California to allow college athletes to be paid, in blow to NCAA rules

(Reuters) – California on Monday became the first U.S. state to allow college athletes to be paid, as Governor Gavin Newsom signed a bill permitting them to pursue the lucrative opportunity of brand sponsorship and endorsements.

The bill, which states that college athletes may profit from their “name, image or likeness,” could set up a showdown between the most populous U.S. state and the National Collegiate Athletic Association over its longstanding rule that college athletes cannot earn compensation.

“Colleges and universities reap billions from these student athletes’ sacrifices and success but block them from earning a single dollar. That’s a bankrupt model — one that puts institutions ahead of the students they are supposed to serve,” California Governor Gavin Newsom said in a statement, referring to schools and the governing NCAA.

Newsom signed the bill during an appearance on HBO’s the The Shop alongside the show’s host, Los Angeles Lakers star LeBron James, a vocal supporter of the measure.

“I’m so incredibly proud to share this moment with all of you,” James wrote on Twitter. “@gavinnewsom came to The Shop to do something that will change the lives for countless athletes who deserve it!”

Under the bill, endorsement deals should not have any effect on student scholarships. It also permits student athletes to employ agents.

The NCAA said the California law risked confusing current and future student athletes by creating different rules for colleges in different states.

“A patchwork of different laws from different states will make unattainable the goal of providing a fair and level playing field,” it said in a statement.

The NCAA reported total revenues of more than $1 billion last year, about 80% of which came from television and marketing rights fees.