By Scott Hirko, Assistant Professor, Sport Administration and Management, Wayne State University; Scholar-in-Residence, Newhouse School of Public Communications, Syracuse University
In June, I received a notification that I may be interested in a new potential college athlete compensation product from myNILpay.com. On LinkedIn, it posts its platform is a “First-of-its-kind payment gateway platform that allows fans to direct-pay college student-athletes.” [1] In return, contributors receive an autographed photo. Curious, I logged in to learn more about how to directly pay college athletes.
It led me to a scenario that I was invited to share for this newsletter. This scenario involves the intersection of technology, social media, and state/federal law with NIL compensation of college athletes. I’ve spoken with a few lawyers with knowledge of Anti-Trust issues and some senior Division I-FBS athletic administrators for their feedback. I also contacted www.myNILpay.org on multiple occasions for comment, with no response to date on this specific scenario.
Scenario
[NOTE, this is not real, but rather a simulation of what I understand may occur in the Fall of 2023]:
“I am attending Spartan Stadium to watch Michigan State play the University of Maryland in football on September 23, 2023. Before the game, my buddies and I discuss a promotion from other Spartan fans on Twitter in late August that encourages me to reward every player who scores for MSU with $23 on the 23rd in 2023!!!! The promotion includes a link to myNILpay.org to provide compensation.
“Nick is the starting QB for the Spartans. He’s played sparingly, but throws a good deep ball. Nick has his profile on myNILpay.org and informed MSU he would participate with all opportunities presented via the app. As I watch the game from the stands, I care about TD passes. I’ve got $100 potential profit riding on the OVER in the over-under of 60 points for the game because of my bet with a Michigan casino (college sports betting is legal in Michigan)… so, the more points the better.
“The tension is high. MSU is trailing Maryland, 7-0, early in the first quarter. Nick throws a 50-yard dart of a pass, a long post to his trusted receiver, Tom, who races to the end zone for the score! The crowd erupts and it is exciting! It’s 7-7, and MSU is back in the game.
“I remember the fan-led promotion and decide to use this app to pay Nick directly. A $23 thank-you for a TD pass is minimal compared to the $77 profit I would make otherwise. I don’t know Nick, but I send Nick a “thank you” note via Twitter letting him know his efforts are helping me to possibly profit on my bet.. and, hopefully, as well, the Spartans win!”
“After the score, Nick races to the sideline. He asks his mom (in the front row) for his phone, and checks it… waiting to how much money he made by throwing a big-time TD pass. By the way, Nick can make $20,000 from just 870 people in a stadium of 76,000 (less than 2% of the crowd) giving $23 instantly for a big-time TD pass.
“Nick gives the phone back to his mom and asks her to “accept and sign on all digital assets” and has the opportunity to cash in with big money from the TD pass. From one play, in one game. For myself, I get a signed pic and signature from Nick! The more TDs the better. GO GREEN has never been more accurate.” [end scenario].
According to myNILpay.org, the app “Complies with NCAA requirements”:
“In exchange for the payment, the fan will receive a unique digital asset featuring the athletes name and digital signature. By digitally signing the asset, the athlete has fulfilled the NCAA quid-pro-quo requirement and does not need to take any other action. The Fair-Market-Value of the digital asset is what the fan and athlete agree on.” [2]
No need to beat around the bush anymore. Pay-for-play is here and it is here to stay. This app allows anyone to pay athletes directly from their phone in real-time, anytime, anyplace.
Pragmatic concerns
Len Elmore, former NBA/NCAA basketball player, television commentator, and current co-chair of the Knight Commission on Intercollegiate Athletics, told me about the scenario: “it’s scary… what is the limit on what we do with young athletes? How do (online NIL products) violate the sensibility of what it means to be a college athlete?” Elmore stated NIL “has always been a right of athletes that should have never been abrogated.”
NCAA’s Interim NIL Policy Key Takeaways states athletes will “refrain from accepting compensation in exchange for athletic performance or participation; or as an inducement for enrollment,”[3] and must abide by state laws.
In Michigan, Governor Gretchen Whitmer signed into law Public Act 366 of 2020, which focused primarily on institutional penalties if prohibiting a college athletes from engaging in NIL activities. The focus on the student within the law states any institution:
“shall not prevent a student from receiving compensation for using his or her name, image, or likeness rights for a commercial purpose when the student is not engaged in official team activities.” [4]
The law also states athletes with NIL opportunities must give notice “at least 7 days prior to committing to the opportunity or contract, for review by that institution.” [5]
State vs national laws and regulations
This scenario provides an insight into the disconnect between national membership rules and state law. The national NCAA rule on NIL prohibits pay-for-play, but each membership institution must abide by state laws; which, in Michigan, does not address the myriad of ways that athletes can receive NIL compensation. Rather, the law in Michigan only prohibits compensation based on any illegal activity or endorsement of tobacco, alcohol, drugs, or gambling.
Elmore noted that once performance is added to NIL payments with a booster organization, it is an NCAA violation… however, in this scenario, there is no booster affiliation between myNILpay.org and any specific institution. He stated this scenario is an example of the need for public policy to address how NIL fits in the wider educational attainment of athletes: “NIL is already manipulating athletes. Boosters and collectives believe the NIL process takes out exploitation – and increases the opportunity to win. But, nowhere does it talk about how it is going to improve the attainment of an athlete’s education in keeping with the true mission of college sports.”
An additional legal view about Anti-Trust issues was offered by Marc Edelman, a tenured Professor of Law and Director of Sports Ethics at the City University of New York. From an Anti-Trust perspective, Edelman stated, “Most likely, NCAA schools cannot get together to stop athletes from accepting payments, but they might be allowed collectively to stop a violation of state or federal law… Also, under Section 1 of the Sherman Act, it is only an Anti-Trust issue if member schools collaboratively rather than independently prevented a practice.”
“Unless the conferences merge further, individual conferences are reasonably unlikely to have market power,” said Edelman. “For example, if the Big 10 wants new NIL restraints – there is not the same market power concern under Anti-Trust law that there would be if the NCAA imposed national rules.”
Many legal and ethical questions are prompted by this scenario. I am hopeful these thoughts are found useful to instigate a robust discussion about specific NIL practices being proposed, as well as the future impact of NIL on college sports and its athletes.
[1] See the LinkedIn profile, myNILpay.org, https://www.linkedin.com/company/mynilpay/
[2] See myNILpay.org, https://www.mynilpay.org/
[3] National Collegiate Athletic Association Interim NIL Policies, https://ncaaorg.s3.amazonaws.com/ncaa/NIL/NIL_InterimPolicy.pdf
[4] See Michigan State House Enrolled Bill 5217 of 2020, https://www.legislature.mi.gov/documents/2019-2020/publicact/pdf/2020-PA-0366.pdf
[5] Ibid.
