.

220

In addition to potential Congressional action, there has been some movement

towards the Executive Branch taking action, though it is unclear if that would

result in an Executive Order or what the action would look like. See Brian Murphy

& Francesca Chambers, California Changed Its Rules on College Athlete Pay. Now White

House Looking into It, News & Observer (Nov. 11, 2019), https://

www.newsobserver.com/news/politics-government/politics-columns-blogs/under-

the-dome/article237131309.html.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 34 4-FEB-21 15:06

208 Harvard Journal of Sports & Entertainment Law / Vol. 12

V. CONCLUSION

Over the course of its existence, the NCAA has developed into an or-

ganization that oversees lucrative athletic programs.

221

Major college sports

are a billion dollar industry, and it seems that the only people who are

unable to take advantage of the financial opportunities afforded by college

athletics are the very athletes who play the vital role in generating reve-

nue.

222

On one hand, athletes argue that they should be entitled to a seat at

the table and a share of the pot. On the other hand, the NCAA maintains

that college sports are integral to the educational experience and that ama-

teurism provides a clear demarcation between professional and college

sports.

223

Over the course of lengthy antitrust legal battles, the courts have ap-

peared sympathetic to both parties.

224

Courts have tended to recognize that

the current amateur model violates antitrust law, but they have not found

“pay-to-play” to be a viable, less-restrictive alternative to the current

system.

225

The Third-Party Payment system can solve this legal quandary by of-

fering a reasonable compromise to both parties. For athletes, they get the

right to financially capitalize on their NIL with third parties.

226

For the

NCAA, it does not have to pay athletes directly, thus avoiding Title IX

concerns, and it can maintain the clear boundary line between professional

and college sports.

227

While the NCAA has been slow to evolve towards allowing any sort of

compensation, recently it has deemed it necessary to begin the process of

modernization and evaluating the amateur system.

228

In part due to influen-

tial states passing laws in direct contradiction to the NCAA rules, the

NCAA may finally be facing the music about the need for change. The

easiest way to implement the Third-Party Payment system is through an

amendment to the NCAA Manual.

229

221

Rovell, supra note 1.

222

See id.

223

See Brief for the Nat’l Collegiate Athletic Ass’n at 11-12, O’Bannon v. Nat’l

Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir. 2015) (No. 14-16601).

224

See O’Bannon, 802 F.3d at 1053.

225

See id.

226

See Simon, supra note 50.

227

See id.

228

See Board of Governors, supra note 29.

229

See Edelman, supra note 204.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 35 4-FEB-21 15:06

2021 / Third-Party Payments 209

Ultimately, allowing college athletes to capitalize on their NIL with

third parties would afford athletes and the NCAA a reasonable solution to

the legal quandary surrounding paying college athletes by eliminating Title

IX concerns, maintaining a clear demarcation between college and profes-

sional sports, maintaining the status quo regarding funding “Olympic”

sports, and allowing for the regulation of steering to maintain competitive

balance. The Third-Party Payment system is a feasible answer to the issue of

paying college athletes.

\\jciprod01\productn\H\HLS\12-1\HLS101.txt unknown Seq: 36 4-FEB-21 15:06