A few thoughts:
1. California's law (AB206) just passed and will not be effective until 2023, so it is really impossible to know at this early date how it will affect things.
2. This situation really calls for federal legislation or, in the absence of that, the NCAA's member schools agreeing on some kind of system that might allow individual athletes to get some quantum of endorsement money.
3. My biggest concern is that schools might end up paying significant money that is nominally "endorsement money" but in fact recruitment money. Like the example in an early post in this thread, that of Jeff Bezos offering a recruit a $2.5 million endorsement contract upon the condition that he commits to the University of New Mexico. I have not read AB206, but if it contains provisions that somehow address this problem (precluding endorsement deals from being concluded until some period of time after the player commits to his university?), then that would be helpful. In that case, perhaps endorsement deals would truly reflect the player's marketability, and likely be pretty few in number.
4. True endorsement deals involve a third party paying money directly to the player or his representatives. They would not take money directly out of university coffers. Individual endorsement deals would, however, reduce the value of team or university endorsement deals. For example, Nike is likely to be far less willing to pay the University of Oregon (much less any other school) big bucks for wearing unis that include the Nike logo if individual players can conclude their own deals and wear the logos of competing sponsors.