By Rashan E. Isaac, Ph.D. Candidate- University of New Mexico (Sport Administration)
Since its inception in 1906, the National Collegiate Athletic Association (initially known as the Intercollegiate Athletic Association) has long served as the governing body for collegiate athletics. Generating roughly $1 billion annually [1], the fiscal success of NCAA (stemming from tv marketing rights/fees, championships and NIT tournaments, investment income, sales/services, and private contributions) has long been criticized due to questions arising over the distribution of funds for student athletes. O’ Bannon V. NCAA [2] is noted at the forefront of NIL legislation in collegiate athletics and served as the catalyst in enabling collegiate athletes to receive compensation for use of their name, image, and likeness. The avenue created for current (and former) collegiate athletes to be compensated has extended into the multi-million-dollar industry that is esport. As esport is well established as a competitive and social phenomenon rivaling that of traditional sport NIL issues have extended into the esport ecosystem due to the amount of revenue generated by the industry.
Arrival of NIL in Esports
Tracing the history of esports provides a roadmap for the rise of NIL throughout the industry. The first noted compensation for esport players occurred during a competition held on October 9, 1982; where students competed against each other in the title Spacewar! at Stanford University’s Artificial Intelligence Library. The winnings (a year’s Rolling Stone Magazine subscription) pale in comparison to those of esport athlete Kyle “Bugha” Geirsdorf: earning $3 million in winnings from the 2019 Fortnine World Cup. With this year’s Fortninite World Cup set to feature a prize pool of $7,675,000 a single question arises: with the inception of NIL at the collegiate level, how will this policy impact esports?
The collegiate athletic arms race: a catalyst for NIL in Esports
Adaption of the current NIL policy [3] by the NCAA opened the door for NIL in collegiate esports. Preceding this movement, the collegiate athletic arms race served as a catalyst for the rise of NIL in esport. Similar to traditional sport, the recruitment of elite collegiate esport athletes may result in lucrative financial opportunities stemming from the success of a program. As the revenue generating potential of esport is now understood by colleges and universities, the last decade has seen engagement in an inevitable arms war to provide the best experience for prospective athletes; a precedent set in 2018 by Full Sail University’s $6 million, 11,200 square foot eSport facility built in collaboration with multiple industry stakeholders. Following a similar blueprint, Illinois State University funded its expansion at the national level though partnership with PIVOT Industry in which CEO Ben Shapiro expressed excitement about the opportunity to “be at the forefront of the role gaming can play for student well-being” and “the opportunity to leverage experience in both esports and naming rights to secure the right brand partnership for a state-of-the-art facility” [4]. College’s engagement in the athletic arms race to fund esport programs has created two crucial circumstances for the state of NIL in esport currently: the inclusion of current issues and framework for recent successful deals.
NIL issues in Esport
Legal issues related to Esport NIL deals largely fall into three major categories including:
- Player Representation and Agency
Moist Esports lawsuit v. U.S. Department of Immigration [5]
- Contest of denial for multiple team-member’s visas
- Contractual and Financial Challenges
Tenney v. Faze Clan [6]
- Complaints over breach in contract for financial agreements (i.e. tournament income, merchandise revenue, brand payouts)
- Legal and Ethical Concerns
NCAA esport policy
NCAA’s stance as a “hands off” approach and policy in regard to esport governance
A lack of consensus governing body for collegiate esport has set the stage for rampant Title IX issues currently existing within the industry.
Future of NIL in Esport
Despite the challenges stemming from recent NIL legislation, NIL serves as a lucrative option in the esport ecosystem. A recent trend includes leveraging the popularity of collegiate athletes by major players in the video game industry; with Activision paying former UCLA quarterback Dorian Thompson-Robinson to promote the title Crash Bandicoot 4: It’s About Time [7]. This is a trend that has been featured heavily in the successful launch of the title College Football 25, in which multiple student athletes (including cover athletes Travis Hunter- University of Colorado, Quinn Ewers- University of Texas at Austin, and Donovan Edwards- University of Michigan) have leveraged the use of social media to promote the game.
The success of NIL in esport is not only seen at the Division 1 level in collegiate athletics, as Taylor Thimmesh of Johnston Community College set a new standard for the industry: being the first esports player to sign with R3V Sports. Despite a Grand Champion II ranking, Thimmesh stated the greatest part of his success is “Pioneering…for other NJCAA athletes in basketball, football, or whatever sport” [8]. The intermingling of NIL success in esport, and its overlapping of opportunities with traditional sport, provide a range of opportunities for future opportunities in esport.
References
- Gough, C. (2022). NCAA revenue by segment 2012-2018 | Statista. Statista; Statista.
- O’Bannon v. NCAA, no. 14-16601 (9th cir. 2015). Justia Law. (n.d.).
- NCAA.org (2021). “NCAA Adopts Interim Name, Image and Likeness Policy.”
- University Staff (2024). Illinois State University hires PIVOT Agency to sell naming rights for Redbird Esports Complex.
- Gwynn, D. (2024). “Moist Esports Sues US Immigration over Apex Legends Visa Issues – Esports Insider.” Esportsinsider.
- FaZe Clan Inc. v. Tenney, 467 F. Supp. 3d 180.
- Nakos, P. (2023). Crash Bandicoot, Activision Ink Six Athletes to Nil Deals. On3.
- Johnston Community College (2022). JCC Esports Athlete First to Sign Nil Licensing Agreement.
