The year-end NIL playbook for lawyers

The start of the 2022 college football season will likely prove to be one of the most pivotal in its history. Whether you are a fan or not, lawyers should follow the season, if just for the ever-changing legal developments.

This is only the second season following a unanimous landmark June 2021 Supreme Court ruling, which set a new precedent regarding compensation for name, image and likeness (NIL). In American Athletic Conference et al. v. Alston et al., the Court unanimously sided with former college players in a longstanding dispute with the National Collegiate Athletic Association (NCAA) about wages. This cleared a wide path for states and schools to create their own NIL policies that complied with the loose interim NCAA guidelines.

Between the rampant on-field competition and the off-field hype surrounding NIL rights, this college football season is set to be unforgettable. Before the players take the field, let's review how the NIL laws are influencing the business of sports, and how they could create new legal scenarios for all college sports stakeholders.

A Look At Policy and Legislation

In Sept. 2021, National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo issued a memorandum that provided updated guidance regarding certain "Players at Academic Institutions" (which she noted are "sometimes referred to as student-athletes"), are employees under the National Labor Relations Act, and, are thereby afforded all statutory protections. There are two unfair labor practice claims being reviewed by the NLRB that could lead to even more progress in getting players additional much-needed protection.

Permitting student-athletes in the U.S. to engage in NIL activities has clearly been front and center with state legislators. Twenty-seven states have NIL laws enacted - many with new proposals and amendments being considered. Several more states have proposed legislation in the works. Support has even been offered by the NCAA for student-athletes while assessing NIL opportunities, to avoid endorsements with alcoholic beverage brands.

It is also worth noting that not all state NIL laws are set in stone. Tennessee, Missouri and Mississippi have all amended or modified their initial NIL laws. In Feb. 2022, Alabama became the first state to repeal its law. The state claimed it put their higher education institutions at a national disadvantage with regard to recruitment. In turn, the NCAA has allowed individual schools to set policies on NIL, creating a more intricate Gordian knot for all stakeholders.

Have NIL, Will Travel

UCLA announced in July that it would depart the Pac-12 conference in 2024 along with USC for the Big Ten. The news quickly drew the ire of California Gov. Gavin Newsom, who demanded UCLA explain publicly how leaving the Pac-12 for a conference outside the Pacific time zone - without UC Berkeley, which is part of the same system - is beneficial for its sports program and its students.

UCLA issued a statement that described how its financial situation influenced the decision and would allow players on its Bruins football team to reach a "broader national media platform." Interestingly, UCLA added: "Specifically, this move will enhance Name, Image and Likeness opportunities through greater exposure for our student-athletes and offer new partnerships with entities across the country."

The move certainly cut deep for Governor Newsom, who in Sept. 2019 signed the historic Fair Pay to Play Act (SB 206) sponsored by Sen. Nancy Skinner (D-Berkeley) and Sen. Steven Bradford (D-Gardena). The law was the first of its kind in the U.S. and gave college students in California the ability to benefit in the future financially from their NIL. We will see what, if any, legal action the governor can take to keep an in-state powerhouse school from joining an out-of-state conference. Good luck, Governor.

NIL may inspire other schools to make similar moves, and you can safely bet they are paying attention to the UCLA situation and assessing how they too can score new and better revenue sources.

Sponsorships Keep Touching Down

Our college athletes' endorsement deals themselves are quite extraordinary and in some cases, outright entertaining. For example, in August, Auburn Tigers quarterback T.J. Finley reportedly became the first college football player to sign a NIL deal with Amazon Fashion. The deal to sell custom merchandise through one of the world's largest retailers is actually Finley's second high-profile sponsorship in a year; the 20-year-old's first NIL deal was announced with PSD underwear in July 2021, just days after the NCAA announced its interim policies.

In another recent endorsement, Nebraska Cornhusker freshman receiver Decoldest Crawford signed with SOS Heating & Cooling, an Omaha-based HVAC company. The terms of the July 2022 deal were not disclosed, but most would agree their collaboration is pretty cool.

On an even grander scale, in August 2022 Twitter and Opendorse jointly announced their plan to enable Pac-12 players to earn NIL compensation by sharing personalized game highlights during the 2022-23 college football season. The cornerstone of the expanded partnership between the social media giant and the technology provider is pre-roll advertising, which will be secured through a Twitter Amplify broadcast. Opendorse claimed on its site that the concept will mark the first time student-athletes can monetize their own game highlights through the medium, which CEO Blake Lawrence referred to as, "...the future of athlete-driven marketing." Theoretically, this levels the playing field a bit within the conference, because it guarantees exposure for whomever makes key highlight plays.

When you put headline-making partnerships aside, most experts expect that the majority of players will land in the middle or low end of the spectrum of NIL deals. This means the terms might only seem favorable at the outset. Cash upfront in exchange for a percentage of backend earnings is not a new concept, but since it is still in its infancy in college sports, the players are bound to encounter some bloodsuckers.

Lawyers Can Coach Players and Drive Legislative Momentum

Many college athletes are still minors and do not have much financial, business, or tax-planning savvy. Enforceable legal protections need to be put in place so that agencies do not exploit players who might unwittingly sign away an equitable share of future wages that could reach way beyond seven figures. Just as importantly, the players need uniform enforceable laws and guidelines to ensure they will be paid. Those paid funds can be allocated specifically to help provide insurance and health benefits if substantial, or if lifetime injuries occur.

Furthermore, outside counsel can call foul at schools and even conferences brokering deals for their students that may not truly be in the athletes' best interest. Representation for our college athletes may protect them from the entities that could use their influence to structure agreements that will ultimately favor themselves.

We should expect that any federal NIL legislation will surely not be passed until after the midterm elections in November. For now, reputable agents and conscientious lawyers should be involved early in the discussions and negotiations to protect the rights and financial futures of our student-athletes. If we take the lead in demonstrating how the new and evolving NIL laws can be used correctly, federal law won't be far behind. Remember, those of us who have championed and brought about the most significant economic shift of college sports with NIL compensation need to facilitate, guide and encourage our federal legislators to put aside their political differences and quickly enact uniform NIL laws fair to all.