California colleges can now pay athletes directly. Why taxpayers may foot some of the bill
Starting Tuesday, California’s top universities can pay their athletes directly — a dramatic shift in college sports that blurs the line between amateur and professional play. Schools have yet to say how much individual students will actually make or when checks might arrive, though a CalMatters estimate suggests some student-athletes at UC Berkeley could make roughly $200,000 a year.
In some ways, these payments are unprecedented. As part of a settlement to a class-action lawsuit, which goes into effect Tuesday, a school will be able to dole out up to a combined $20.5 million this year in payments to any or all of its athletes. Almost all of the money will go to football players and to a lesser extent, men’s basketball players.
At public universities, such as UC Berkeley or UCLA, schools could use taxpayer dollars to make these payments. State or institutional funds already support roughly 30% of UC Berkeley’s athletic budget, according to one analysis by Syracuse University and the Knight Commission on Intercollegiate Athletics.
Student athletes are already compensated, albeit indirectly. Many college athletes receive full scholarships. They’ve also been able to earn additional money since 2021, when the state passed a first-in-the-nation law allowing athletes to make brand deals or receive gifts.
Up until now, those deals, known as “name, image and likeness” compensation, were only allowed if they came from a third party, such as a company or a group of private donors, and the payments had to be in exchange for services. CalMatters found that some top athletes have made nearly $300,000 in a single deal by posting company advertisements on social media, though most students, especially women, make very little.
The settlement allows universities to pay students directly, and it comes with a number of restrictions on students’ compensation and colleges’ athletic programs. Students in top athletic programs will now need approval to receive compensation from brands or donor groups. Colleges will also be able to give out more athletic scholarships, but in exchange, schools are required to further limit the numbers of players on each team who are eligible for tuition aid.
UCLA, UC Berkeley, Stanford and the University of Southern California are required to participate in the settlement, since they’re defendants in the lawsuit. Other colleges and universities in California can opt in.
UC Berkeley currently has about 900 athletes but will eventually need to cut roughly 100 players to meet the requirements of the settlement, Chancellor Rich Lyons said in a statement on June 11.
Using a mix of current revenue and new fundraising, he said the university hopes to pay $12 million to its football players, $3 million to men’s basketball players and $1 million to women’s basketball players. If UC Berkeley were to divide it evenly — which is unlikely — that means this year, each men’s basketball player would receive roughly $200,000, each football player would receive roughly $100,000 and each women’s basketball player would receive around $60,000. Lyons did not mention paying any other athletes, though they could still receive a scholarship and, if approved, certain brand deals or donations.
UC Berkeley declined to respond to CalMatters’ questions seeking further clarification. Stanford has yet to comment publicly on the settlement and did not respond to CalMatters’ request for comment.
UCLA is not saying how much it will allocate to each of its athletic teams but Athletic Director Martin Jarmond hassaid that the school will distribute a total of $20.5 million, the maximum yearly amount allowed. USC said it will do the same, said Cody Worsham, the university’s senior associate athletic director. He said USC “will increase investment in all 23 (athletic) programs,” which could include additional scholarships as well as direct payments.
‘The settlement doesn’t advance California athletes’ rights at all’
This new payment system may not last for long, as at least two groups have already filed legal challenges.
In addition to allowing schools to pay students directly, the settlement also includes a provision requiring the National Collegiate Athletic Association to divide up roughly $2.8 billion and give it to former student athletes who never had the opportunity to get paid because of the previous NCAA rules. Most of that money, 75%, is supposed to go to former football players. Former basketball players are set to receive 15% of the total payout, women’s basketball players will receive 5% and the remaining 5% will go to all other athletes.
Female athletes from across the country have appealed that payout plan, putting any payments on hold. The women claim that the settlement payouts violate the federal non-discrimination law, known as Title IX.
“The settlement doesn’t advance California athletes’ rights at all,” said Ramogi Huma, the executive director of the NCAA, which advocates for the rights of college athletes. “It just stifles it.”
Huma sponsored the California bill that first allowed athletes to profit off their name, image and likeness in 2021. That bill expressly prohibits schools and athletic associations, such as the NCAA, from preventing compensation for college athletes, but “this settlement would do just that,” said Huma. Under the settlement, combined compensation to all athletes cannot exceed $20.5 million, and students may not be able to receive compensation from certain donor groups, known as booster clubs or collectives.
By participating in the settlement, Huma said California’s colleges and universities may be violating state law.
Where will the money to pay college athletes come from?
Often known as “revenue-sharing,” these new direct payments are no different from any other kind of expenditure. “Schools can use any dollars that they have to pay their athletes,” said Mit Winter, an attorney specializing in college athletics — it doesn’t matter whether the athletic programs earn any revenue at all.
Some of the money for sports at California’s public universities comes from TV deals, ticket sales and parking fees, but some also comes from the college’s general fund, which is taxpayer-supported, and from fees that all students pay to their university. In some cases, such as at Fresno State, the portion of athletic revenue that comes from taxpayer dollars or student fees has increased over the past 15 years, according to analyses by the school’s student newspaper.
“The school itself may say we’ll use this money over here, that comes from ticket sales or donations from donors, but the money is fungible,” said Daniel Rascher, a professor of sports finance at the University of San Francisco. Student-athletes could receive payments based on the revenue of ticket sales, for example, but the office staff who administer those payments may rely on general fund dollars for their salaries.
While paying athletes directly may seem like a change for the university and the taxpayers who may foot the bill, Rascher said it isn’t really a new expenditure at all. “They were already spending this money on getting students to show up — expensive coaches, high quality training facilities.”
He said athletic programs benefit all students by helping to market the university. “One way we know it’s a net positive is that schools are continuing to join the Division 1,” said Rascher. Division 1, which includes more than 350 schools across the country, is the most elite and costly arena for college sports.
Colleges get three weeks to figure million-dollar payment system
Although universities will be allowed to distribute up to $20.5 million to its athletes, many won’t be able to dole out that much. At Cal State Bakersfield, Athletic Director Kyle Conder said the school will also participate in the settlement, though it doesn’t have “any revenue to share” at the moment.
UC San Diego joined the NCAA Division 1 last year and Associate Athletic Director Jeff Tourial said it already plans to join the settlement and pay its athletes. He said the school won’t be able to pay out the maximum and that the university is “still working out the specifics,” such as how much money it will spend or who it will go to.
“Everybody in our world is hesitant to commit to anything because there could still be appeals,” Tourial said. “There’s still so much uncertainty. It’s hard to pin down a number in a relatively short period of time.”
California District Judge Claudia Wilken finalized the settlement on June 6, giving schools just over three weeks to decide how they would officially respond. “There are many people in our department who are thinking about this all day, every day,” said Tourial. “The college athletics landscape is shifting very rapidly. Seemingly every day it’s something else.”
For Karson Gordon, an incoming sophomore at UCLA and a member of the football and track and field teams, today’s settlement is hardly on his mind.
Along with a full scholarship, Gordon also made over $20,000 over the last academic year by signing trading cards and through deals with a sunglasses company, a beverage company and various nonprofit organizations. Those deals will now be subject to approval under the new settlement. Gordon said he doesn’t know yet if he will be paid directly by UCLA or how much he will make, but he’s not concerned.
“It’ll all iron itself out,” he said. “I’m honestly blessed just to get compensation for myself and my athletic abilities.” His focus, he said, is on the field.
___
This story was originally published by CalMatters and distributed through a partnership with The Associated Press.