As critical NLRB hearing kicks off, what's the state of play in college athletics?

Amid the outcry in certain college sports circles over the patchwork of state NIL laws, the transfer portal and pay-for-play schemes, don’t lose sight of the existential issue hovering above all else.

Here’s the true state of play in college athletics: The NCAA is aggressively lobbying for a federal reform bill primarily to secure antitrust protection and a formal designation that athletes are not university employees – and the association covets those two items for an important reason.

It’s because fierce winds are blowing in the opposite direction – as the NCAA faces a growing number of potentially crippling legal challenges and proceedings that could classify at least some groups of athletes as employees and cost the association an astronomical $4.2 billion in damages.

Without a congressional lifeline, the NCAA – essentially assuming the role of bystander, unwilling to craft a new model – could watch the entire college athletics enterprise as we know it go up in flames. 

College sports is now entrenched in a critical stretch – a series of huge developments or rulings could begin to set the enterprise on course for revolutionary change.

One occurred Friday evening when U.S. District Judge Claudia Wilken granted class-action status for the three remaining damages classes in the landmark House v. NCAA antitrust case. The next development kicks off Tuesday with the start of the National Labor Relations Board’s virtual hearing that will weigh the unfair labor practice charges against the NCAA, Pac-12 and USC.

As the hearing begins, it’s important to keep in context where the NLRB case fits into the broader dynamic. Here are the key questions:

Is House class-action ruling really that important?

Absolutely. It’s impossible to overstate its importance, or how radically the outcome could reshape the entire college athletics model. 

The NCAA and power conferences could be ordered to pay some $4.2 million in damages to thousands of former and current athletes. Both sides in the case have engaged in settlement talks – and Wilken’s Friday night bombshell – albeit not unexpected – likely will increase the urgency for the NCAA to settle. But, at this point, what is the plaintiffs’ motivation to settle?

Thousands of athletes could possibly receive NIL backpay as well as a slice of TV broadcast revenue. That’s something most college leaders have aggressively tried to prevent, as the value of TV rights contracts has grown considerably. And NIL rule changes could take hold that would permit schools and conferences to pay NIL dollars to athletes for any reason, including athletic performance.

Legal experts such as Mit Winter, a college sports attorney with Kennyhertz Perry, said a loss would “financially cripple” the NCAA, adding that this case could “end the NCAA – or at least the NCAA in its current form.”

So, yes, the case could not be more important. 

When will we get clarity on NLRB case?

NLRB Administrative Law Judge Eleanor Laws will preside over the hearing. This portion of the hearing will discuss pretrial motions and subpoena issues. Unfortunately, no testimony will be shared until subsequent hearing dates: Dec. 18-20; Jan. 22-Feb. 2; and Feb. 26-29 (if needed).

After this week, the hearing will continue next month and beyond in person in Los Angeles. 

The case will weigh charges that the USC football and men’s and women’s basketball players are employees under the National Labor Relations Act. The complaint alleges the three charged parties are joint employers; they misclassified the players as student-athletes; and they maintained certain rules in the USC Student-Athlete handbook.

This marks the first complaint and unfair labor practice hearing since NLRB General Counsel Jennifer Abruzzo issued her headline-grabbing memo in September 2021 with her guidance on the employee status of college athletes. 

This week represents a key step, but the process will take time. A growing number of legal experts believe the industry is on a slow march toward an employee model – the operative word being slow. 

What’s at heart of NLRB complaint?

One word: Control. 

The unfair labor practices charges, filed by the board’s Los Angeles office, encompass a high-stakes complaint that could help shape the future of college sports. It alleges in part that USC’s athlete handbook stipulates the extent to which athletes can engage with media. 

In its recent motion to dismiss the charges, USC asserted that it provides “guidelines,” but not “work rules” pertaining to how athletes engage with media. While the motion was rejected because it wasn’t filed in a timely manner, the arguments illuminate the university’s strategy.

USC stated it encourages athletes to “make yourself available to the media” and that interviews are part of USC’s “educational experience.” It also stressed that USC does not “restrain the student-athletes’ ability to reach out to, respond to, or otherwise engage with the media in any way.”

Other sources, however, believe control is a prime ingredient in the college sports dynamic, at least at the Power 5 level.

Jason Stahl, founder of the College Football Players Association, said the control question underscores the industry’s umbrella problem: the infantilization of the college athlete. 

Some administrators and/or coaches have a “paternalistic mindset, where they are kids, and we will tell you what’s what. ‘Go in the corner, sit down, we’ll figure it out. We will dictate every hour of every day,'” Stahl told On3. “Yes, [some] do want to exercise total control over the entire industry. They don’t want the players having any power – that’s why they fought NIL for so long.”

This isn’t only relevant NLRB proceedings, right?

Right. The Dartmouth men’s basketball team that ventured into Cameron Indoor Stadium to open the season against Duke on Monday night may be remembered for what the players accomplish off the court this season.

We are awaiting a highly anticipated decision by Laura A. Sacks, a Boston-based NLRB regional director, on whether the 15 players can conduct a union election.

On Sept. 13, a petition filed with the NLRB by the Service Employees International Union identified 15 players from Dartmouth as seeking representation. Then came last month’s fascinating four days of witness testimony in a virtual pre-election hearing. 

The overarching question: Are athletes university employees under the National Labor Relations Act?

The pre-election hearing offered clear, illuminating – if not somewhat predictable – arguments from both sides.

Dartmouth junior basketball player Cade Haskins laid out the conditions and school protocols that he believes should warrant the basketball players being formally deemed employees of the college. 

On the other hand, one of the arguments Dartmouth’s legal team espoused was that the players there are not employees because, unlike men’s basketball programs elsewhere, the Ivy League program actually loses several hundred thousand dollars per year.

The line of questioning from the athletes’ attorney, John Krupski – who sat before a framed photo bearing the words “Collective Bargaining Matters” – most often drilled down on the notion of control.

Exactly how much control do the men’s basketball coaches exert over their players?

What other court battle needs to be followed?

Look toward Pennsylvania.

The plaintiffs in Johnson v. NCAA, former Villanova football player Trey Johnson and other Division I athletes, are asking that athletes be deemed employees subject to the Fair Labor Standards Act. That requires covered employees to be paid minimum wage and overtime pay, much like non-athletes at colleges who participate in work-study programs. 

While the case’s focus is narrow, a determination that college athletes are employees would be monumental.

A three-judge panel is currently weighing whether federal district court Judge John Padova applied the correct standard when he denied the NCAA’s motion to dismiss two years ago.

In February, both sides made oral arguments before the three-judge panel on the U.S. Court of Appeals for the Third Circuit in Philadelphia. It was clear from the judges’ line of pointed questions that they found the NCAA’s arguments pertaining to why athletes are not compensated suspect and unconvincing.

In fact, they signaled that they believe at least some athletes are indeed employees of schools and potentially the NCAA.

The judges illuminated the circular nature of the NCAA’s time-honored contention that student-athletes are not professional athletes because they don’t expect compensation from the school. It’s an argument that was surgically unpacked in the Alston case by U.S. Supreme Court Justice Brett Kavanaugh and other attorneys since then.

Federal reform bill would curb NIL “chaos,” right?

Well, leave aside the large question of whether “chaos” exists in the NIL space and to what extent. The NCAA asserts that it needs a federal reform bill to secure a uniform national NIL standard and to try to thwart pay-for-play schemes.

But the larger reason the NCAA is hell-bent on national legislation is to land the other two bigger-ticket items on its wish list: Antitrust protection and a formal designation that athletes are not university employees.

There’s ample reason – laid out above – why the NCAA so desperately wants both measures. The chances of landing a federal reform bill this year are akin to trying to complete a fourth-down Hail Mary – against the wind.

A flurry of drafts of disparate bills have circulated this summer. None has even gone to a vote. There have been 10 congressional hearings related to NIL. Last month’s may have been the most instructive, as we heard from NCAA President Charlie Baker, Big Ten Commissioner Tony Petitti and Notre Dame Athletic Director Jack Swarbrick, among others.

Of note: Baker said he’s talked with some 1,000 athletes since assuming his role in March and not one said they were in favor of an employee model. However, between Oct. 22 and 27, Bill Carter of Student-Athlete Insights polled just under 1,100 current student-athletes – 73% said they would be in favor of employee status.

Why don’t power leagues don’t just leave NCAA?

That is quickly becoming the seminal question.

Friday’s ruling in the House case just underscored how vulnerable the NCAA is now in a post-Alston world. The courts are increasingly looking askance at the NCAA, its rules to limit compensation for athletes and circular arguments defending an antiquated model.

When will the power leagues get fed up with being sued?

As Winter said, “I’d look for some schools to now more seriously consider leaving the NCAA to be part of creating a new organization that operates under a model that complies with antitrust and employment/labor law.”

What’s the endgame?

There is an increasing likelihood that college sports will usher in an era of revenue sharing. At least some athletes will be formally designated as employees of their schools, leagues or the NCAA. The only question is how soon we get there and which entities trigger the paradigm shift.

Many view it as a virtual inevitability.

While the NCAA continues to lobby Congress for a lifeline, it is ceding the opportunity to craft a new model. In the process, the courts and NLRB are moving to shape it themselves.

And shape it they will.