With the NCAA’s Decision to Permit Amateur Name Image Likeness Compensation, Student-Athletes and Legislators Score a Big Win; But Will It Be a Draw at the End of the Season?
In a seeming about-face, the NCAA’s governing board voted unanimously on October 29, 2019 to allow college athletes to be compensated for the use of their name, image, and likeness (“NIL”).1 This decision came amid a flurry of proposed and passed legislation challenging the NCAA’s bedrock prohibition against NIL compensation, as well as a groundswell of public support for loosening amateurism rules. This article diagrams the shifting rules of play by: (1) detailing the NCAA’s recent decision; (2) comparing state NIL legislation; (3) outlining the approaches to compensation considered at the federal level; and (4) discussing possible implications for institutions of higher education of amending the NIL framework.
1. While the NCAA Rule Book Will Change, the Extent of the Anticipated Modifications Is Unclear.
Until its October decision, the NCAA was staunchly committed to the concept of amateurism,2 taking the position that student-athletes “should be protected from exploitation by professional and commercial enterprises”3 and prohibited from accepting any form of compensation for the use of their NIL.4 While the NCAA seemingly dipped its proverbial toe into the NIL pool earlier this year when it appointed a Working Group to examine proposed federal and state legislation related to student-athlete compensation,5 at the same time, the NCAA vowed the Working Group would not consider any amendments that could be construed as payment for participation.6 Public statements by the NCAA even hinted at the possibility of a legal challenge to California’s then-pending legislation allowing for NIL compensation.7 This unyielding opposition to student-athlete compensation made the NCAA’s October decision shocking to many. However, while the board’s decision directly contradicts the NCAA’s standing amateurism rules, it can be argued that the decision was inevitable in light of mounting pressure from politicians, celebrities, and the court of public opinion.8
Moreover, and not insignificantly, while the decision directs each of the NCAA’s three divisions “to immediately consider updates to relevant bylaws and policies,” it stops short of actually changing any existing rules; instead, the divisions have until January 2021 to finalize new rules.9 In its directive to the divisions, the board explained that the “modernization” of the rules must, among other things, (1) “[m]aintain the priorities of education and the collegiate experience to provide opportunities for student-athlete success” and (2) “[m]ake clear the distinction between collegiate and professional opportunities.”10 The NCAA describes its decision as one that will permit student-athletes “the opportunity to benefit from the use of their name, image and likeness in a manner consistent with the collegiate model,”11 leaving institutions and student-athletes to wonder what a new system permitting NIL compensation would need to look like so as to be consistent with the existing “collegiate model” of amateurism.
Only time will tell how the NCAA’s decision will translate into actual rule changes and whether, and to what extent, each division's proposed updates will differ.
2. States’ Game Plans for Student-Athlete Compensation.
The NCAA’s decision follows promised and proposed legislation from around the nation intended to break down rigid amateurism policies.
On September 30, 2019, California Governor Gavin Newsom signed into law the “Fair Pay to Play Act,” which is the first law on the books to allow student-athletes to receive compensation for use of their NIL. Several states followed suit. To date, legislators in Florida,12 Illinois, New York, Washington and New Jersey13 have proposed similar bills, and legislators in several other states, including Colorado, Minnesota, Pennsylvania, Michigan and South Carolina, reportedly plan to propose comparable bills in the near future.14
Commonalities Among States’ NIL Legislation
With a few exceptions, states have largely modeled their legislation after California’s Fair Pay to Play Act, including by adopting the Act’s January 1, 2023 effective date.15 The Fair Pay to Play Act and proposed legislation in Florida, Illinois, New York and Washington each include variations of the below provisions.
Distinctions Among States’ NIL Legislation
While California’s Fair Pay to Play Act and the proposed legislation in Florida, Illinois, New York and Washington are similar in many important respects, there are also some notable distinctions. In particular, there is variation in the (1) applicability to community colleges; and (2) plans to continue to study the issue of student-athlete compensation, as identified below:
The proposed bills in New York and Washington further add to the Fair Play to Pay Act. New York Senate Bill S6722B requires that each institution establish a sports injury health savings account and a wage fund; the heath savings account would provide student-athletes who suffer a career-ending or serious injury during a game or practice with compensation upon graduation, while the wage fund would be divided evenly and paid to all student-athletes each year. Washington House Bill 1084 provides that violations of the student-athlete compensation legislation would be considered violations of other state laws, including unfair or deceptive acts in trade or commerce and unfair methods of competition.
Would a State-by-State Approach Work?
While legislation permitting student-athlete compensation has gained a great deal of support in general, the brewing state-by-state approach has also gained its share of criticism. Some commentators argue athletes will be incentivized to attend schools in states where they will have the opportunity for NIL compensation or to retain an agent, and that “power schools” would then enjoy an unfair recruiting advantage. Some student-athletes have already spoken out against this premise, responding that NIL compensation would not have influenced their choice of school.19 Others have argued that, by stopping short of mandating profit sharing with student-athletes, the proposed legislation does not go far enough.
3. Federal Politicians Have Also Gotten Into the Game With Plans to Tackle Student-Athlete Compensation Both Indirectly and Directly.
The NIL compensation debate and legislative proposals aimed at challenging the NCAA’s current rules are not limited to state legislators. On October 16, 2019, North Carolina Congressman Mark Walker hosted a roundtable on Capitol Hill to discuss the topic. The NCAA was notably absent from the discussion despite an invitation to attend. Senator Mitt Romney, who did attend, is quoted: “I know there are people who think we can hold this off . . . We’re not going to make a change here. But the reality is Congress is going to act. We are coming for you. We’re coming to help these athletes.”20 The topic has even made its way into the Presidential race,21 and representatives from both political parties have voiced support for student-athletes’ right to compensation.22
In addition to hosting the roundtable, Congressman Walker also proposed the Student-Athlete Equity Act,23 which would amend the Internal Revenue Code to condition the NCAA’s status as a tax-exempt, non-profit organization on the NCAA permitting student-athletes to receive compensation.24 Support for the Act remains uncertain; there has been no activity since the bill was introduced in the House and referred to the Committee on Ways and Means on March 14, 2019.
Apparently interested in a more direct approach to reform, former Ohio State University football player and now United States Congressman Anthony Gonzalez is reportedly working on a federal law that would allow student-athletes to receive compensation for use of their NIL.25 It was previously reported that Gonzalez planned to wait to propose his bill until the NCAA’s Working Group delivered its final report.26 Whether Gonzalez will proceed with the legislation after NCAA’s recent decision to permit student-athlete NIL compensation remains to be seen.
Of course, not all federal lawmakers have taken a pro-compensation stance: Senator Richard Burr has vowed to introduce legislation taxing scholarships for those student-athletes that choose to profit from their NIL.27
4. What’s Next?
As the various players contemplate their next move, there are a number of potential scenarios: the NCAA might pass comprehensive rules that appease state and federal representatives and the public; or, Congress could pass legislation that satisfies the individual states and/or curtails the NCAA’s authority to limit NIL compensation. In the meantime, states will likely press on with drafting, proposing and passing legislation to permit student-athletes to be compensated for their NIL.
As discussions unfold, and legislation is considered, institutions would be wise to understand the views of their stakeholders and to identify a cohesive institutional position on the subject of student-athlete compensation. In those states where legislation is under discussion, institutions might find that they have an opportunity to shape law and policy by engaging in the public discourse.
Impacted institutions should be cognizant of, and start planning how they will comply with the obligations imposed by pending or, in the case of California, passed legislation. Institutions might start by considering who will be responsible for the oversight of the NIL compensation process on campus. For example, all of the current passed or proposed legislation requires student-athletes to disclose to an official designated by the institution if the student enters into a contract for his or her NIL and similarly anticipates that an institution official will review such contracts to identify potential conflicts. Institutions in states with anticipated or proposed legislation should also become familiar with the state’s statutory definition of “name, image, and likeness” to understand the scope of that legislation. Of course, all institutions should stay tuned for the legal challenges that could follow legislative activity and/or rule amendments by the NCAA.
- Board of Governors starts process to enhance name, image and likeness opportunities, NCAA (Oct. 29, 2019), http://www.ncaa.org/about/resources/media-center/news/board-governors-starts-process-enhance-name-image-and-likeness-opportunities.
- 2018-2019 NCAA Division I Manual (2018) at 12; id. at art. 2.9.
- Id. at art 2.9.
- NCAA Bylaws at art. 188.8.131.52.
- Michelle Brutlag Hosick, NCAA working group to examine name, image and likeness (May 14, 2019), http://www.ncaa.org/about/resources/media-center/news/ncaa-working-group-examine-name-image-and-likeness.
- Even the NFL Players Association and the National College Players Association weighed-in, announcing their willingness to evaluate ways to help college athletes receive payment. See Matthew Impelli, NFLPA Wants to Help College Athletes Receive Compensation Following California’s Fair Pay to Play Act, Newsweek (Oct. 28, 2019), https://www.newsweek.com/nflpa-wants-help-college-athletes-receive-compensation-following-californias-fair-pay-play-act-1468232.
- Supra, note 1 (emphasis added). The NCAA’s Working Group “will [also] continue to gather feedback through April  on how best to respond to the state and federal legislative environment and refine its recommendations . . . on the regulatory framework.” Id.
- Supra, note 1 (emphasis added).
- Florida representatives have proposed two different bills. See HB 251 (2020) and HB 287 (2020). The significant difference between the two is the effective date, with HB 251 to become effective January 1, 2023 and HB 287 January 1, 2020.
- There are several reports regarding New Jersey’s proposed legislation, which was recently assigned bill number S4160, but the bill is not yet publically available for review.
- John Feinstein, The NCAA is still whining about pay to play. It’s too late for that., Washington Post (Oct. 16, 2019), https://www.washingtonpost.com/sports/colleges/the-ncaa-is-still-whining-about-pay-to-play-its-too-late-for-that/2019/10/16/d128a2c8-f01e-11e9-8693-f487e46784aa_story.html.
- With the exception of one of Florida’s bills, discussed below.
- Creates a Community College Athlete Name, Image and Likeness Working Group to provide a report by 2021
- Creates a College System Athlete Name, Image, and Likeness Task Force to provide a report by 2021.
- Creates a Community College Athlete Name, Image, and Likeness Working Group to provide a report by July 2021.
- Logan Newman, Elite athletes approve of California name, image, likeness law, but it may not affect their recruitment, USA Today High School Sports (Oct. 16, 2019), https://usatodayhss.com/2019/california-name-image-likeness-law-affect-elite-ncaa-recruiting.
- Brian Murphy, ‘We’re coming for you. We’re coming to help these young athletes’: Romney warns NCAA, The News & Observer (Oct. 16, 2019), https://www.newsobserver.com/news/politics-government/article236329643.html; see also Emily Caron, Mitt Romney tells NCAA ‘we’re coming for you,’ says Congress will act on name, image, likeness, CBS Sports (Oct. 16, 2019), https://www.cbssports.com/college-football/news/mitt-romney-tells-ncaa-were-coming-for-you-says-congress-will-act-on-name-image-likeness/.
- Ella Chochrek, Democratic Presidential Hopeful Cory Booker Calls out NCAA ‘Exploitative Practices,’ Outlines Plan to Reform, FootwearNews (Oct. 16, 2019), https://footwearnews.com/2019/business/legal-news/cory-booker-ncca-athletes-proposal-1202857767.
- Michael McCann, California’s New Law Worries the NCAA, but a Federal Law is What They Should Fear, Sports Illustrated (Oct. 4, 2019), https://www.si.com/college/2019/10/04/ncaa-fair-pay-to-play-act-name-likeness-image-laws.
- H.R. 1804 – 116th Congress (2019-2020).
- Greta Anderson, The Push for Player Pay Goes National, Insider Higher Ed (Oct. 4, 2019), https://www.insidehighered.com/news/2019/10/04/us-congressman-propose-college-athlete-payment-bill.
- Maria Pitofsky, Burr promises bill to tax scholarships of student athlete who profit off their likeness (Oct. 29, 2019), https://thehill.com/homenews/senate/467993-burr-promises-bill-to-tax-scholarships-of-student-athletes-who-profit-off.