BILL ANALYSIS �
AB 475
Page 1
Date of Hearing: January 7, 2014
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Das Williams, Chair
AB 475 (Brown) - As Amended: January 6, 2014
[Note: This bill is doubled referred to the Assembly Arts,
Entertainment, Sports, Tourism and Internet Media Committee and
will be heard as it relates to issues under its jurisdiction.]
SUBJECT : Student athletes: scholarships.
SUMMARY : Requires that, commencing with the 2015-16 academic
year, certain requirements are placed on four-year universities
located in California as it relates to student athletes; defines
the terms "licensing fees" and "permission-to-contact letter"
for purposes of the Student Athlete Bill of Rights; and,
specifies an institution of higher education (IHE) that
receives, as an average, less than twenty million dollars in
annual income derived from media rights and licensing fees for
intercollegiate athletics shall not be subject to the
requirements of this measure. Specifically, this bill :
1)Specifies that, commencing with the 2015-16 academic year, an
athletic scholarship given out by a public IHE in the state
shall be guaranteed for five academic years or for the
completion of a student athlete's eligibility if the student
athlete maintains good standing with the institution he or she
attends and continues his or her participation in the sport.
2)Specifies that, commencing with the 2015-16 academic year, a
full athletic scholarship given by a public IHE shall cover
the full cost of attendance for that institution and shall
include an additional three-thousand-six-hundred-dollar
($3,600) student athlete participation stipend.
3)Specifies that, commencing with the 2015-16 academic year, if
a student athlete decides to transfer from a four-year
university located in California, the IHE shall give the
student athlete a permission-to-contact letter, and not place
any restrictions or conditions on where the student athlete
may transfer.
4)Defines "licensing fees" as fees received by an IHE for the
use of likeness of the school or one or more student athletes
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to market, promote, or advertise products, jerseys, video
games, events, literature, or signage.
5)Defines "permission-to contact letter" as written permission
from the student athlete's athletic director or designated
athletic administrator granting the student athlete permission
to begin the transfer process.
6)Specifies that an IHE to which this measure applies shall rely
exclusively on revenue derived from media rights and licensing
fees for intercollegiate athletics to defray any costs accrued
under this measure.
7)Specifies that IHEs that receive, as an average, less than
twenty million dollars in annual income derived from media
rights and licensing fees for intercollegiate athletics shall
not be subject to the requirements of this measure.
EXISTING LAW :
1)Prohibits any person from giving, offering, promising or
attempting to give money or other item of value to a student
athlete or member of the athlete's immediate family to induce,
encourage or reward a student athlete's application,
enrollment or attendance at a public or private IHE to
participate in intercollegiate sporting activities. Some
exceptions may be granted in accordance with National
Collegiate Athletic Association (NCAA) rules. A person who
violates these rules is subject to a civil penalty of up to
$10,000, or three times the amount given, offered or promised,
whichever is greater (Education Code � 67360).
2)Prohibits student athletes and members of their immediate
family from soliciting or accepting money or other item of
value as an inducement, encouragement or reward, subject to
the same exceptions and penalty listed above (EC � 67361).
3)Requires California postsecondary educational institutions
that offer athletic scholarships to provide specific
information on its website, such as NCAA policy on scholarship
duration, the most recent cost of attendance, and their policy
on athletically related medical expenses (EC � 67365).
4)Defines the following: "athletic association" to mean any
organization that is responsible for governing intercollegiate
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athletic programs; "athletic program" to mean an
intercollegiate athletic program at any IHE; "graduation
success rate" to mean the percentage of student athletes who
graduate from that IHE within six years of their initial
enrollment, excluding outgoing transfers in good academic
standing with athletic eligibility remaining, and including
incoming transfers. The rate is to be calculated by combining
the rates of the four most recent classes that are available
in the exact manner as the rate is calculated under NCAA
rules; "IHE" to mean any campus of the University of
California or the California State University, or any
four-year private university located in California, that
maintains an intercollegiate athletic program; "media rights"
means the rights to media coverage of intercollegiate
athletics included in contracts that are entered into by
intercollegiate athletic conferences and television networks
and that generate monetary payments to individual IHEs; and,
"student athlete" to mean any college student who participates
in an intercollegiate athletic program of an IHE, and includes
student athletes who participate in basketball, football, and
other intercollegiate sports (EC � 67451).
5)Specifies the following: 1) unless a student athlete declines
the payment of premiums, an athletic program shall be
responsible for paying the premiums of each of its student
athletes whose household has an income and asset level that
does not exceed the level for Cal Grant A recipients set forth
in EC � 69432.7 for insurance covering claims resulting from
their participation in the athletic program; 2) an athletic
program shall be responsible for paying the insurance
deductible amount applicable to the claim of any student
athlete who suffers an injury resulting from his or her
participation in the athletic program and makes a claim
relating to that injury; 3) if a student athlete suffers an
injury resulting from his or her participation in the athletic
program that requires ongoing medical treatment, the athletic
program shall provide, for a minimum of two years following
the student athlete's graduation or separation from the IHE,
one of the following: a) the necessary medical treatment and
b) health insurance that covers the injury and the resulting
deductible amounts; 4) three "a" and "b" shall not apply to
preexisting medical conditions that predate the student
athlete's participation in the athletic program; 5) an
athletic program shall adopt and implement guidelines to
prevent, assess, and treat sports-related concussions and
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dehydration. Additionally, an athletic program shall adopt
and implement exercise and supervision guidelines for any
student athlete identified with potentially life-threatening
health conditions who participates in an athletic program; 6)
an IHE that receives, as an average, less than ten million
dollars in annual income derived from media rights for
intercollegiate athletics shall not be subject to the
requirements of this section; and, 7) an IHE to which this
section applies shall rely exclusively on revenue derived from
media rights for intercollegiate athletics to defray any costs
accrued under this section (EC � 67452).
6)Mandates that athletic programs shall comply with all of the
following: 1) if an athletic program does not renew an
athletic scholarship of a student athlete who suffers an
incapacitating injury or illness resulting from his or her
participation in the athletic program, and the IHE medical
staff determines that he or she is medically ineligible to
participate in intercollegiate athletics, the IHE shall
provide an equivalent scholarship that, combined with the
total duration of any previous athletic scholarship or
scholarships received by the student athlete, will be provided
for a total of up to five academic years or until the student
athlete completes his or her undergraduate degree, whichever
period is shorter. Additional years may be provided at the
discretion of the IHE; 2) if a student athlete takes a
temporary leave of absence from an IHE, the duration of that
leave of absence shall not count against the five-year limit
on eligibility for an equivalent scholarship as determined; 3)
an athletic program shall provide an equivalent scholarship to
a student athlete who was on an athletic scholarship and is in
good standing, but has exhausted his or her athletic
eligibility, for up to one year or until the student athlete
completes his or her primary undergraduate degree, whichever
is shorter, except that an athletic program with a graduation
success rate that is above 60 percent, disaggregated by team,
shall not be subject to the requirements; 4) a student athlete
whose athletic scholarship is not renewed for cause by an
athletic program shall receive no benefits under this part,
but may appeal this decision within the IHE attended by the
student or within the athletic conference or association of
which that IHE is a member, as appropriate; 5) each athletic
program shall conduct a financial and life skills workshop for
all of its first-year and third-year student athletes at the
beginning of the academic year. This workshop shall include,
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but not be limited to, information concerning financial aid,
debt management, and a recommended budget for full- and
partial-scholarship student athletes living on or off campus
during the academic year and the summer term based on the
current academic year's cost of attendance. The workshop shall
also include information on time management skills necessary
for success as a student athlete, and academic resources
available on campus; 6) an IHE shall grant a student athlete
the same rights as other students with regard to any and all
matters related to possible adverse or disciplinary actions,
including, but not necessarily limited to, actions involving
athletically related financial aid; 7) an athletic program
shall respond within seven business days with an answer to a
student athlete's written request to transfer to another IHE;
8) An IHE that receives, as an average, less than ten million
dollars in annual income derived from media rights for
intercollegiate athletics shall not be subject to the
requirements of this section of law; and, 9) an IHE to which
this section of law applies shall rely exclusively on revenue
derived from media rights for intercollegiate athletics to
defray any costs accrued under this section (EC � 67453).
7)See comments below for relevant NCAA rules.
FISCAL EFFECT : Unknown
COMMENTS : Need for the bill . According to the author, major
college athletics is an $11.4 billion a year industry that does
not compensate the student-athletes, "whose dedication in the
classroom and exploits on the field make the industry
commercially viable." The author states, "Many [student
athletes] do not receive the full educational opportunities and
financial support they were promised. In fact, because of the
athletic eligibility requirements imposed by the NCAA, the
Pac-12 Conference and the university, student-athletes are not
given scholarships that cover the full cost of attendance and
foster academic retention and graduation. "
Additionally, the author states, "Currently, scholarships do not
cover the full cost of attending the university. As result
student-athletes are forced to get Pell-grants and other
financial aid to cover the cost of attendance, even though the
Pac-12 just signed a $3 billion television contract."
Background . NCAA Rules : The NCAA is a voluntary association of
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about 1,200 colleges and universities, athletic conferences, and
sports organizations that administer intercollegiate athletics.
Volunteer representatives from these schools and conferences
establish rules that govern the NCAA and programs designed to
further its purposes and goals.
Rules Regarding Transfers . An athletics staff member or other
representative of an institution may not make contact with a
student-athlete of another NCAA or NAIA four-year collegiate
institution without first obtaining written permission of the
first institution's athletic director. If permission is granted,
all NCAA recruiting rules apply.
If an institution receives a written request from a
student-athlete to permit another institution to contact the
student-athlete about transferring, the institution shall grant
or deny the request within seven business days.
If the institution denies the student-athlete's request to
permit any other institution to contact them about transferring,
the institution shall inform the student-athlete in writing that
s/he may request a hearing conducted by an institutional entity
or committee outside of the athletics department. The hearing
shall be conducted and a decision rendered in writing within 15
days of receipt of the written request for a hearing.
A one-time transfer exception exists for student-athletes
competing in sports other than baseball, basketball, bowl
subdivision football or men's ice hockey, if specified
conditions are met. This rule also has exceptions for
student-athletes in the specified sports that were not recruited
by the original institution and have never received athletic aid
from any institution. Also, student-athletes who have earned a
bachelor's degree may also use the one-time transfer exception
under specified conditions.
Rules Regarding Student-Athlete Finances . The 2012-13 Guide for
the College-Bound Student-Athlete, and other links on the NCAA's
website, provides information about several aspects of becoming
a collegiate athlete, including athletically related financial
aid and recruiting regulations. Specifically:
1) Athletic scholarships in Divisions I and II are
initially awarded for up to one academic year, and may be
renewed annually for up to five years (D-I) or up to a
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total of 10 semesters/15 quarters (D-II). Division III
institutions do not award athletic financial aid.
2) Effective August 1, 2012, Division I allows institutions
to provide athletic aid for a period not less than one year
and that does not exceed the student's five-year period of
eligibility.
3) Athletic scholarships can be renewed, reduced, increased
or canceled from year to year for any reason.
4) During the one-year period of the award, the athletic
scholarship may not be renewed, reduced or canceled except
under four specified conditions: 1) the student-athlete
rendered himself or herself ineligible; 2) the
student-athlete fraudulently misrepresents himself or
herself; 3) the student-athlete engages in serious
misconduct as determine by the institution's regular
student disciplinary authority; and 4) the student
voluntarily withdraws from the team (and requesting
permission to contact or transfer does not constitute
withdrawing from the team).
5) Any time the athletics aid is not renewed, or is reduced
or canceled, the student-athlete must be notified in
writing of his or her right to request an appeal, and the
appeal must be heard by the institution's regular financial
aid authority.
6) Athletic scholarships are awarded in a variety of
amounts.
7) The total amount of financial aid a student-athlete can
receive may be limited, and may affect whether a
student-athlete may accept additional financial aid.
The NCAA recently updated their bylaws that regulate recruiting,
scholarship levels, timing and methods of communication between
IHEs and student athletes. Rules governing Division I, II and
III IHEs are not necessarily the same across divisions.
Currently, NCAA bylaws impose a number of restrictions on
student athlete financial assistance. For example, NCAA D-1
schools:
Effective August 1, 2012, Division I allows institutions to
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provide athletic aid for a period not less than one year and
that does not exceed the student's five-year period of
eligibility.
1) Under the new Division I multiyear aid legislation, any
athletic scholarship that is awarded for more than one
year cannot be renewed, reduced or canceled during the
period of the award except under four specified conditions:
1) the student-athlete rendered himself or herself
ineligible; 2) the student-athlete fraudulently
misrepresents himself or herself; 3) the student-athlete
engages in serious misconduct as determine by the
institution's regular student disciplinary authority; and
4) the student voluntarily withdraws from the team (and
requesting permission to contact or transfer does not
constitute withdrawing from the team).
2) Are permitted to provide medical insurance for its
student-athletes.
3) Cannot award financial aid to a student athlete that
exceeds the cost of attendance that normally is incurred by
students enrolled in a comparable program at that
institution.
4) A student-athlete may be employed, provided they are
only paid for work actually performed and the pay rate must
be commiserate with the going rate for someone with similar
skills and experience and the employer does not pay the
student-athlete based on his or her athletics reputation.
SB 1525 (Padilla, Chapter 625, Statutes of 2012) . This measure
enacted a Student Athlete Bill of Rights and placed specified
requirements on collegiate athletic programs commencing with the
2013-14 academic year and ending January 1, 2021.
Over the course of several months in 2012, this measure was
amended five times; the chaptered version of the measure changed
significantly from the original version of the measure. Prior
versions of SB1525 included guaranteed scholarships for five
years for student-athletes and removed transfer restrictions for
student athletes. These provisions were negotiated out of SB
1525 because they proved detrimental to the student-athletes.
The signed version of SB 1525
codified into law practices that support student-athlete welfare
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and minimized the disadvantages to student-athletes.
To note, just weeks after SB 1525 was chaptered, AB 475 was
introduced; AB 475 revisits the same issues that were negotiated
at length and subsequently removed from SB 1525 prior to the
Governor signing SB 1525 into law.
Issues to consider . Ed O'Bannon lawsuit . The O'Bannon lawsuit
began in 2009 as a case about the NCAA profiting off the
likenesses of former athletes in Electronic Arts (EA) Sports
video games. In January 2013, a federal judge ruled that the
plaintiffs could add current athletes to the case and that the
plaintiffs could go after everyone profiting off the likenesses
of college athletes. That includes the conferences and the
networks that televise the games. In November 2013, the judge
partially granted a full class-action status in the Ed O'Bannon
lawsuit against the NCAA. Trial date is set for June 2014. It
is very possible that the jury will side with the plaintiffs,
subsequently changing the entire NCAA model.
To note, when student-athletes play an NCAA sport, they have to
sign a waiver that relinquishes their right to make money off of
their likeness as an NCAA athlete. In the case of the O'Bannon
lawsuit, because EA and NCAA used classic teams, like the 1996
UCLA Bruins basketball team, this caught the attention of Mr.
O'Bannon and because he felt that he was forced to sign the
waiver, today he feels he forfeited being able to make
additional money post being a student-athlete.
The Sherman Antitrust Act specifically bans artificially fixing
prices, aiming to mean people and businesses are paid what they
deserve. Mr. O'Bannon, et al., are alleging that if the NCCA
did not force them to sign the waiver contracts, they could have
gotten money from someone else (potentially an EA competitor) to
use their likeness. If you consider student-athletes'
scholarships adequate payment for their services, this could
still artificially depress how much they are paid. If the judge
agrees, the waiver would be considered an illegal restraint of
trade under the act.
NCAA compliance . The proposed cost of living scholarship
increase and $3,600 stipend for California public schools
participating in NCAA, as called for in this bill, are
impermissible under NCAA rules. If University of California,
Berkeley (UCB) and University of California, Los Angeles (UCLA)
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are required to provide these scholarship amounts, the NCAA will
declare our CA student-athletes ineligible, and they will no
longer be able to compete in the NCAA. The following are the
NCAA Bylaws on this issue:
a) Bylaw 15.2 lists the only permissible types of financial
aid.
b) Bylaw 15.01.6 explains that we may not exceed the cost
of attendance.
c) Bylaw 12.1.2 makes it clear that student-athletes may
not be paid to compete in their sports.
The NCAA continues to work on a nation-wide solution to provide
stipends to student-athletes. California needs to wait (like all
other states) and see the outcome.
Additionally, this measure requires UCB and UCLA to guarantee
scholarships to all students for 5 years. While these schools
currently maintain scholarships for student-athletes who can no
longer compete due to injury, they have made it clear that they
are strongly opposed to guaranteeing scholarships across the
board. The NCAA rules permit students to seek 5-year
scholarships from any school. This creates the opportunity for
students and schools to negotiate during the recruitment process
about the contract duration and monies provided.
Under this bill UCB and UCLA will no longer have that right.
Therefore, these scholarships will then count against their
scholarship limits for the next five years, while every other
school in the country will be able to adjust scholarship amounts
on an annual basis.
As a result, the persons who stand to be most negatively
impacted are California's student-athletes that have to compete
against every other institution that can reshape its scholarship
allotments every year.
Lastly, the proposed licensing fees definition would require CA
to quantify alleged profits from impermissible conduct. Section
12.5 of the NCAA Bylaws addresses the limited use in which
student-athletes may promote their own events and incidental
activities, but does not allow institutions to earn these kinds
of "licensing fees."
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Transfer provision . Existing NCAA and Pac-12 transfer policies
serve as a deterrent to competing schools from tampering with
another institution's student-athletes. The loss of that
deterrent for only the four targeted institutions would place
student-athletes at UCB, UCLA, Stanford and University of
Southern California (USC) in the position of being highly
desirable new additions for other programs seeking to lure
transfers without penalty.
As a result, the bill's transfer provisions put the four
targeted universities at a clear competitive disadvantage since
each would be compelled to follow rules that would not apply to
any other university not only in the State of California, but in
the entire country.
Graduation rates . Recently, there has been concern over the
graduation rates of California student-athletes. However, the
four institutions that would be effected by this measure have
worked hard to implement success strategies that go beyond the
goals of the NCAA.
The NCAA passed rules outlining an academic reform package for
all member institutions in 2002. These reforms were created in
order to provide a more accurate and "real-time" depiction of
student- athlete academic success, as well as to provide a
series of incentives and disincentives for institutions based
upon their respective performance rates.
The Academic Progress Rate (APR) is a term-by-term measure of
eligibility, retention and graduation for student athletes who
have received athletics grant-in-aid during the academic terms
in question. A score of 1000 on the APR is the highest score
possible for any given intercollegiate athletic team.
The Graduation Success Rate (GSR) represents a four-year average
based on a six-year cohort, meaning that the latest report
includes only those student athletes who received athletic
scholarships and enrolled at a participating NCAA school as
freshmen or incoming transfers from 2002-05, and completed their
degree within six years. Each intercollegiate athletic team
receives an individual GSR score.
Data collection began with the 2003-2004 academic year,
resulting in completion of the first four-year rate in fall
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2007. Individual institutional and team rates are reported at
the beginning of each fall, based upon student-athlete academic
performance during the previous academic year. Teams and
institutions not meeting the established national benchmark were
subject to contemporaneous penalties beginning with the
2005-2006 academic year.
In 2011, the minimum APR increased from 900 to 930, setting a
new national benchmark with corresponding penalties. NCAA
penalties are sport specific and can include scholarship
reduction, practice reduction and ban on post-season
competition.
Below is the average GSR for the four effected schools with the
most recent data (data past 2007-2008 will not be calculated
until May 2014):
-----------------------------------------------------------------
| Institution | Years | GSR |
|---------------------+---------------------+---------------------|
|Stanford |2003/04 -2006/07 |96% |
|---------------------+---------------------+---------------------|
|UCB |2003/04 -2006/07 |78% |
|---------------------+---------------------+---------------------|
|UCLA |2003/04 -2006/07 |87% |
|---------------------+---------------------+---------------------|
|USC |2003/04 -2006/07 |77% |
-----------------------------------------------------------------
To note, since the implementation of the NCAA APR, none of the
above institutions' athletics teams have ever been penalized for
not meeting the required APR benchmark.
Committee considerations . It is unclear as to the present issue
at hand that needs to be resolved. The bill is poorly drafted
in that parts of the bill would only apply to the two public
NCAA schools (UCB and UCLA), not the two private schools
(Stanford and USC). Additionally, these four institutions
provide unparalleled support for student-athletes, yet AB 475
seeks to penalize only them. To impose one set of rules on
California, places our student-athletes at a disadvantage with
the other schools against whom they compete.
Should the committee act on a measure when there is no
justification for raising the same issues SB 1525 addressed
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before there is time to even measure the impact or benefits of
SB 1525? Should the committee act on a measure that would make
the effected four current NCAA participating schools
incompliant? And, should the committee act on a measure that
has an active related lawsuit set for trial in June of this
year?
Prior and Related Legislation :
1) SB 1525 (Padilla), see above for description.
2)AB 1743 (Campos), Chapter 16, Statutes of 2012, clarified that
the online scholarship disclosures required of a California
postsecondary educational institution only apply to
institutions that offer athletic scholarships to "student
athletes."
3)AB 2079 (Torlakson), Chapter 592, Statutes of 2010 provided
that all California postsecondary educational institutions
that offer athletic scholarships are required to provide
specified scholarship information on their websites.
4)AB 95 (Torlakson), of the 2009-10 Legislative Session, which
died in the Assembly Higher Education Committee, would have
required athletic recruiters to provide student athletes with
specified information relating to the college athletic program
within one week of initiating personal contact with the
student athlete for purposes of athletic recruiting.
5)SB 193 (Murray), of the 2002-03 Legislative Session, which was
held in the Assembly Higher Education Committee, would have
prohibited California institutions of higher education from
participating in any organizations that regulates student
athletic scholarships, including the NCAA.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
Stanford University
University of California
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University of Southern California
Analysis Prepared by : Jeanice Warden / HIGHER ED. / (916)
319-3960