To Pay or Not To Pay … College Athletes

Happy Thursday! We’d like to give a special shout out to Uncle Sadegh, a taxi driver in the coastal city of Rasht, Iran. Well-known locally for posting videos on social media of himself dancing jubilantly in the streets of his city, the Iranian regime shut down his account—apparently because it was … too happy.

Quick Hits: Today’s Top Stories

• COP28, the United Nations’ two-week climate change conference in Dubai, United Arab Emirates, concluded on Wednesday with an agreement from the nearly 200 countries represented to “transition away” from fossil fuels—the first time the meeting has resulted in an explicit call to end the use of the resources. More than half of the parties at the conference lobbied for stronger language in the final text—a promise to “phase out” fossil fuels—but met resistance from countries part of the Organization of the Petroleum Exporting Countries (OPEC). The agreement has no enforcement mechanism. 
• The Federal Reserve held interest rates steady following the central bank’s meeting on Wednesday, maintaining a target range for the federal funds rate between 5.25 and 5.5 percent and marking the third consecutive meeting that the Fed has left rates unchanged. Officials signaled that rate cuts could come next year as inflation continues to cool, prompting a rally in the markets that resulted in the Dow Jones Industrial Average closing at an all-time high. Members of the central bank’s Federal Open Markets Committee projected that the federal funds rate would be 4.6 percent by the end of next year, suggesting three quarter-point cuts in 2024. Fed Chair Jerome Powell emphasized the need to proceed carefully, but also signaled that the central bank is focused on the risk of not cutting rates soon enough and slowing the U.S. economy more than necessary. “We’re aware of the risk that we would hang on too long,” he said at a press conference yesterday. “We know that that’s a risk and we’re very focused on not making that mistake.”
• The Supreme Court announced Wednesday it will take up a case to decide whether rioters who breached the Capitol on January 6, 2021, can be charged with obstruction of an official proceeding—referring to efforts to prevent Congress from certifying the results of the 2020 election. The charge is among the four charges against former President Donald Trump in special counsel Jack Smith’s case in Washington, D.C. More than 300 people are facing such an obstruction charge, which defendant Joseph Fischer is challenging, related to the January 6 insurrection. 
• The Supreme Court also said it would hear a Biden administration challenge to a Fifth Circuit Court of Appeals ruling limiting access to the abortion pill mifepristone. The Fifth Circuit had previously ruled that the Food and Drug Administration (FDA) did not follow proper procedures when it began expanding access to the drug originally approved some 20 years ago, suggesting the court’s ruling could also have implications for the FDA’s regulatory powers.
• Federal Judge Tanya Chutkan on Wednesday paused proceedings in former President Donald Trump’s case regarding his efforts to overturn the 2020 election while he appeals a decision regarding his immunity. “As the D.C. Circuit recently made clear, a former President’s absolute immunity would constitute ‘an entitlement not to stand trial or face the other burdens of litigation,’” Chutkan wrote in her order, adding that, if the case was returned to her court, she would consider, “consistent with its duty to ensure both a speedy trial and fairness for all parties.” Part of that consideration would be whether to keep any deadlines thus far established, including a trial start date scheduled for March 4, the day before Super Tuesday.
• House Republicans voted unanimously on Wednesday to formally authorize an impeachment inquiry into President Biden, officially directing the House Judiciary and Ways and Means Committees to continue their probe into ties between the president and Hunter Biden’s business activity. Republicans have argued a formal inquiry is necessary to compel the Bidens and the White House to comply with subpoenas in their investigation. “Today’s vote of the full House of Representatives authorizing the inquiry puts us in the strongest position to enforce these subpoenas in court,” said House Speaker Mike Johnson. Democrats decried the inquiry as a partisan sham. “There is no evidence that President Joe Biden has engaged in wrongdoing,” claimed House Majority Leader Hakeem Jeffries.
• Hunter Biden defied a House Republican subpoena to appear for closed-door testimony Wednesday, showing up outside the Capitol instead to protest and call for an open hearing. “I’m here to testify in a public hearing today to answer any of the committee’s legitimate questions,” Hunter said at a press conference. The House Oversight Committee subpoenaed Hunter last month, with a December 13 deadline to appear for testimony. House Oversight Chair James Comer and House Judiciary Chair Jim Jordan said yesterday they would “initiate contempt of Congress proceedings” against Hunter.

The Wild West of College Athletics

A district judge in West Virginia issued a 14-day temporary restraining order against the National Collegiate Athletic Association (NCAA) on Wednesday, pausing the enforcement of the “Transfer Eligibility Rule,” which effectively benches for a year certain student athletes who transfer colleges. It’s a short-term win for students looking to take their talents elsewhere, but it also raises new questions in the ongoing battle over how a student may profit from their personal brand.

College athletes were granted permission to profit from their name, image, and likeness (NIL) in a landmark 2021 ruling by the Supreme Court—though the ensuing years have opened the floodgates to controversy and confusion as a patchwork of state laws and school regulations complicates matters, predominantly for student athletes. In recent weeks, the NCAA has proposed radical new rules to regulate the student athlete sponsorship market, while a bipartisan collection of lawmakers works to get a national standard across the finish line.

In June 2021, the Supreme Court handed down a unanimous 9-0 ruling in NCAA v. Alston that stated the NCAA had violated antitrust law by limiting the amount of in-kind, education-related benefits colleges and universities could provide to their athletes. While the immediate ruling was not directly related to sponsorship deals or NIL opportunities, the NCAA announced its own interim policy about a week after the ruling “suspending NCAA name, image and likeness rules for all incoming and current student-athletes in all sports.” Under the new policy, students were allowed to engage in NIL activities as prescribed by the law of the state where their school is located. Schools were tasked with helping students navigate those state laws, and students were required to report all approved NIL activities to their school.

Even at the time, the NCAA’s then-President Mark Emmert stressed the need for a more permanent—and nationalized—solution. “With the variety of state laws adopted across the country, we will continue to work with Congress to develop a solution that will provide clarity on a national level,” he stated in a press release announcing the changes. “The current environment—both legal and legislative—prevents us from providing a more permanent solution and the level of detail student-athletes deserve.” 

Nearly two years later, a patchwork of state laws and regulations (32 states and counting) regulates NIL activities, and the NCAA continues to face legal scrutiny over its governance of the enterprise. Many students have utilized the transfer portal—a database that processes student athlete school transfer requests—to move from school to school, often in search of the best NIL deal. To prevent abuse of the system, the NCAA established a rule that required students who transferred more than once to refrain from competition for a year, unless they received a waiver from the NCAA.

Two antitrust lawsuits were filed—in California and West Virginia—against the NCAA just this month, challenging the treatment of student athletes. The aforementioned West Virginia lawsuit (brought by the state of West Virginia, as well as Ohio, Colorado, Illinois, New York, North Carolina, and Tennessee) disputes the NCAA’s transfer eligibility rule. The bylaw “unjustifiably restrains the ability of these college athletes to engage in the market for their labor as NCAA Division I college athletes,” the lawsuit alleges. “In contrast to college athletes, students with academic or music scholarships can freely transfer institutions without facing similar restraints on their ability to practice their craft. Likewise, coaches and administrators face no comparable barriers.” The California action argues in favor of the direct compensation of student athletes, which “the NCAA refers to as ‘pay-for-play,’” the lawsuit asserts, “but what anyone else would call market-value compensation.”

These lawsuits come against the backdrop of a formal complaint before the National Labor Relations Board regarding the classification of student athletes and a separate move by the Dartmouth men’s basketball team to unionize, calling for an end to the “age of amateurism and the brazen exploitation of athlete labor and intellectual property.”

Faced with this onslaught of legal challenges, it comes as no surprise that the NCAA—now led by former Massachusetts Gov. Charlie Baker—and a coalition of its subsidiary conferences are pushing for rapid action. President Baker sent a letter to member schools earlier this month outlining a proposal to radically transform their financial relationship with student athletes, and set “more permissive and flexible rules across the NCAA that put student athletes first.” The proposal includes lifting the cap on education-related benefits, permitting schools to enter sponsorship deals directly with students, and—most transformatively—allowing schools to set up a trust fund that can be used to pay athletes directly.

These changes would apply to a new subdivision of high-resource Division I schools (colleges and universities are grouped into three divisions for athletics, by level of competition and amount of available resources), who would be invited to opt in. Schools that choose to participate would be required to designate $30,000 per student athlete, per year into an “enhanced educational trust fund.” There would be no cap on the amount of funds a college could provide, and the trust fund would be subject to Title IX rules—meaning at least 50 percent of the funds must go to female athletes. “Colleges and universities need to be more flexible,” Baker wrote in the letter. “And the NCAA needs to be more flexible, too.”

While Baker’s proposal includes changes that would be made within the NCAA itself, a group of over 30 NCAA conferences—the Coalition of the Future of College Athletics (C4FCA)—is pushing for Congress to set national standards regarding NIL, to end the “confusion for student athletes in the recruiting process and the lack of transparency in NIL, as it differs state to state,” Samantha Azzarelli, a spokeswoman for C4FCA, told TMD. Baker and Big Ten Conference Commissioner Tony Petitti both testified before the Senate Judiciary Committee in October, arguing that without national standards, student athletes are lured to the college programs that can promise the biggest payout. “Many states are passing NIL and associated laws designed specifically to provide their in-state universities with a competitive advantage in recruiting through the promise of NIL,” said Petitti. “A uniform federal statute is needed to preempt this network of state laws.”

There are several proposed bills currently floating around the Senate that could implement uniform federal standards on NIL policy. Sen. Cory Booker of New Jersey, in conjunction with Sens. Richard Blumenthal of Connecticut and Jerry Moran of Kansas, proposed a bipartisan piece of legislation; Sen. Tommy Tuberville of Alabama and Sen. Joe Manchin of West Virginia are also working on a bipartisan proposal. Sen. Ted Cruz, too, has put forth his own NIL bill—though unlike the other proposals, his legislation would empower the NCAA to craft any regulations. “I think it would be a mistake to rely on government to create a quasi-government entity to make and enforce some rules,” Cruz told TMD. “As I’ve said, I think the NCAA is a much better institution to set the rules.”

Despite his natural conservative inclination against ceding state lawmaking control to the federal government, Cruz has been in conversation with Booker about a consensus plan—and is optimistic about its chances of passing. “There is widespread appreciation of the need for federal legislation—an appreciation that is bipartisan,” he said. “I think we risk doing enormous damage to college athletics if Congress does not act. It is the wild west right now. My colleagues are hearing from universities in their states that this chaos makes no sense.” 

But with a full legislative plate and the end of the year rapidly approaching, Congress likely won’t bring a consensus plan into the end zone until early 2024, at least.

Worth Your Time

• The U.S. is in the midst of a military recruitment crisis—but it’s nothing compared to the problem in Japan. “After 75 years of peace, Japan is facing immense challenges in its rush to build a more formidable military,” Motoko Rich and Hikari Hida reported for the New York Times. “To understand why, consider the Noshiro, a newly commissioned navy frigate equipped with anti-ship missiles and submarine-tracking sonar. The vessel was designed with an understaffed force in mind: It can function with about two-thirds of the crew needed to operate a predecessor model. Right now, it puts out to sea with even fewer sailors than that. On the ship’s bridge, tasks that previously occupied seven or eight crew members have been consolidated into using three or four. The ship’s nurse doubles as dishwasher and cook. The slimmed-down crew on the Noshiro nods to the stark demographic reality in Japan as it confronts its gravest security threats in decades from China’s increasingly provocative military actions and North Korea’s growing nuclear arsenal. Japan has committed to raising military spending to 2 percent of gross domestic product, or by about 60 percent, over the next five years, which would give it the third-largest defense budget in the world. It is rapidly acquiring Tomahawk missiles and has spent about $30 million on ballistic missile defense systems. But as the population rapidly ages and shrinks—nearly a third of Japanese people are over 65, and births fell to a record low last year—experts worry that the military simply won’t be able to staff traditional fleets and squadrons.”

Presented Without Comment

Axios: [Democratic Sen. Joe] Manchin Launching Tour to Weigh Interest from ‘Politically Homeless’

Also Presented Without Comment

The Hill: [Former GOP Rep. George] Santos: ‘I Want to Go Back to Congress’ 

Toeing the Company Line

• In the newsletters: The Dispatch Politics crew covered Sen. Josh Hawley’s endorsement of Donald Trump and Gov. Chris Sununu’s endorsement of Trump challenger Nikki Haley, Scott outlined (🔒) why the Chinese economy is in rough shape, and Jonah argued (🔒) blanket free speech policies can abdicate universities’ responsibilities in moral education.
• On the podcasts: Rep. Dan Crenshaw joins Jonah on The Remnant to discuss what’s broken in Congress and how to fix it, while Sarah and David break down the Texas abortion case and special counsel Jack Smith’s Supreme Court petition on Advisory Opinions. 
• On the site: Mike explains what could happen if third-party and independent candidates help throw the presidential election to the House in 2024, and Bonnie Kristian pushes back on claims from Sen. Lindsey Graham and others that Gazan civilians’ moral culpability essentially makes them fair game for Israeli missiles.

Let Us Know

Do you think the adoption of name, image, and likeness rules and increased use of the transfer portal in recent years has hurt college athletics?