Big Trouble for College Football?

Today the Chicago District of the National Relations Board ruled that football players at Northwestern University are employees and can unionize. The Board found that players’ scholarships are tied directly to their performance on the field, they are working between 20-50 hours per week, and they are generating millions of dollars for the university.

This is a big concern for universities nationwide.

If this ruling holds, college athletes will be able to bargain for new rights. The Northwestern players have said they want better medical coverage, concussion testing, four-year scholarships, and may even want to receive compensation.

The ruling will also make it more difficult for universities to argue that their football programs are in furtherance of exempt purposes. If they are unable to do so, the IRS will rule these programs to be unrelated business and will assess unrelated business income tax on universities’ football program income.

As we previously told you, we will have to wait and see whether this causes universities to drop their football programs altogether or to start forming 501(c)(6) organizations for their football programs. (The Internal Revenue Code currently allows professional football leagues to be recognized as exempt. However, Congress may be ready to kill this exemption.)

Northwestern’s president emeritus seems to think it will be the former. He has stated that if the players are allowed to unionize, the university may give up on Division I football. But they will have a while to think about it. Northwestern issued a statement that it will appeal the ruling and labor law experts say the appeal could take years to resolve.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits, 4705 Laurel Canyon Blvd, #306, Studio City, CA 91607

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