By C. Peter Goplerud III, of Counsel, Spencer Fane LLP
Twenty-five years ago, I wrote a law review advocating pay for play for college athletes. The article presented arguments for the concept, but also noted legal and practical obstacles to implementation.
I did not, however, even consider advocating for athletes to be able to directly benefit from the use of their name, image and likeness (NIL). I wasn’t creative enough to think along those lines. And, of course, at that time there was no such thing as social media.
Since then, many others have argued that there should be compensation allowed for athletes’ participation in intercollegiate athletics. In recent years, in the aftermath of the O’Bannon case, there have been many advocating that the athletes should be able to receive NIL benefits.
California enacted the first law granting NIL rights to collegiate athletes with an effective date of July 1, 2021, and prior to that date, several states enacted similar legislation. Following months of institutional indecision, the NCAA Board of Governors unanimously agreed , on June 30, 2021, it was time to address its stance regarding NIL. It announced a waiver of the rules that prevented athletes from exercising their NIL rights.
There are now 22 states that have NIL laws in effect. Another 12 states have bills that have been signed into law with effective dates between now and 2023. Several other states considered legislation but did not succeed in passing NIL bills.
Finally, there are numerous bills pending before both houses of Congress, but federal action is not likely this year.
While each state’s law has different provisions and nuances, all provide a wide grant of NIL rights to collegiate athletes. Many of the laws prohibit the athletes from entering into contracts which conflict with existing institutional contracts, unless the school approves the contract. All of them require the athlete to disclose all contracts to their school.
In many jurisdictions the athletes are allowed to have agents or attorneys represent them in negotiations for contracts. Some states require that anyone representing an athlete in NIL matters must be licensed in that state. Some of the laws require schools to provide some level of education regarding financial matters. Some have provisions regarding the use of the schools’ logos. Many of the laws preclude athletes from NIL relationships involving alcohol or marijuana.
Since July 1, it has been a wild west environment for athletes, agents, compliance officers, boosters and business entities. There are published reports of a few significant deals for some high-profile athletes and many smaller opportunities for others. In this context, “high-profile” has multiple meanings; it would include both highly talented and accomplished athletes and athletes with significant social media influence.
It is important to understand that there are opportunities throughout collegiate sports, not just for athletes at Power 5 schools. NAIA athletes were granted NIL rights nearly a year ago.
While there are reports of many schools adding staff to deal with NIL, Division II and III schools face unique challenges with NIL because they typically have fewer resources, particularly in compliance. The compliance and reporting requirements of the various state statutes do not differentiate between Division I schools and the others
There are already reports of athletes in various sports, male and female, securing six- and seven-figure contracts.
Early financial winners included the Cavinder twins, who are starting guards on Fresno State’s women’s basketball team; Bryce Young, who is the quarterback for Alabama’s football team; and Paige Bueckers, star player on U Conn’s women’s basketball team. She has actually filed for a trademark for her nickname, Paige Buckets. More recently there are reports of a Kentucky men’s basketball player signing a deal with a Porsche dealer and the backup quarterback for Florida indicating he will only be considering six- and seven-figure deals.
Most of the larger deals have been negotiated by agents or attorneys.
Many athletes, however, will not be able to monetize their NIL rights at that level. There are concerns expressed regarding gender equity. The Drake Group has recently released a lengthy paper setting forth strong arguments for protecting the rights of participants in women’s sports, noting the need for schools to be vigilant about Title IX compliance in the context of NIL.
However, there are at least two notable large-scale deals for women’s programs that have been announced recently. The entire Santa Clara University women’s soccer roster has been signed to a NIL contract, and every Brigham Young University female athlete will benefit from a NIL deal with a Utah based tech company.
There are certainly questions whether Division II and III athletes will be able to monetize their NIL rights at a level comparable to the typical Division I athlete. While there are reports of lucrative deals being struck by athletes in these divisions, current data indicates a relatively wide disparity overall. One likely key for success for these athletes will be high levels of social media activity.
And, then there is the question of what happens when an athlete with a high-dollar deal underperforms on the field or court. The NCAA policy prohibits deals based upon performance or anything that looks like pay for play. It seems likely that such athletes will collect on deals in place, but they will find it difficult to secure additional opportunities.
Several university athletic departments have already put together group licensing programs for their athletes. Such arrangements can streamline NIL opportunities for these athletes and minimize the time and attention individual athletes might otherwise devote to securing contracts or sponsorships.
There are also several organizations which have recently been formed to represent and advise athletes and schools on NIL matters. Opendorse is a marketing entity working with both athletes and schools. WME Sports is representing several athletes for NIL agreements. Athliance provides NIL related compliance services for institutions. UniWorld Group, a multicultural advertising and marketing agency, is launching a new sports consulting unit to focus on NIL and Black student athletes.
It seems pretty clear that NIL is going to have a significant impact on recruiting, both for initial enrollment and athletes being enticed to enter the transfer portal. This has implications for compliance and enforcement, particularly with regard to booster involvement. Some of the state laws prohibit deals with boosters, but there are clearly some agreements already in place with athletes and local businesses.
The issues noted here just scratch the surface of a volatile and uncertain environment. Institutions and athletes alike are well advised to give careful consideration to the policies developed internally and the parameters for lawful and compliant exercise of NIL rights.