Why Washington Is Trying to Rein In College Sports

From New York Times, I'm Natalie Kitrowf. This is the daily. A sport has imploded before our very eyes, and I don't say this hyperbolicly. In the five years since student athletes were allowed to get paid to play, college sports has gone completely haywire. Give it a break. This is not the college football we all grew up with. Each year it's gotten a little worse. We have a broken system. Players are moving from team to team chasing a payday. Malachi Tony 4.1 million cars in bed. 4.3 million. I think my biggest year was 6. He's a college kid. Colleges are amassing dark money war chests. Programs that never stood a chance before are becoming champions. The Indiana Hoosiers are the Kings of college football. And no one, not the players, not the coaches, not the athletic directors can agree on what the rules around all this even are. Much less how to follow them. We have no rules and we have no governance. This is just a really sad state of affairs. It's not right. And we got to find a way to do something. Today Stewart Mandel of the athletic explains why this week Washington finally decided to step in. It's Thursday, October 1st. Stewart Mandel, welcome to the daily. Oh, we're starting right now. Yes. Okay. There was no real warning there. I'm ready now. Thank you. Glad to be here. So earlier this week something very rare happened. A bill past the Senate with overwhelming bipartisan support. And even rarer, that bill is attempting to regulate sports, which is a part of American life that Washington generally keeps its nose out of. So we are turning to you to explain this moment. Help us understand what's going on here. Well, for the past five years, ever since college athletes were finally allowed to make money, and specifically paid for their name, image and likeness rights, what we now call NIL, everybody's been talking about how college sports is in chaos. A term you often hear is the Wild Wild West. And so the industry, the NCAA, the conferences, the schools have spent a lot of time and a lot of money lobbying Congress saying we need your help. So this bill that protect college sports act, which was co-sponsored by Ted Cruz or Republican and Maria Cantwell Democrat, it covers pretty much everything you can think of in college sports. But what most people focus on is how it regulates name, image, and likeness payments. And then how often the players can transfer between schools. Got it. And on Monday night, it passed in the Senate and it passed in a landslide. Final vote 77 to 22. Now it goes to the House. Nobody can really predict what's going to happen then. But in the meantime, a huge bipartisan slam dunk for the people who sponsored the bill, maybe not so much for the people who are on the other side of it. And this is being described as historic. Talk about why? It's historic because nobody can remember a time when Congress set out to regulate an entire sport. They've regulated certain parts like NFL television rights and whatnot. But here's Congress basically saying, hey, we're dictating the rules now. They want to take over regulation of all of college sports. Okay. We're going to get into the specifics of the bill what it actually does. But before we do that, I want to talk about the state of college sports right now. At this point, I think everybody has an opinion about college sports. There's a lot of dark money flowing through this world. And you as a part of the amazing team at the Athletic, which is a sports publication owned by the Times company, have done a lot of vital work to help give us a clearer picture of the landscape here. So let's tell the story of how we actually got to this point where Washington is intervening in this way. Well, I think it's safe to say that college sports has changed more in the last five years than it had in the 50 years before that. And that all has to do with a pretty important demarcation, which is prior to July 1st, 2021, throughout all of our lifetimes, it was understood college athletes cannot make money. They cannot receive any compensation above and beyond their scholarship. Right. In fact, at one point in the NCAA rulebook, it said, you can give them a bagel, but not a bagel and cream cheese. That was a real rule. Wow. But throughout the 2010s, public opinion is shifting to, well, why don't the athletes receive a cup of all this money. People are reading about television deals that are worth billions of dollars. They're reading about coaches, making five, six million dollars a year, which is quaint now, but it was a lot then. And saying, this is not fair to the athletes. They deserve a cut. And that eventually leads to state politicians around the country, making their own bills, making their own laws that say athletes can make NIL money in direct conflict to the NCAA's rules. And then a really big moment came in 2021 when the Supreme Court took up an antitrust case in which the NCAA was sued, not specifically about NIL. The issue in that one was a cap on educational expenses that schools offer the athletes, but same principle, right? There was a restriction in place on a form of compensation in the Supreme Court ruled nine nothing against the NCAA. And in a concurring opinion that Justice Brett Kavanaugh wrote, he kind of expanded the scope of their decision to cover a lot more than just this one issue. He wrote that the NCAA's business model in any other industry would be flatly illegal. That's a quote. Yeah, that's what he wrote. So that's when the NCAA caved. And so July first comes and athletes can now do endorsement deals. If I can sign with Gatorade, you can too. Jared Casey, you just made one of the greatest game winning catches in Kansas football history. Where are you going now? Where am I going? I'm going to Applebee's. So pretty quickly, you started seeing college athletes appearing in TV ads for sports drinks for fast food chains, local mom and pop shops, and some of these college towns where they're big celebrities. Hey, this is Dakota Scroffer. I've received it from Louisiana. When you're AC isn't Dakota's, you call SOS, he's Nicola. And of course, social media ads, all of these things that we would consider to be fairly benign. What nobody for saw was that once they opened that Pandora's box, that NIL rights would be used for a completely different purpose, which is boosters paying their athletes to come to their favorite school. And just say what boosters are exactly? Boosters are donors to a university's athletic department. And the NCAA considers you a booster if you buy season tickets. But what we think of are the rich guys who donate tens of millions of dollars and have their names on buildings. And they just want to win a national championship. And so here's an opportunity to basically be the owner of a college sports team and pay the players yourself. And how are they doing that? Well, in history, prior to NIL, it was all backroom, shady, under the table stuff. Stuff, frankly, that was hard to prove. But you always heard rumors about it and every so often somebody would get busted and the player would be ineligible or the school would get punished. Now that NIL is allowed, you can do it all above board. So NIL becomes a thing on July 1st, 2021. In the spring of 2022, not even a year later. Nico Yamalyeva has committed to Tennessee $8 million NIL deal. The athletic reports that a high school quarterback in California, a five star recruit who hasn't committed to a college yet, has signed a four year $8 million deal with a collective associated with the University of Tennessee. I think two million a year for a five star quarterback prospect is a freaking steal. So what's a collective? It's a bunch of donors pulling their money together in one pot that they can then use to distribute to recruits because the school itself can't do it. They would get in big trouble. And pulling a whole bunch of money together $8 million in this case. Yeah. And that sent shockwaves throughout college sports because nobody realized just how quickly we'd gone to multi-million dollar deals. Right. And it's easy to imagine how these sums of money can begin to transform the way these leagues actually function. Absolutely, because right around that same time in 2021, the NCAA also loosened its restrictions around transfers. So for a long time, if you wanted to transfer to another school, you had to sit out a year. So now they change the rule where, okay, one time exception, you can transfer and play right away. So that's 2021. And even within a couple of years of that, that one time restriction goes away. And unlike the pro leagues where you can only sign somewhere as a free agent when your contract's up, these college players can do it at any time. It's pure unlimited free agency. And that opens the floodgates because now these donors and these collectives can use that money to entice guys to transfer to their school. And now you have teams that are turning over half or more of their roster in a given year. Just this past year, this past off season, Oklahoma State brought in 91 new players, which is quite a number when there's 105 on the roster. - Wow. (soft piano music) - The other big change is, right up till that point, the schools themselves couldn't be involved. All these NIL deals were being done by third parties. But starting in 2025, again, because of another court case, now for the first time schools, can pay their athletes directly up to a limit. And that limit at first is $20.5 million per year. Those are not NIL deals though, that's revenue sharing. - This is a huge deal, right? Schools now being able to directly pay players, walk me through what the goal was here. - The goal was actually to stabilize the system. The thinking at the time was, well, if we the schools can control the payments, then there's gonna be less movement and the costs are gonna go down. Because as part of the rules around revenue sharing, they set up this clearing house that all the outside NIL deals would have to get approved. I talked to athletic directors at the time who earnestly believed that this would be the end of collectives, that the market would stabilize. And if anything, it did the exact opposite. And as soon as they instituted this system, it was a race to figure out how do we get around it. - What does that exactly look like? It sounds extremely chaotic, but paint me the full picture here. - Yeah, it looks like the NFL, if the NFL had no rules or ability to enforce their rules, you have on the school side, these programs, in addition to the coaching staff, now have a full on personnel department, with a general manager, with scouts, who are evaluating players from around the country, all the time with an eye on, oh, maybe that guy might be available to add to our roster next year. And on the other side of that transaction, we have agents for the players, who, no matter what time of year it is, and certainly during the season, are calling up those GMs and saying, hey, I've got this guy, he's doing really well at this school. If he decides to transfer, how much would you be willing to pay for him? - And they're doing that over and over again. They're shopping these players around, you're saying. - They're constantly shopping these players around. In fact, the guy could have one good game in September, and suddenly that's the window to start calling around, engaging interest. And ultimately, the goal is to get a bidding word going, 'cause by the way, unlike in the NFL, where it's public information, what everybody makes, it's all private in college, and so the agents can pretty much dictate the terms. Hey, this school over here is offering two million. Are you willing to go to three million? And nobody really knows if those are real offers or not. - So Stuart, how much money big picture are we talking about flowing through this system now? - That information is very hard to obtain. Everybody's very hush-hush about it. Like I said earlier, they're under no obligation to publicize it. But this summer, myself and several of my colleagues from the athletic set out to try to find out what all of the 68 major programs are spending on football, because football is, in most cases, about 75% of what they're spending on all of their athletes. So eventually, through calling every source you can think of around the industry, we arrived at a number that we believe is accurate for all 68 major conference teams. And in many cases, it was a lot more than most people imagine. We'll be right back. All right, Stuart, how did you get to these numbers? How did you figure out what this marketplace actually looks like? - Well, one thing you figure out pretty quickly is coaches and GMs are very reluctant to talk about what they are spending on their own team, but they love to talk about what their competitors are spending. You also have to be alert to the fact that everybody's got an agenda. The coaches all want you to think they're spending less than they are, because that lowers expectations from the fans. The athletic directors, though, they want you to think they're spending more than they are, 'cause that makes them look like good fundraisers. So we talked to GMs and coaches, we talked to athletic directors, we talked to people that work at the collectives, agents who negotiate deals with these schools, and eventually we narrowed it down to a range for each school. And in some it depends on which conference you're in and how much TV money that conference makes, but on the low end we have schools that are spending 10 to 15 million dollars, and then the richer schools at the top, on Ohio State, Oregon, Texas, Miami, are spending north of 50 million dollars. So the idea that the market was gonna stabilize once the schools established direct revenue sharing and third party deals have to be approved. The collectives would go away, clearly that was not the case amongst the biggest spenders. - Can I ask a somewhat provocative question, which is, is above 50 million actually an outlandish amount of money for a team that's actually generating enormous revenue for a university? I know it's a big round number. I know it's just football, but this is a sport that produces some of the most watched TV all year in America. - Yeah, I mean, I think in a vacuum, you could make the case that it's not actually that significant, a number relative to how much revenue comes in, but it's jarring because five years ago that number was zero, right? It's a market that happened overnight. And in a sport where nobody ever talked about how much money was being spent on the players within five years, 50 million dollars on just one school's football budget seems quite dramatic. - Right, and then other dramatic piece of this, I think, was just how inequitable this system was shown to be and honestly problematic if you're a school that is only paying eight million dollars to your players where your competition is spending five times that amount. - No question. It's a really alarming takeaway from this that kind of accentuates just how wide the gap is growing between the haves and have-nots. Now, there's always been haves and have-nots in this sport, but if you happen to be one of the lucky schools that has a billionaire booster like Texas Tech does, Texas Tech spend a pretty irrelevant program for most of its history, but they have this oil magnet, Cody Campbell, who played a Texas Tech who's now on the board of trustees, and he's throwing money around and Texas Tech, while a lot wins the big 12 last year for the first time in his history. - To a single billionaire alum can make a huge difference. - He can make a huge difference. In fact, another big concern is how all that money affects transfers. I happen to think that the rise of transfers has been good for the sport overall. Indiana wins the national championship last year, goes from losing his programs in national champion, they could not have done that in the era before transfers. But I'm not a fan of a specific school, right? I cover the whole sport. If you're a fan of an individual school, let's say NC State. I feel like every year whoever the top two or three players are on NC State, they get poached by another school, a school with more money. And yes, it makes it hard to keep track of who's on your team from year to year. Also, fans are so loyal to their school, and they have an expectation that the players will be too. And that's just not the case anymore. Some players are gonna go to whoever will pay them the most money. And I recognize that that can be a really demoralizing thing for fans of a specific school. - Yes, I mean, what you've described is not just a complete reordering of fans' relationship to college sports, but a complete reordering of how college sports actually work at the most fundamental level, which then generates quite a bit of frustration, including in Congress, where lawmakers decide to weigh in. So let's talk about that, how they actually weigh in, and what is in this bill? Walk me through it. - Well, the bill is kind of a college sports madlib, to be honest, but this is my first time covering anything congressional I had to watch CSPAN for three hours for the first time in my life. And one thing I've learned is that it seems like everybody in Congress is a big college sports fan, right? Everybody has a school or multiple schools in their state that they represent, and they all have a vested interest in it. Ted Cruz has more favorite teams than anybody, because he's in Texas, which has the most division one teams in college football. So when ESPN's pre-game show went to Austin for the big Ohio State Texas game, Ted Cruz appears on the show to basically shill for the bill, and he gets, by the way, booed the entire time. - Well, look, as you know, well, college sports is an amazing institution. - Not because of the bill, but because he's considered a curse, wherever he goes to Texas team's game. - They just don't even want him in the stands. - Right. - Most college athletic programs, right there. They're losing tens of millions of dollars. - And as a result-- - And for Cruz and for the other senators who are deeply involved in this, there are really two issues that seem to galvanize them the most. The transfers and how much money the players are getting. And so how does the bill address this? Well, with transfers, it brings back that rule that the NCAA had very briefly, that restriction, that an athlete can only transfer once and playwright. way. If they want to transfer again, they have to sit out a year. Meaning theoretically this would limit that free agency mayhem where players are hopping from school to school to school every year. Correct. You would have far more of your roster in place from one year to the next. Okay. And what about the spending piece? How does it address that? It's important to note that the bill does not include any specific limit on what an individual athlete can make. It's a cap on how much the school can spend on those athletes. Technically, there's a cap now, but nobody's following it. They're finding all of these workarounds. In the bill, that number goes up quite a bit to 48 million. But now all of those third-party NIL deals that the athletes get that they use to supplement those payments, like now those all count toward the cap. So basically, this regulation aims to neuter those collectives and boosters who are sending so much money through college sports right now. It's trying to rein that outside spending in. Yeah, it's definitely a cost-control measure because right now, year to year to year, these rosters are going up 40, 50, 60%, maybe even more, and they need that to slow down. Now there are schools right now that are already spending more than $48 million. We know that from our reporting. Eventually, all of the schools will get to that number because in a free market, they might even get to even more than that. I have to say, Stuart, there's a lot that's fascinating about this bill, but I think it's really interesting that a bunch of Republicans are supporting what's essentially the government intervening in the free market and putting real restrictions on it. Yeah, they get to that much bipartisan support. You had both Republicans and Democrats going against what some of their traditional stances would be. You have, like you said, Republicans were trying to regulate a free market. You've also got Democrats who are supporting a bill that a lot of its critics say is anti-labor. If we're going to impose rules on athletes, we should apply the same rules to coaches. So, within Congress, the Congressional Black Caucus, as already said, they're going to oppose this. Because it's not about the athletes, it's not about fairness, it's enforcing hypocrisy. A couple of the main issues are, first of all, the elephant in the room. This bill restricts what schools can spend on their players, but not their coaches. And oh, by the way, the majority of college football players are black, and the vast majority of coaches are white. Right. It sounds like the critics of this bill are pointing out what they see as something fundamentally unfair, which is that if you're trying to control costs, why are you doing it only on the backs of players' incomes? Maria Cantwell's big talking point in pushing for this bill was the escalating expenses and how universities are now having to subsidize their athletic departments. But the main drivers of those expenses over the years were coaching salaries and buyouts, facilities, recruiting costs, none of which are addressed in this bill. Just stepping back, Stewart, it is wild to think about how quickly the sentiment on this issue has shifted. I mean, to hear you describe it, five years ago, all the momentum was behind these players, behind the idea of them finally making money off of a system that had made money off of them for so long. And now, with all the upheaval that's happened, the pendulum is swinging back to finding the limits of that spending, to controlling it, to making it more predictable, and to handing power back to management. Yeah, it's pretty fascinating to go back to 2019, 2020, when the states were first starting to propose these NIL bills. California was the first one. I used to say back then, there's never been a more bipartisan issue than NIL because these bills would pass both blue states and red states by huge margins. Like, everybody agreed, okay, it's time for the athletes to start getting a piece of the pie. So it's like on July 1st, 2021, somebody flipped a switch and all the power shifted in the other direction. And then I think you saw it in practice, you saw the chaos that ensued that this went in a completely different direction than people imagined. And suddenly, it's okay, how do we reign some of this back in? All right, so this bill has a long way to go before it passes. It goes to the house now. We don't know what's going to happen there, but I want to ask Stuart, we've spent a lot of time here talking about the finances of this sport and the enormous business surrounding it. We haven't really talked about the games themselves, like how all this upheaval is actually playing out on the field. As someone, you know, who lives in this world who covers it so closely, how do you think the actual product that we're talking about has changed because of all of this? I mean, we have the Senate telling us this bill should become a law because college sports have been ruined by everything you've described. Is that true? Yeah, that's what's crazy for all of the angst for the fact that it went all the way to the Senate. Saturdays in the fall have never been more exciting. When you're watching a great game like Texas Ohio State a couple weeks ago or LSU Ole Miss, you're not thinking, "Man, this would be better if the players couldn't transfer as often." If anything, I think it's more exciting because more teams have a chance, right? Indiana, winning the National Championship last year was the best college football story of my lifetime. The losingest major conference program of all time flipped overnight into a national power and won the National Championship and everybody loved it. 30 million people watched the National Championship game and yet amidst all this, we're being told that the whole enterprise is in trouble and the asteroid is heading toward it. So at the end of the day, the TV ratings have never been better. The attendance is still great. So all of the things that we're talking about and addressing in here have had a tremendous effect on how the people in the business do their jobs. It's clearly had a tremendous effect on the income and livelihood of some of the elite athletes, but false Saturdays are still undefeated. Turns out college football is just a really hard thing to break. They're trying hard to break it but they haven't yet. All right, we'll do it. Thank you so much for coming on the show. Thank you so much for having me. We'll be right back. Here's what else you need to know today. Suddenly, the breaks of the wings come up. We start dog diving like the plane loses control. We fell down the 15,000 feet like five kilometers. In my head, I said, I don't deserve to die like this. I'm so young. On Wednesday, a fly to buy plane on its way to Israel made an emergency landing after one pilot stabbed another and passengers and crew want to fight to regain the flight control. Like a massive turbulence and we didn't know what happened. Then we saw that there is a people running to the cockpit and we understood that there were some stabbing over there. The plane suddenly plunged thousands of feet during the attack, which was only stopped when a group of passengers rushed to subdue the aggressive pilot. Videos from the plane showed at least one wounded man and several others covered in blood. All of the passengers and crew members arrived safely in Israel by Wednesday night after a replacement aircraft was sent to retrieve them. As they disembarked, they shared harrowing stories of what had happened on board with my colleagues. Adam Rascon and Natan Odenheimer. The most frightening moment was actually for me. After we arrived in Saudi Arabia, and every time I just thought of going back to that plane, I just thought of the moment where the plane collapsed and maybe it could happen all over again and maybe. Israeli Prime Minister Benjamin Netanyahu said that one of the pilots had, quote, "apparently attempted to crash the plane with its passengers on board, nearly all of whom were Israelis." The Israeli authorities are investigating whether the incident was an attempted attack on Israelis or a suicide, among other possible explanations. Today's episode was produced by Carlos Paretto, Adrian Hurst, Eric Krupke, and Astha Chatharvedi. It was edited by MJ Davis Lin and Michael Benoit, with help from Rob Zipco. Contains music by Marion Luzano, Diane Wong, and Dan Powell, and was engineered by Alissa Moxley. Our theme music is by Wunderly. That's it for the Daily. I'm Natalie Kitroweth. See you tomorrow.