How the recent NLRB memo affects college athletes

I read the memo and it is fascinating, as a sports fan, but it contains a lot of legalese. Can you explain in layperson’s terms what the memo says and what Abruzzo’s position is?

This memo came out from the general counsel of the National Labor Relations Board, so this is one person’s opinion, but her opinion carries an outsized weight in this situation. She was appointed by the current presidential administration, President Biden, and because of that, she came in with an agenda that the administration has basically said they are in lockstep with. One of those agendas was dealing with this issue of what she calls a misclassification of the term student-athlete. She’s not calling everybody who plays college sports misclassified; what she’s saying is the athletes who play football and men’s and women’s basketball at some [Football Bowl Subdivision, formerly Division I] schools are revenue-producing employees, they are not student-athletes. She feels that that’s a gross misclassification of who they are. On a later podcast, the general counsel added that she would strongly consider adding other sports, including women’s athletics, whose treatment meets the definition of ‘misclassified.’

The definition of revenue is what is going to be the sticking point here because in Division I athletics, revenue can be made, but spent. You bring money in but you spend it on paying for bills, and departments will say they lose money or they break even. You look at NCAA financial reporting forms and that’s what they indicate. The challenge will be defining what the revenue is and how much of it is there to have. That will be one of the first challenges.

Would, for example, players on the Texas football team or the Alabama football team fall under her qualifier of ‘certain players?’ I’m sure they generate very large amounts of money for their programs and schools.

Yes. The Power 5 conferences are the first kind of cutoff. Alabama is a good example and Texas is a good example because they have large athletic budgets that drive additional revenues to pay for the other teams in the athletic department, and in some cases, they send revenues back to the institution for the institution to spend on other things. But not every school in the Power 5 can do that. In fact, there are a number of Power 5 schools that are subsidized by their institutions either through student fees or debt service reallocation, et cetera, et cetera. The trick will be exactly at what schools under what circumstances would these employees be characterized? That’s going to be the challenge. And she’s saying to the folks out there who are thinking about collective bargaining or creating some sort of larger voice that the place to start is in the athlete health and safety, worker safety.

When you’re an employee, you have federal guidelines, OSHA guidelines, to ensure that your workplace is kept safe. Those have been negotiated over years, and they’re codified in laws and policies. But, really, in college athletics, every workplace—if you want to call it a workplace—is different. It’s up to the school to determine what those standards are. And she’s saying, ‘That’s no longer acceptable, these athletes are making a lot of money for you.’ Therefore, one of the first places she thinks she wants to be able to have discussions and create some change is in the areas of athlete health and safety.

Do you expect there to be any immediate effects from her memo or would it take more widespread action or a larger ruling?

Well, there are outside folks who are obviously watching this very carefully. There is, of course, the National College Players Association, which is Ramogi Huma’s organization. Ramogi been very involved for 15, 17 years now in being a voice for college athletes. There are a couple of other folks who individually have talked about starting some sort of players’ union. Where I think the impetus is going to come from is from labor-side, employment law firms, law firms who are used to advocating for unions and understand the landscape of the NLRB ruling, and also understand what the dynamics of a workplace should look like. I can imagine that a firm like that would be interested in seeking out some plaintiffs to be able to sort of test this area. I wouldn’t be surprised if there are already some feelers being put out.

The NCAA has had a lot of losses in court lately. Do you think this memo is something that they would be proactive in addressing or supporting, or will it result in more litigation? Do you expect the NCAA to fight this?

Looking backwards, that’s exactly what you expect the NCAA to do. But this is where the Supreme Court ruling comes in from June. Basically, the NCAA has been hammered because folks believe—and the Department of Justice came forward and said to the NCAA—your organization, because you create a national standard across all schools that all schools have to adhere to, is an antitrust violation. So if you continue to behave that way, we are going to hold you accountable for antitrust, where if you lose, not only do you lose, but you lose in triple. Everything is trebled in the damages. The last thing the NCAA needs to do at this point is to be sued for antitrust. What the court and folks have said coming out of the Supreme Court is these issues will devolve—and that’s a key word—devolve to the conferences. And the conferences create enough competitive behavior in the marketplace to allow for them to decide their own rules.

So the SEC, for example, might decide they want to take this on, but the Big Ten may not, and there’s nobody forcing the Big Ten to do it because it’s a marketplace decision. So that will fundamentally limit the NCAA’s impact in this situation.

You mentioned that Abruzzo was appointed by President Biden, a Democrat, but this seems to be a pretty nonpartisan or bipartisan issue. I don’t know about the labor aspect, but as far as the rulings against the NCAA, at least Supreme Court-wise, both Republican- and Democratic-appointed justices seem to disapprove of what the NCAA has been doing. In this particular case, even if there were a general counsel appointed by a Republican, would you expect the same sort of position?

I’m going to answer your question just a little bit differently. I do think that this is bipartisan, and I think it’s bipartisan not just at the Supreme Court level, but in the House and in the Senate as well. There have been a number of hearings with both Republicans and Democrats furious at the NCAA about how this has been allowed to fester, and also the fact that the organization has continued to just challenge it even though all the signals were out there saying, ‘Don’t do this.’ They did it anyway. So there is a lot of underlying anger and there’s an opportunity for Congress to be able to craft legislation. The NCAA has basically said to Congress, ‘OK, tell us what to do here.’ They’re looking for a national standard in name, image, and likeness. But the NCAA is hoping they are going to get some liability protection so that they can’t continue to be sued.

The NCAA Men’s Division I Basketball Tournament, or March Madness, is the main moneymaker for the NCAA. With all of these changes and potential changes, going forward, do you think the Tournament will exist as is?

One thing I think almost everybody can agree on—except for this past March Madness, where it was clear that the gender inequities were so visible on the men’s and women’s basketball side—is that the NCAA generally can run good tournaments. It’s nothing to sneeze at to say that you can make a billion dollars on average every year just running one men’s basketball tournament. There’s a lot of pressure to say that women’s basketball can also make money if it’s given the right support; some people argue women’s softball and other sports can make money, too, so they’ll be that challenge for the organization to monetize all of the sports that they control.

Remember, college football is outside of the NCAA. The College Football Playoff is not managed by the NCAA. The conferences get the money directly from the Playoff. The money doesn’t even come through the NCAA headquarters, it goes directly to the conferences. Right now, that money is probably eight times more, on average, than the March Madness money. That’s right now with a College Football Playoff of four teams, and I’m sure you heard the rumors that they’re going to move to 12. Those revenues will easily double, if not triple, if they put them out on the marketplace. If you look at the recent NFL media deal, it’s $113 billion for their next contract. They went to multiple platforms, multiple channels to be able to do this. College football follows the NFL, so there’s going to be enormous money on the football side. Those conferences that drive that money will carry the weight of what the NCAA does in the future. The NCAA will hold onto March Madness, it will run a very successful basketball tournament, but what that means for the rest of college sports—the Ivy League, the FCS, the basketball-centric schools, Division II, Division III—is very much uncertain at this point. They will have a postseason, that’s for sure, but what all that means and who pays for it, that’s not as clear.

You have a long history in college athletics. You are a former college athlete, a former Division I and Division III head coach and athletics administrator, and academic director of GSE’s Collegiate Athletics Certificate Program. What do you think the next decade of college sports will look like? I’m sure something called the NCAA will still exist, but what do you foresee the future holding for college athletes and the association?

It’s funny, I taught in the Penn Graduate School of Education’s Executive Doctorate Program [recently] and we tried to answer that very question with senior leaders who are enrolled in that course. You can’t underestimate how fast this thing is changing, and I don’t think we’re done changing yet. The dynamics of all of this will certainly show that the NCAA will have far less power. It already does. I think coming out of COVID-19 and the lack of control over whether the Power 5 conferences would play football or not play football, leaving that up to the conference commissioners, really showed that the NCAA does not have much power when it comes to the big-time money.

The organization has called for a constitutional convention in January of 2022 and they are actively soliciting feedback, ideas, from all three memberships, so Division I, Division II, Division II, and they’re saying, ‘What’s the next evolution that’s going to work for each of your divisions individually?’ We know that that NCAA has had a massive rulebook. It’s something like 440-pages long. They’re totally going to put the responsibility, I think, onto the conferences to decide what they want. No. 1, it works better with antitrust. And No. 2, it allows for more nimbleness in decision-making, which is also something that NCAA has been accused of not possessing. So I think we’re going to see a lot of change. There are still more cases in the court system right now that could enact further change, and certainly how these collectively bargained rights come about is also going to bring tremendous change on the association. I think we’re right at the beginning of a long period of time of evolution.