Recap: How We Got Here
Over the past three years there have been seismic shifts in the landscape of college sports, and these authors forecast even more change on the horizon. A look back at NIL developments will help put the current NIL landscape into context. In October 2019, following an onslaught of proposed NIL legislation by a number of states (and an enacted NIL law in California), the NCAA shocked many by voting unanimously to "immediately consider" updates to its longstanding prohibition on student-athlete compensation for use of their NIL. But the NCAA stopped short of actually changing any existing rules at that time. Fast forward to January 2021, prompted by a letter from the DOJ's Antitrust Division questioning the NCAA's planned approach to regulate NIL, the NCAA postponed its anticipated vote on NIL rule updates. State legislatures did not let up, with several additional states proposing and passing NIL legislation, many with July 1, 2021 effective dates. Congressional efforts persisted, too, but with less traction than state efforts. The authors continue to monitor progress at both the state and federal levels here.
What You Need to Know:
Given the recent changes in NIL rights and responsibilities for institutions and student-athletes, readers should:
- Be familiar with the NCAA's interim policy and their applicable state law requirements, if any
- Know that Congress and state legislatures continue to consider and introduce new NIL bills, while some states have already made moves to amend or fully repeal their NIL laws
- Check out our NIL legislation tracker here to stay up to date
On June 30, 2021, just one day before several state NIL laws were slated to go into effect and following the Supreme Court's June 21, 2021 ruling in Alston, the NCAA's Board of Directors approved an interim NIL policy, permitting all NCAA student-athletes to profit from their NIL. Operating under the interim policy, collegiate athletes who attend school in a state with an active NIL law must comply with that law, in addition to any institution and conference policies. Student-athletes who attend school in a state without active NIL legislation must comply only with any institution and conference policies.
Colleges, universities, and conferences quickly adapted by adopting NIL policies. And, student-athletes wasted no time cashing in on their NIL, with several student-athletes signing deals just after midnight on July 1, 2021 in a variety of contexts ranging from merchandise (Justyn Ross, The Players Trunk) and hair products (Antwan Owens, 3KINGS Grooming) to deals with cell phone providers (Haley and Hanna Cavinder, Boost Mobile).
In addition to individual student-athlete NIL deals, third-party companies and institutions have also started to test the waters with team-wide deals. For example, a protein bar maker, Built Brands, has entered into a deal whereby it will provide compensation to every member of the Utah-based BYU football team, including compensation to all walk-on players in amounts comparable to the cost of tuition and $1,000 to scholarship athletes for being brand ambassadors. No NIL legislation has been introduced in Utah. Similarly, American Top Team has entered into a deal whereby it will offer $500 per month to the ninety football players on scholarship at the University of Miami to promote its gyms on social media. Florida's NIL law has been in effect since July 1, 2021.
It has been reported, however, that the NCAA is looking in to the BYU and Miami NIL deals for potential violations of the NCAA's interim policy, specifically whether the deals run afoul of the pay-for-play prohibition. It has also been reported that the NCAA sought information from the University of Oregon regarding its third-party NIL program, Division Street, which provides branding and marketing assistance to Oregon athletes. Several institutions have employed similar vendors to assist their student-athletes with NIL ventures, so the NCAA's view of the Oregon policy could have a far-reaching effect.
Happening Now: NIL in Action
As state legislative sessions came to an end last year, many of the proposed NIL bills that did not become law were marked dead, while many other state bills are still alive, with proposed effective dates ranging from January 1, 2022 through January 1, 2023. One proposed bill, Virginia's House Bill 1298, underscores that NIL developments will no doubt affect high school students in the context of collegiate recruitment efforts. That bill prohibits high school student-athletes from entering into contracts to receive compensation for use of their NIL.
As for early adopters of NIL legislation, the landscape has changed so rapidly that some are already considering amendments. For example, Florida House Bill 939 aims to amend its NIL law to give institutions and athletic departments greater leeway in facilitating deals, consistent with NCAA guidelines which do not prohibit such arrangements. Alabama has gone a step further and repealed its NIL law altogether, finding that its legislation was more restrictive than NCAA guidelines.
While the NCAA continues to grapple with incorporating NIL policy changes, on January 20, 2022 it voted to approve an amended constitution, which goes into effect August 1, 2022. With regard to the "collegiate student-athlete model" the amended constitution plainly states "student-athletes may not be compensated by a member institution for participating in a sport, but may receive educational and other benefits in accordance with guidelines established by their NCAA division." Relevant here, the amended constitution also provides that: (1) "each division shall establish guidelines regarding student-athlete benefits, including commercialization of NIL," to prevent exploitation of student-athletes; (2) all conferences must provide student-athletes with "conference policies for licensing, marketing, sponsorship, advertising, and other commercial agreements that may involve use of a student-athlete's NIL"; and (3) institutions must "maintain written policies for licensing, marketing, sponsorship, advertising and other commercial agreements that may involve the use of a student-athlete's NIL," and must "provide such policies to student-athletes and make those policies publicly available."
The testing (if not erosion) of the traditional amateurism model continues to play out in the courts. In the wake of the Alston decision – which struck down limits on education-related benefits for student-athletes – the Third Circuit has taken up the question of whether NCAA Division I athletes qualify as employees of the institutions they attend "solely by virtue of their participation in interscholastic athletics" under the Fair Labor Standards Act.
Future: What's to Come for NIL
While we don't have a crystal ball, most NIL watchers predict that more transformational changes are forthcoming. We will likely continue to see states pass NIL laws and student-athletes enter into individual deals across the country. There will be a focus on the equality of such deals, including potential implications under Title IX. The NCAA has repeatedly affirmed its desire for Congressional action, and will continue to lobby for same. Although there is bipartisan support at the federal level for NIL legislation, the divergent views on the scope of that legislation continue to halt progress.
One thing is certain – the quickly changing landscape has left many collegiate stakeholders with more questions than answers when it comes to crafting compliant NIL policies at their institutions. As the contours of acceptable NIL activity have yet to be tested, whether team-wide deals will become more prominent may hinge on the NCAA's investigation into the BYU and Miami deals, and the enacted NIL law (if any) in each institution's jurisdiction. Institutions in states with enacted NIL legislation should be familiar with the state's statutory definition of "name, image, and likeness" to understand the scope of the legislation as it relates to their campus, and comply with all NIL statutory requirements, as well as conference policies, and stay tuned for legal challenges that could follow.
We will continue to track updates on student-athlete NIL compensation and report on legal issues as they develop.