NIL’s continuing impact on college sports and the law

Change is in the air for our college student-athletes. From their on-field performance to social media activity, student-athletes have made significant gains in their name, image and likeness (NIL).

In 2021, the United States Supreme Court unanimously sided with former college players in American Athletic Conference et al. v. Alston et al., in a dispute with the National Collegiate Athletic Association (NCAA) about compensation and academic benefits. This precedent-setting decision set in motion significant changes to the NCAA landscape, and upended a 100-year stranglehold on the college athletes earning money off their sport. Student athletes were unable to benefit from their NIL, which was ironic since it was their athletic prowess that generated billions of dollars in revenue for their colleges and universities.

The momentum has finally shifted. College players are cutting through the noise and proving to be just as effective making clutch plays on the field as they are advocating for - and exercising - their rights off the field in 2022. Let's look at NIL developments and how the right strategies can help our college players protect themselves in the short- and long-term.

Policies and Proposed Legislation

The NCAA was left in a very vulnerable position following the Alston verdict, as it certainly contributed to the rise of new collectives. Independent of universities, collectives are typically founded by alumni and driven by boosters to help create NIL opportunities for student-athletes through various activities. This was precisely what the NCAA sought to avoid, as collective actions can sometimes slither over towards the "pay-to-play" dynamic that can taint and undermine the recruitment process.

In a recent response to the rise in collectives, the NCAA released Interim Name, Image and Likeness Policy Guidance Regarding Third Party Involvement. The guidance states, "...NCAA rules preclude boosters from engaging in recruiting activities, including recruiting conversations, on behalf of a school. Further, NCAA recruiting rules preclude boosters from providing benefits to prospective student athletes and preclude institutional staff members from being involved, directly or indirectly, with the provision of benefits to a prospective student athlete. Finally, it is important to note that existing NCAA prohibitions related to pay-for-play have not changed as a result of the Interim NIL Policy."

The NCAA also said that "contracts must be based on an independent, case-by-case analysis of the value each athlete brings to an NIL agreement. This is opposed to providing compensation or incentives for transfer decisions, athletic performance, achievement or membership on a team."

Some states have enacted laws to strengthen this recent NCAA policy and prevent direct communication between boosters and students (and prospective students); other states have made it easier for athletic departments and boosters to have dialogues. Steps toward a federal framework are needed to guide how NIL is reshaping the landscape but are currently bogged down by the upcoming midterm elections.

In a move that reminds players and the public that NIL is on the minds of lawmakers, U.S. Sens. John Thune (R-S.D.) and Ben Cardin (D-Md) introduced the Athlete Opportunity and Taxpayer Integrity Act on Sept. 28, 2022. These two senators sit on the Subcommittee on Taxation and IRS Oversight. Their proposed bipartisan legislation would prohibit collectives from using the charitable tax deduction for specific contributions that compensate college athletes (or incoming college athletes) for the use of their NIL.

Cardin said the proposed legislation reflects "...an obligation to protect taxpayer funds, which means that charitable deductions should be reserved for charitable activities. Purposefully blurring the line between private expenses and charitable contributions dilutes both these efforts."

Following The Money Cross-Country

The Big Ten conference has always been a major draw in college sports, so it is no surprise that prestigious schools have recently made some serious moves. UCLA announced in July that it would depart the Pac-12 conference in 2024 along with USC for the Big Ten.

UCLA stated that its financial situation influenced the decision, and that they, by joining the Big Ten, will allow the players on its Bruins football team to reach a "broader national media platform." More interestingly, the school 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."

With new interim NIL guidelines in place until a federal framework is installed by Congress, schools now have the leverage they've needed to attract the most promising athletic talent. When the possibility of NIL endorsement deals is entangled with guaranteed revenues, the next steps are obvious. If we follow the money this past summer, we will arrive at the Big Ten. In August, the long-awaited Big Ten media rights deal was made official and demonstrated that the value of the dollar has not depreciated much. The seven-year agreement, which begins in 2023, aligns with broadcast partners Fox, CBS, and NBC, and was valued at more than $7 billion.

Whether UCLA was acting on instinct or rumor, or both, it seems that just one month after enacting their strategy to move they provided a "greater exposure" for their players. If trends like this continue where more Pac-12 schools find better opportunities elsewhere, the conference may soon crumble.

Emerging NIL Tech Platforms and Legal Income Streams

Even the college players who know they likely will not receive high-value deals and endorsements are creating new ways to monetize their NIL. Combining technology, finance, and rabid fandom, former Notre Dame walk-on running back Mick Assaf founded YOKE to tap into the fan-powered segment of NIL. YOKE's mission is to, "To help athletes receive fair compensation for their name, image, and likeness." The platform allows fans to pay athletes for content - such as workout tips and personal philosophies.

Several similar companies have emerged in the wake of the NIL era, exploring ways to facilitate fan-powered NIL deals through various strategies - a model they hope will "democratize" NIL. Stakeholders in college athletics are hoping fan-funded deals, from subscription-based content services to autograph shops, will tap into a consistent, long-standing and profitable NIL income stream.

The improved NIL opportunities have occured during an interim period where the NCAA has seemingly thrown up its hands waiting for Federal legislation. But this scenario will not last forever.

Federal NIL legislation may regain traction in Congress after the midterm elections in November. Until then, amid the confusion and musical chairs of college sports, those of us who have championed the cause for our college athletes can be proud of what has been accomplished.