In the not too distant future, college athletes playing at top-tier schools may be hitting the open houses as hard as they hit the gym.
Earlier this month, the State Legislature unanimously passed a bill — over the NCAA’s objection — to allow college athletes to earn money from their names, likenesses and images. If Gov. Gavin Newsom signs the “Fair Pay to Play Act” — which would take effect in 2023 — California would become the first state in the nation to allow college athletes to get paid.
And its impact could be enormous, with California’s college athletes for the first time being offered lucrative endorsement deals and sponsorships.
It could mean that some would have enough money to do the first thing many players do when they sign their first professional contract: Buy a home.
For real estate agents, the bill could also create a pipeline of newly-minted millionaire clients. Los Angeles alone is home to two of the top college athletic programs in the nation, the University of Southern California and UCLA.
Kofi Nartey, Compass’ sports and entertainment division director — and former college football player — supports the bill but admits it will present a new set of challenges.
“I think it’s good for college athletes to be able to make money from their likeness and the brand they are building in the same way that the universities have for years,” he said.
Buying a first home is an exciting prospect for college athletes — and their agents — but it comes with considerations those students and their schools haven’t previously had to tackle.
Nartey, who was a wide receiver at the University of California at Berkeley, admits the stakes are higher when working with younger athletes.
“We have a built-in responsibility because we are dealing with the largest financial decision of most people’s lives,” he said. “There’s an increased responsibility when you are dealing with someone who’s come into a lot of money very quickly.”
Gregory Piechota, a Compass agent who’s represented pro athletes in L.A., including Serena Williams, said it’s important to make sure everyone on a client’s team is on board with a purchase. That could be a financial manager, a sports agent, and family members.
“There are agents who will say that whatever the client wants they’ll make it happen, but from deals I’ve done, what helped me keep clients is making sure everyone’s on the same page,” he said.
Hilton & Hyland agent Justin Hunchel offers a little preview for prospective buyers. Because athletes move frequently, he advises they “buy something that’s going to be easier to get rid of versus something that is very specific” to their taste. Sometimes that’s easier said than done.
“For someone who comes into a lot of money like that, there can be a tendency to go through it rather quickly,” Hunchel said. “So you try to advise them as best you can, but there’s only so much you can do in those situations.”
Nartey added that he’s had to “tell clients not to spend as much as they wanted to spend. When you haven’t renewed a contract, there’s no reason to spend that much.” Nartey’s client list has included Michael Jordan, Kevin Durant, former Lakers player and current L.A. Sparks head coach Derek Fisher, among others.
Nartey said that universities, which have been staunchly opposed to the bill, should “build out the infrastructure to support these younger athletes.” That could mean a mandatory training on wealth management, similar to the “Rookie Transition Program” available for incoming N.F.L. players.
SB 206 does not require schools to provide that counseling or training. It’s mostly focused on barring schools and the NCAA from disqualifying student athletes who receive compensation in some way for their likeness, image, and names.
The issue of allowing college athletes has been debated within the NCAA since at least the 1980s, but the country’s dominant collegiate sports association has fiercely fought the idea and continues to do so.
In a letter sent to Newsom earlier this month, the NCAA argued that the bill was unconstitutional and would give California schools an “unfair recruiting advantage” over schools in states without such a law.
“This bill would remove that essential element of fairness and equal treatment that forms the bedrock of college sport,” the letter said, according to the L.A. Times.
Piechota said he’s noticed that top-tier players themselves are better preparing for the pressures of life as a professional athlete. He said they’re “smarter” with their money than athletes typically were in the past.
More young athletes are interested in investment properties and quiet neighborhoods away from the high-profile areas like the Hollywood Hills and West Hollywood, where there are more distractions, he said.
Compass agent Elana Fullmer, whose husband, Brad, spent a couple of seasons with Angels during his 10-year baseball career, called L.A. a great place for a young player to buy.
“What’s a safer or better way to build wealth than to buy property in L.A.?” she said.
Still, being able to spot a good investment deal requires expertise and some finesse.
When asked if he had any advice for young athletes looking to buy homes either for personal or investment purposes, Nartey was concise: “Call me.”