By Connor Glass, CCHA
The current state of NIL in college athletics is sort of like the Taylor Swift and Travis Kelce romance. It’s being covered incessantly by the national media; as many people love it as love to complain about it; some find it distracting from the actual game; and it seems likely to end in a way that could be a little messy. This NIL update will highlight some of the latest NIL developments and reactions. Most recently, the Florida State University (FSU) football program was involved in NIL-related recruiting violations, and the NCAA was hit with another lawsuit, this time from Tennessee and Virginia Attorneys General (AG’s). But when it comes to student-athletes monetizing their name, image, and likeness, it’s not all Bad Blood. The NCAA passed an NIL proposal that many people hope will bring some transparency to the NIL space and help protect student-athletes.
- The Florida State University Decision
On January 12, 2024, the NCAA released a Negotiated Resolution for an FSU case involving an NIL-related recruiting violation. Specifically, an assistant football coach informed a prospective student athlete (PSA) and his family members about a meeting with a booster during the PSA’s official visit. The assistant coach transported the PSA and his family members to an off-campus location to meet with the booster. At the meeting, the booster offered the PSA an NIL deal valued at approximately $15,000 per month over one year. While the assistant coach did not attend the meeting, he provided the PSA and his family members a ride back from the off-campus location.
Using NIL as a recruiting inducement was one of the few prohibitions covered by the NCAA’s Interim NIL Policy in July 2021. A year later, the NCAA clarified prohibitions around such activity in its Name, Image and Likeness Policy Question and Answer. The answer to Question No. 3 states, “[a]n institutional staff member may not organize, facilitate, or arrange a meeting or conversations between the NIL entity and a PSA, including a transfer student athlete…” It is worth noting, however, that, in speaking with the PSA, it would have been permissible for the FSU coach to disclose existing NIL arrangements with current student-athletes at FSU, as long as the coach did not “provide information or guarantees regarding NIL opportunities should the PSA attend [the coach’s] institution.” Id.
The FSU case demonstrates the complexity of NIL rules. For instance, while this case represents violations for a coach’s conduct with a PSA, coaches are permitted to interact more with NIL entities on behalf of current student-athletes. Coaches may engage NIL entities to inform student-athletes of NIL opportunities, give information to student-athletes about NIL opportunities, provide student-athletes’ contact information to NIL entities, introduce student-athletes to representatives of NIL entities, and arrange space for student-athletes and NIL entities to meet on campus or at an institution’s facilities. NCAA Division I Institutional Involvement in a Student-Athlete’s Name Image and Likeness Activities (October 26, 2022).
The FSU coach facilitated a meeting between a “booster,” or representative of FSU’s athletics interests who also represented an NIL collective, by informing the PSA and his family members about the meeting and providing transportation to and from the location of the meeting. If, however, the young man were a current FSU student-athlete instead of a PSA, what the assistant coach did could have been permissible… as long as the coach did not communicate with the NIL entity regarding a specific request or demand for compensation, encourage the NIL entity to fulfill that request, or “proactively assist in the development/creation, execution or implementation of a [student-athlete’s] NIL activity… unless the same benefit is generally available to the institution’s students.” Id.
Navigating NIL rules is a difficult endeavor. College coaches are constantly looking for a competitive edge, and bigger programs are supported by NIL collectives run by boosters who want to land the big recruits. Institutions want to demonstrate to recruits and current student-athletes that they are committed to embracing NIL, but that can be difficult to do while remaining NCAA compliant. The best way for an institution to avoid NCAA penalties or the headache of going through an investigation is to make NIL rules education a priority. It’s worth noting that FSU’s head football coach was able to avoid a Head Coach Responsibility violation by promoting an atmosphere of compliance and monitoring his staff. Additionality, the institution was able to avoid a failure to monitor by providing effective rules education to its staff members and training its staff to “routinely seek guidance from compliance when questions or concerns arose.”
As much as people want to call NIL the “Wild West”, the FSU case demonstrates that the NCAA plans on enforcing its rules—but that might not be the End Game given the lawsuit filed last week.
- Tennessee and Virginia Complaint
The antitrust case brought by the State of Tennessee and the Commonwealth of Virginia against the NCAA exhibits some of the frustrations related to the NCAA’s NIL-related recruiting restrictions mentioned above. The Complaint requests that the United State District Court for the Eastern District of Tennessee issue a Temporary Restraining Order (TRO), then preliminary injunction, then permanent injunction “barring the NCAA from enforcing its NIL-recruiting ban or taking any other action to prevent prospective college athletes or transfer candidates from engaging in meaningful NIL discussion prior to enrollment…”[1]
The main argument throughout the Complaint is that NCAA rules restricting NIL-related recruiting “limit competition and artificially decrease NIL compensation that college athletes would otherwise obtain in a free market.” Since NIL rules prohibit institutions from using NIL as a recruiting inducement, they restrict PSAs from being able to shop around for the best NIL offers from different schools. As a result, PSAs are unable to ensure that they are being compensated what the market dictates they are worth (whether PSAs’ “worth” is related more to their athletic ability than their name, image, and likeness is a conversation for another NIL Update).
Days later, the NCAA filed its opposition to the plaintiffs’ TRO and preliminary injunction, specifically stating that the plaintiffs were seeking relief against “longstanding and fundamental prohibitions against the professionalization of college sports.” The NCAA pointed out that Tennessee’s NIL law already restricts compensation arrangements designed to incentivize enrollment, the very thing the challenged NCAA rules prohibit. The Tennessee law states “To preserve the integrity, quality, character, and amateur nature of intercollegiate athletics and to maintain a clear separation between amateur intercollegiate athletics and professional sports, such compensation must not be provided in exchange for athletic performance or attendance at an institution.”[2]
Additionally, the NCAA listed multiple procompetitive benefits fromthe challenged rules, including: preserving collegiate athletics as a unique offering; competitive balance among member institutions; and preventing student-athlete exploitation. The “preventing student-athlete exploitation” argument is particularly interesting, as the NCAA argued the challenged rules act as a “safeguard” for PSAs who are “unlikely to have an advanced understanding of their own NIL value…”
Ultimately, the TRO was denied in federal court. U.S. District Judge Clifton Corker ruled the potential harm claimed by the plaintiffs was not imminent and “is compensable by monetary damages and, thus, not irreparable.”[3]The TRO, however, is indicative of a new trend. A federal court recently issued a preliminary injunction on the NCAA’s transfer rule, effectively making the rule that restricts immediate eligibility for an undergraduate student-athlete who has transferred to a four-year institution previously unenforceable through the end of the 2023-24 academic year. Even though the Tennessee, Virginia TRO was rejected, it seems likely that another suit will eventually be filed in relation to reports of some future NIL investigation. To put it another way, TROs and lawsuits are procedures that the NCAA is getting to know All Too Well.
- NCAA’s Adoption of NIL Student-Athlete Protections
The NCAA Division I Council met in January at the 2024 NCAA Convention in Phoenix, AZ, where it adopted NCAA Division I Proposal No. 2023-58 (Name, Image and Likeness – Student-Athlete Protections). The proposal will go into effect on August 1, 2024 and includes the following elements:
- Third-Party Service Providers. The NCAA will create a centralized registry of professional service providers, including agent representatives, who are seeking to provide services to student-athletes.
- Disclosure of NIL Activities. Student-athletes must disclose specified information related to NIL activities valued at $600 or more to the institution no later than 30 days after entering or signing the agreement. Failure to disclose will result in the student-athlete becoming ineligible until the disclosure requirement is satisfied.
- Education. The NCAA office will make comprehensive NIL education, including the provision of standardized contract terms for use in NIL agreements, available to prospective student-athletes, student-athletes, and professional service providers.
Part of the proposed bylaw’s rationale includes:
“This proposal is designed to assist student-athletes in making informed decisions as they navigate the environment surrounding name, image and likeness without exerting control over a student-athlete’s decision or curtailing their name, image and likeness opportunities. While congressional action and/or state laws could help regulate the name, image and likeness environment, this proposal should be considered the first step in creating protections for student-athletes in the name, image and likeness environment, which must be regularly monitored to ensure the needs of student-athletes are met….”[4]
Like most new legislation, the NCAA’s new NIL Student-Athlete Protections proposal has been met with mixed reviews. On the one hand, a centralized NIL registry could be an effective way to empower student-athletes and fill a Blank Space by providing them with some transparency related to NIL agents for example. On the other hand, requiring the disclosure of all NIL activities over $600 – at the risk of losing their eligibility – will potentially add a lot of liability for institutions and a lot of risk for student-athletes who could lose their eligibility for failing to disclose a deal. Not to mention, there will likely be some resistance from SAs who do not wish to disclose their NIL agents/inner circle. Student-athletes at public universities, for example, could potentially face public scrutiny if NIL details were obtained through a public records request.
As the NIL landscape continues to evolve, just like the eras of one of our culture’s biggest pop icons, no one is Out of the Woods yet.
[1] https://fingfx.thomsonreuters.com/gfx/legaldocs/lgpdnnlblpo/pr24-10-NCAA.Antitrust-Tennessee-Virginia.pdf
[2] Tenn. Code Ann. § 49-7-2802(a).
[3] Daniel Libit, Judge Nixes Tennessee, Virginia NIL Injunction Push Against NCAA, Sportico, Feb. 6, 2024, https://www.sportico.com/leagues/college-sports/2024/ncaa-nil-tro-tennessee-virginia-1234765691/.
[4] https://web3.ncaa.org/lsdbi/reports/pdf/searchPdfView?id=107554&businessCode=PROPOSAL_SEARCH_VIEW&division=1
