NIL strategies to consider in college athletics

For decades, college athletes did not receive any compensation under the guidelines of the National Collegiate Athletic Association (NCAA). This travesty occurred repeatedly while the schools and conferences generated billions of dollars over the years through broadcasting, ticket sales and merchandising rights of college sports. Student athletes spent countless hours training, playing and traveling on behalf of their schools and conferences, and they could not legally have claimed to work for either.

Off the field, the game is changing, and how to play might contradict a college athlete’s on-field mindset. Lawyers have an opportunity to demonstrate their reliability in this arena and help prevent any unethical or unwittingly harmful conduct to our players.

Let’s discuss the state of NIL today and how an eye on proposed federal legislation can illustrate ways for lawyers to play smarter in this evolving area.

State of play

A pivotal moment in college sports history occurred in July 2021, when 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 NCAA about compensation and academic benefits. This precedent-setting decision overhauled the landscape, and sent a message that it was in the NCAA’s best interest to change its tired tune with regard to NIL.

A new song is being sung by new NCAA President Charlie Baker, who has publicly stated his support of college athletes being able to profit off NIL since assuming his duties in March 2023.

One of the bold recent plays Baker and the NCAA board of directors called for was for the Division I Council Working Group on Name, Image and Likeness to huddle with various stakeholders – including former and current athletes, advocates, coaches and administrators. Their feedback will hopefully help shape new proposals, which are scheduled to be unveiled in October and are aimed at providing better transparency, fairer policies and clearer guidelines.

According to the NCAA, the proposals aim to:

●Develop a registration process for NIL service providers (such as agents and financial advisors) and NIL entities (those who contract with student-athletes for the use of their NIL).

●Create a standardized contract or standard contract terms that could include certain information to be required, including terms like fee structures and the specific activities for which athletes would be compensated.

●Establish disclosure requirements for student-athletes and/or NIL entities that could serve as a resource for student-athletes and would be intended to provide transparency about NIL activities.

These developments are encouraging on the face, but players and their families should maintain a healthy skepticism, as this is a new strategy for the NCAA – one it had resisted for a hundred years. Federal lawmakers seem to be also eyeing the NCAA’s moves with caution, as new proposed bills are making their rounds, some of which seem to circumvent the association altogether.

Emerging patterns on Capitol Hill

This summer, Southeastern Conference (SEC) Commissioner Greg Sankey publicly stated that “only Congress can truly set a national standard for name, image and likeness compensation in college athletics.”

Notice who Mr. Sankey omitted from this idea. Those in college sports who have been in the trenches with the NCAA may not be amped up to work with them again. As it happens, new bipartisan bills addressing NIL and collectives are being introduced again in the Senate that might gain the traction athletes, coaches and all stakeholders need, especially in case the NCAA’s proposals miss the goal line.

For example, Senators Cory Booker (D-NJ), Richard Blumenthal (D-CT), and Jerry Moran (R-KS) announced a draft of legislation, titled the “College Athletes Protection & Compensation Act.” The bill gained significant attention from the media as well, as it addressed issues like safeguarding athletes’ health and wellness, covering their out-of-pocket costs and ensuring gender parity in tournaments. The issue of collectives was also addressed. Collectives are groups of alumni and supporters of a school who fund NIL opportunities for the athletes. These school-adjacent groups leverage their influence to pool revenue through NIL compensation, which is generated from various sources – like businesses and local advertisers to the fans.

On collectives, the Act noted: “Athletes would be allowed to have representatives assisting them with contracts, finances, marketing, and brand management, and institutions would be prohibited from punishing athletes for receiving food, rent, medical expenses, insurance, tuition, fees, books, and transportation from a third party.”

Perhaps most importantly, Moran said the bill would establish national NIL standards and protect opportunities through a central oversight entity – the College Athletics Corporation – to set, administer and enforce the rules and standards.

That another agency would need to be created to enforce rules demonstrates another vote of “no-confidence” in the NCAA’s effectiveness. The call for feedback on this proposed act closed in August so an update is on the way. Furthermore, Booker is a former student-athlete who has considerable momentum among his peers in this arena.

Senators Joe Manchin (D-WV) and Tommy Tuberville (R-AL) introduced the “Protecting Athletes, Schools, and Sports (PASS) Act of 2023.” A joint press release issued by the duo claimed that PASS will establish a national standard for NIL that will “protect student-athletes, maintain fair competition and compensation, strengthen transparency, and preserve the time-honored tradition of college sports.”

PASS would also require agents and collectives to register with a regulating body, such as the Federal Trade Commission (FTC), in an effort to “improve transparency of NIL activities.” The PASS Act incorporated feedback from stakeholders and has public commendations from the Big 12 Conference, SEC and NCAA President Baker.

It is commonly known that federal bills lose momentum as fast as they gain it. However, it would be a clutch win for Congress to pass a bill that has bipartisan backing as well as support from influencers in college athletics. They share a common pattern that permits the players to make their own destiny while also maintaining some of the dignity of entrepreneurship.

Making accurate calls

The key players in college athletics seem ready to usher in a whole new era of off-the-field engagement. The NCAA’s policies will be refined and retrofitted to a federal framework, which is why athletes, their families and their representatives should keep close watch on these proposals and begin strategizing for endorsements going forward. They should seek qualified and experienced legal counsel before signing any deal.

Finally, all sides need our legal help. Our college and high school athletes, their families, the schools, agents, boosters donating, and collectives need competent counsel to fairly and legally protect their interests.