--:-- [Sound of a podcast intro fading out]
--:-- Host (Jessica Mendoza): Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
--:-- Charlie Baker: Hi, Jessica.
--:-- Host (Jessica Mendoza): Today, we're talking about a major change in college sports. A federal judge has approved a settlement worth more than $2.5 billion between the National Collegiate Athletic Association, or the NCAA, and a group of current and former college athletes. This settlement creates a new system where every Division I school can choose to pay athletes up to $20.5 million per year collectively. Schools can start paying athletes in July. But there's still a lot to iron out, from regulating payments to new issues around gender equity and ensuring fair competition. I'm joined today by Charlie Baker, the president of the NCAA. Welcome to the show, Charlie.
--:-- Charlie Baker: Thanks for having me, Jessica.
--:-- Host (Jessica Mendoza): If you do the math, it's pretty clear that somewhere in the vicinity of a billion dollars will be shared with student athletes every year, at a minimum, starting next year. So, yeah, it's huge.
--:-- Charlie Baker: That's right. It's a big deal.
--:-- Host (Jessica Mendoza): Can you introduce yourself, please, and just tell us who you are?
--:-- Charlie Baker: Sure. This is Charlie Baker. I'm the president of the National Collegiate Athletic Association. And today, you're the president of the NCAA. You were previously the governor of Massachusetts.
--:-- Charlie Baker: That's right.
--:-- Host (Jessica Mendoza): Some of the things that your predecessors have done after office was join the U.S. Senate or work in private equity. For you, why the NCAA?
--:-- Charlie Baker: Well, I got a call right around Halloween of 22, sort of 60 days before I left office from a friend of mine who said he had met with the search firm searching for the next president of the NCAA. And when he heard what they were looking for, he thought of me.
--:-- Host (Jessica Mendoza): That's fascinating. And you said it was a good fit for you because of the governance-type model.
--:-- Charlie Baker: That's right. The NCAA has 180 committees and it writes bylaws. It sounds a lot like a governor-type, governance-type model.
--:-- Host (Jessica Mendoza): Let's talk about this big moment for your organization, the settlement between student-athletes and the NCAA that was recently approved by a federal judge. Five years in the making, you've called this moment a new beginning, and obviously the headlines have proclaimed this the most significant change in college sports. Do you agree with that?
--:-- Charlie Baker: Well, obviously the creation of the NCAA was bigger, and I would argue that Title IX was bigger. I certainly think it's one of the biggest moments because it creates a federally approved framework for schools to directly purchase NIL rights from their student athletes.
--:-- Host (Jessica Mendoza): That's right. And you were talking about how long this discussion and debate has been going on. This change is one that the NCAA fought against for a really long time, this idea that college athletes should be paid. You have embraced it under your tenure. Can you talk about why?
--:-- Charlie Baker: Well, after I'd been at the NCAA for about six months, I put out a position paper that basically talked about this idea of having schools purchase NIL rights from their student-athletes. And the reason I did it was because it just seemed to make sense to me.
--:-- Host (Jessica Mendoza): You mentioned the internet and how it's changed the way people interact with each other and with brands. Can you talk more about how that relates to this issue?
--:-- Charlie Baker: Sure. I mean, things have changed a lot over the course of the past few years. And this whole issue of name, image, and likeness has too. I mean, I remember 15 years ago maybe even 20 when the internet first became kind of a thing there was a kid who was probably a teenager who lived a few towns over from us who was on YouTube writing all these really hilarious original songs.
--:-- Host (Jessica Mendoza): That's Bo Burnham.
--:-- Charlie Baker: That's right. And he's gone on to become pretty famous. He's made a bunch of pretty interesting movies. But this is when he was young. And, you know, eventually he had like 100,000 followers on YouTube. And people started buying ad space on his site.
--:-- Host (Jessica Mendoza): And that's what you're saying, that college sports has been slow to adopt this kind of model.
--:-- Charlie Baker: That's right. And I just looked at it and said, these seem very similar to me. I don't know why we can't figure out a way to play in this space.
--:-- Host (Jessica Mendoza): So, you would say that this is a victory for the NCAA, despite the fact that it is a lot of money to pay out and there was all that resistance for such a long time?
--:-- Charlie Baker: I think it's more a victory for the young people. I mean, I certainly think the NCAA needed to get here, and I'm glad that we did. But I also believe the whole point here was to create a way for the NIL piece to become part of the relationship between the schools and the student athletes.
--:-- Host (Jessica Mendoza): And you mentioned the Wild West of the name, image, and likeness era. Now that schools can pay student athletes directly, can you just talk us through how the money is going to get distributed from schools to students and how this all will be regulated?
--:-- Charlie Baker: Well, the biggest thing is the four most well-known conferences, I think, the ACC, the SEC, the Big Ten and the Big 12. They are responsible for creating a process to manage, administer and enforce the rules associated with the way this works.
--:-- Host (Jessica Mendoza): And you mentioned the College Sports Commission. Can you explain what that is?
--:-- Charlie Baker: Yeah. The College Sports Commission is going to own the responsibility and the obligation for tracking the $20 million annual spend that's directly from the schools to student athletes, as well as the third-party NIL activity and the roster management stuff.
--:-- Host (Jessica Mendoza): And you mentioned the cap management platform and the third-party NIL platform. Can you explain how those work?
--:-- Charlie Baker: Sure. The cap management platform is being managed by the four power conferences, and it's where each school will submit their data, their rosters and what they're planning to spend their up to $20 million every year.
--:-- Host (Jessica Mendoza): And the third-party NIL platform is being managed by Deloitte.
--:-- Charlie Baker: That's right. And again, if you're going to do the deals, you've got to run them through the system and get them approved.
--:-- Host (Jessica Mendoza): Let's talk about the 20.5 million cap. It's the cap that schools can spend on paying athletes. But and this has come up before different schools have different budgets. There are D1 schools with smaller athletic budgets like Washington State, and you got Texas which you know has huge athletic budget and a lot more flexibility to meet that cap. Is it fair to the schools that don't have that kind of flexibility?
--:-- Charlie Baker: Well, I think this has been a good example of something where I think we have to wait and see how this plays out a little bit before we draw conclusions.
--:-- Host (Jessica Mendoza): And you mentioned the College World Series. You think that's a good example of how this new system could work?
--:-- Charlie Baker: Yeah. I mean, everybody said last year when there were four ACC teams and four SEC teams in the College World Series that NIL and all the rest had ruined this for everybody else. And yet this year you have eight teams in the College World Series, none of whom were in it last year.
--:-- Host (Jessica Mendoza): And you think that's a sign of things to come?
--:-- Charlie Baker: Yeah. I think what's probably going to happen is conferences are going to decide which sports they want to be really good in. And if you're, you know, Ohio State and you're the Big Ten, you're going to be good in a lot of sports, right?
--:-- Host (Jessica Mendoza): And you mentioned Title IX. How do you think Title IX might affect the distribution of these payments to college students?
--:-- Charlie Baker: Well, I certainly think, I mean, keep in mind that one of the places where there's going to be tremendous benefits as a result of Title IX is in scholarships, because one of the things this settlement does is it gets rid of the limits on scholarships that have been in place historically, which have dramatically underserved a lot of college student athletes.
--:-- Host (Jessica Mendoza): And you think that's going to lead to more women playing college sports?
--:-- Charlie Baker: Yeah. I think that will be true on the men's side as well. But just based on what I've heard schools talk about and what I've heard them say, there's going to be, I wouldn't call it an explosion, but there's going to be a very big increase in the number of student athletes who are scholarshiped.
--:-- Host (Jessica Mendoza): You and the NCAA are petitioning Congress for an exemption that would create some legal immunity for your organization. Can you just talk about why you think you need that?
--:-- Charlie Baker: I'm looking for limited liability so that we can make and enforce rules around certain things like academic performance and eligibility.
--:-- Host (Jessica Mendoza): And you think that's necessary because of the potential for lawsuits?
--:-- Charlie Baker: Yeah. There are a lot of folks in Washington, when I've talked to them about this issue around eligibility and around the four years to play five and the fact that you now have a lot of people who are looking to basically break that through the courts and to have a standard that basically says there is no limit to how long you can play, which would be, I think, a terrible thing to do for all the kids who come after the kids who are playing now.
--:-- Host (Jessica Mendoza): I see. And you think this exemption would protect the NCAA from all kinds of legal action, not just related to eligibility necessarily?
--:-- Charlie Baker: No, no, but I'm talking about limited liability protection. I'm worried someone's going to come after the academic standard. And you've got to meet those standards, and those standards are tied to eligibility.
--:-- Host (Jessica Mendoza): And you think that's a concern because of the potential for lawsuits?
--:-- Charlie Baker: Yeah. Now, if we're going to have people arguing with us in court about eligibility around how many years you can play, you can bet somebody's going to come in with a case at some point around, well, why is there an academic standard? And the answer is because it matters since 99% of you are not going to play professionally.
--:-- Host (Jessica Mendoza): And you mentioned the program that gives a core guarantee to every kid in Division I, where if they need 10 years to graduate, they get to keep their scholarship for 10 years.
--:-- Charlie Baker: That's right.
--:-- Host (Jessica Mendoza): I see. And you think that's a good thing?
--:-- Charlie Baker: Yeah. I think it's a good thing.
--:-- Host (Jessica Mendoza): You know, I never really liked that word very much, to tell you the truth. I prefer thinking about them as students who play sports.
--:-- Charlie Baker: Yeah. I would much rather have us focusing on what I would describe as, and I think this is where the settlement's going to take us, where we're worrying about things like, you know, having a really robust injury surveillance program, having a real robust program around mental health and health and well-being, having a really robust program around academic performance, having a, you know, robust program around sports betting, which, by the way, As a health and well-being and a mental health issue is a really big issue for kids in big-time college sports.
--:-- Host (Jessica Mendoza): And you think that's a better focus for the NCAA?
--:-- Charlie Baker: Yeah. I would much rather have us focusing on that stuff and less on this argument about what's an amateur.
--:-- Host (Jessica Mendoza): Is the answer refocusing and changing the terminology potentially?
--:-- Charlie Baker: Well, I certainly think the students who are playing sports in D2 and D3 and then and in you know a decent swath of D1 are for all intents and purposes going to continue to be kids for whom that four billion dollars in scholarships is going to matter a lot more than NIL.
--:-- Host (Jessica Mendoza): And you think that's a good thing?
--:-- Charlie Baker: Yeah. I think it's a good thing.
--:-- Host (Jessica Mendoza): Charlie Baker, NCAA president. Thank you so much for coming on.
--:-- Charlie Baker: Well, it's been great to talk to you, and I really would like to see you all spending some time in this space and seeing how some of the stuff that you and I talked about actually plays out over time.
--:-- Host (Jessica Mendoza): That's all for today, Tuesday, June 24th. The Journal is a co-production of Spotify and The Wall Street Journal. Special thanks to Lane Higgins for help on this episode. Thanks for listening. See you tomorrow.
