If last year is any indication, legal controversies will dramatically reshape the sports industry in 2024. Here are five key predictions:
1) Charlie Baker Prioritizes Settling College Athlete Litigation
If NCAA president Charlie Baker has his way, his organization will make two major changes: (1) DI schools can pay athletes for their NIL and (2) DI schools in a new subdivision can pay athletes at least $30,000 per year via an “enhanced educational trust fund.” Baker’s idea is only a concept at this stage, raises a bevy of legal questions and will face a slow-moving NCAA review process. But the plan could—and some would argue should—place colleges into two buckets: those that offer a pro sports-like experience and those that treat intercollegiate athletics more traditionally.
Although Baker’s reforms could pay big dividends for the NCAA, they wouldn’t resolve ongoing legal challenges that threaten the NCAA and its members with paying billions of dollars.
In Re College Athlete NIL Litigation and Johnson v. NCAA feature thousands of athletes as plaintiffs. They seek not only rule changes but also monetary damages for past and ongoing harms—including related to TV broadcasts, video games, NIL and unpaid wages. Then there are the NLRB petitions regarding USC football and men’s and women’s basketball players and Dartmouth men’s basketball players. They demand employee recognition and potential formations of unions that would collectively bargain wages, hours, health care, retirement and other terms of employment with schools, conferences and the NCAA.
Baker’s plan doesn’t tackle those issues, but it’s difficult to imagine it having any chance for success without Baker also resolving them.
Watch for the former Massachusetts governor to put on his dealmaking hat and try to reach settlements. Settlements would call for the NCAA and member schools to pay hundreds of millions or billions of dollars to resolve past harms to athletes. Former and current college athletes would be paid, and their attorneys would net healthy cuts, too.
This is, of course, super complicated.
There are many attorneys involved on behalf of players, and their clients’ legal claims run the gamut of antitrust, labor and employment laws. What methodologies should be used to determine how much money each player gets? That question could lead to sharp differences of opinion, including among star and ordinary players and among athletes who play different sports, are on different teams and at different schools.
Baker would also need to craft a plan that member conferences and schools—as well as their insurance companies and financial backers—could accept. Should every school pay the same? Should Power Five schools, especially those at the top, pay a lot more? What types of university funding could be used to pay this type of settlement?
The USC and Dartmouth petitions are about changing the status of athletes into employees who can unionize. Could Baker craft a plan that accepts some college athletes as employees and would it appease enough players and schools? Would that arrangement comply with federal and state laws that vary in terms of workers counting as employees and their eligibility to form unions?
If Baker can’t strike deals, the alternative will be to roll the dice with federal courts and hope they side with the NCAA. Under the leadership of Mark Emmert, the NCAA tried that strategy in O’Bannon and Alston and lost both cases. Don’t expect Baker to make the same mistake.
2) Recognition of College Athletes as Employees Advances
While Baker striking deals could change their trajectories, the NLRB petitions involving USC and Dartmouth players as employees will advance further in 2024. The Dartmouth petition is moving fast. There was already a hearing before the NLRB’s regional office in Boston and the players and school now await a decision. The USC petition is in the middle of a hearing process before the agency’s regional director office in Los Angeles.
There’s a good chance both petitions will succeed, at least at the regional director level. Attorneys for the players have forcefully rebutted long-standing NCAA arguments that college athletes are amateurs. There’s also increasing support in legal and political communities for the recognition of some college athletes as employees.
But there will be appeals, including to the agency’s board in D.C. and later to federal courts. Realistically, the process could last well into 2025 or 2026. Still, expect to see legal momentum for college athletes as employees continue this year.
3) Conferences Keep Realigning in Direction of Two Pro Sports-Like Conferences
As the Pac-12 plays out the string and the ACC faces FSU and perhaps other member schools wanting out, the Power Five is on a path to contraction.
Although it won’t happen in 2024, the Power Five could morph into two super conferences, each with about 15 or 20 teams—in the mold of the Eastern and Western Conference in the NBA or the NFC and AFC in the NFL.
There are schools that generate massive revenues through athletics, and see their admissions and fundraising efforts boosted through athletics. Some could afford to operate in a world where schools pay the players wages, share TV money and still comply with Title IX. Provided the NCAA changes amateurism rules, the athletes at these schools could remain as students. There’s no law preventing a school employee from also being a student.
That won’t be the world in 2024, but if the Pac-12 folds and the ACC struggles to maintain its membership in 2024, that world won’t be so far off.
4) PGA Tour and LIV Golf Settle Since Alternative Is Worse
With an impending deadline of Dec. 31 to finalize a partnership agreement, the PGA Tour, the DP World Tour, LIV Golf and LIV’s backer—the Public Investment Fund of the Kingdom of Saudi Arabia (PIF)—have extended their negotiations into 2024. They’ll continue to talk as they attempt to form a new entity that would look different than what they outlined last June. What was billed as an entity funded by PIF and its $700+ billion is now expected to also feature prominent U.S. investors, including owners of teams from the major pro leagues.
Both have reasons to strike a deal. If they don’t, their litigation could resume. The PGA Tour had the upper hand in court but found it costly to litigate. Those costs would return if the litigation restarted. The PGA Tour could also struggle to keep its top golfers given that LIV could pay them much more and given that the PGA Tour, now a LIV business partner, can no longer credibly preach loyalty or suggest it would be unpatriotic to join a Saudi-funded league.
Meanwhile, LIV has the financial wherewithal to fund litigation indefinitely. But LIV and PIF were uncomfortable with the prospect of complying with pretrial discovery in U.S. courts—and the precedent that would set for PIF’s many other investments in U.S. companies.
Expect the parties to reach a deal and create a super league that could find itself facing its own antitrust problems.
5) Diamond Sports Bankruptcy Will Play Key Role in RSNs’ Future
One of the fears of the Diamond Sports Group bankruptcy process is that it could lead to fans being unable to watch their favorite teams on TV. Through Bally Sports, Diamond has carried games on regional sports networks for more than 40 teams in the NBA, NHL and MLB. The bankruptcy process has been—as expected—messy and could last for years. But fans haven’t lost games, and it seems unlikely that will happen. Through arrangements approved by U.S. Bankruptcy Judge Christopher Lopez, Diamond, the leagues and teams have worked through those issues. At other times he’s ruled for one side or another.
The central question raised by Diamond’s bankruptcy is how RSNs will fit into a world where more sports fans stream. Will RSNs succeed in an era where cable TV is deemphasized? Will leagues and teams earn as much in their broadcasting deals?
The answers to these questions will continue to form in 2024. They might trouble many in the business of sports. As Sportico’s Eben Novy-Williams wrote last week, uncertainties with RSNs and cord-cutting are among factors that could lead to franchise values dropping for the first time in decades.