Today, California Governor Gavin Newsom vetoed SB 906, which aimed to amend California NIL law. The bill, introduced by State Senator Nancy Skinner (D – Berkley), sought to implement novel transparency measures that would mandate public disclosures from all California schools regarding the total funding NIL collectives and other entities spend on NIL services from student-athletes at each respective university. The proposed legislation would have made California the first state to dip its toes into the water of public NIL disclosure. My previous article on the details of the proposed legislation can be found here. 

The now kyboshed bill would have allowed fans, recruits, and members of the media to see just how large of an NIL war chest each California school has at its disposal. As the economic dynamics of college sports continue to evolve, the amount of money schools’ NIL collectives have to pay their athletes is paramount to the successful recruiting and retention of revenue-sport athletes.  

The bill introduced by Skinner was rooted in principles of gender equity. According to a news release, the state senator hoped that the bill would pressure “NIL entities to do the right thing and boost funding for women athletes.”

The proposed legislation would have required public disclosure of the aggregate amount of money athletes from each team received and noted discrepancies in compensation between genders. According to industry estimates, roughly 95% of NIL collective payment goes towards male athletes. NIL collectives are legally separate entities from the institutions they support and, therefore, escape the scrutiny of Title IX mandates of equal funding across gender. 

Governor Newsom cited two reasons for his veto in a statement released today: “College sports are in a period of transition as many schools are changing athletic conferences and relevant issues are currently pending in the courts. As Governor, I want to ensure California’s colleges continue to be competitive with other states. Further changes to this dynamic should be done nationally.”

Newsom believes that transparency in NIL funding may put California schools at a disadvantage to schools outside of the state that do not face the same disclosures. Athletes looking to compete at the college level could easily see the robustness of a school’s NIL program through such disclosures and could choose to pursue other programs that can be alleged to have superior resources outside of the state. 

Newsom also indicated that due to the massive uncertainty around college athletics’ future structuring, like institutional revenue sharing, any further NIL reform should be addressed at the federal level. 

With a patchwork of state NIL laws being the only regulation on athlete compensation in the college athletics space, further splintering and disparate regulation presents challenges to athletes and those looking to tap into NIL for brand partnerships. 

Newsom’s anti-federalist mindset is a change of pace from his approval of the 2019 Fair Pay to Play Act, also presented by Skinner, that made California a trailblazer by codifying the nation’s first law enshrining the right for athletes to profit from their NIL.