Three NIL developments poised to impact the NCAA in 2024

The past year was pivotal for student athletes in the fight for the financial compensation they deserve for their name, image and likeness (NIL). The tide is finally turning in their favor, with critical progress happening in courtrooms, board rooms and even on Capitol Hill.

However, players and their counsel should be well-informed on the issues and understand where and how NIL policies originate and what drives their evolution. Let’s review some of the developments poised to change the trajectory of how NIL is governed in collegiate athletics.

Accepting NCAA’s proposed trust

Since the NCAA named former Massachusetts Governor Charlie Baker as its new president in 2022, the association has taken long overdue steps in the right direction regarding NIL and their role in its governance. Baker had openly stated his willingness to lean into progressive financial incentive plans and frameworks beyond scholarships. In December 2023, Baker floated rule changes that could really shake up how Division I schools evaluate the compensation being offered to their players.

Key goals of the proposal include:

● Creating a new subdivision of Division I schools.

● Writing a set of rules for the new subdivision regarding recruiting, transfers, roster size and more.

● Making membership in the subdivision voluntary, but conditional. For example, each school would be obligated to compensate at least half of their athletes with $30,000 or more per athlete per year in a trust fund. This would translate to millions per year.

The schools are clearly not hurting for money. NCAA Research reported that NCAA schools across all three divisions reported total athletics revenues of more than $18.9 billion in 2019. Division I schools accounted for 96% of generated revenues across the NCAA, and obviously operate on a different financial playing field than other divisions.

Additionally, Baker believes that his proposed new rules close the gender equity gap since the trust fund would have to follow Title IX law, thus equally distributing funds to male and female players.

This is the sort of progress that those of us who represent players have been waiting for since entering the field decades ago. Baker has embraced his role as chief problem-solver in the past year and is trying to forge a new strategy for the NCAA that is less reactive than it traditionally was. He seems to have intentionally dropped this preview ahead of the annual NCAA Convention in January 2024, when it is expected that interim NIL guidelines will be replaced with concrete ones.

Class action could benefit former college athletes

In November 2023, a suit granted class action status that could have a huge ripple effect for former college athletes against the backdrop of the NCAA’s NIL interim guidelines.

House v. NCAA was originally filed in 2020 by Arizona State swimmer Grant House, and sought damages for the interim and remaining rules. House is the lead plaintiff, with two others named – former Illinois football player Tymir Oliver and current Texas Christian University basketball player Sedona Prince. These lawsuits were filed prior to the groundbreaking 2021 landmark Supreme Court ruling (American Athletic Conference et al. v. Alston et al.) and a unique memo from the National Labor Relations Board (NLRB) in 2021 which affords statutory protections to certain players as employees under the National Labor Relations Act.

U.S. District Judge Claudia Wilken is hearing the case, which in itself is newsworthy, as she is known for having previously ruled against the NCAA in Alston. Judge Wilken granted the class action status, opening the door for student athletes to share in revenues, potentially expanding the class to thousands of current and former student-athletes that some experts speculate could boost damages to as high as $4 billion.

Just prior to Thanksgiving 2023, the NCAA and Power 5 conference filed an interlocutory appeal in the Ninth Circuit. Considering Judge Wilken’s experience hearing NCAA cases and the association’s recent track record in court, it is unlikely this appeal will be successful.

The jury trial is scheduled for January 2025. Should it settle beforehand, it could influence NIL rules in the NCAA and at state and federal levels, which could prevent similar claims from being filed.

Keep your focus on Capitol Hill in 2024

My mantra, along with others in this complex area of practice, is that a federal framework is absolutely necessary to protect our student athletes. Various advocacy groups visited Capitol Hill to meet with legislators about the best path forward. Most recently, the Coalition for the Future of College Athletics (C4FCA) made their case for federal NIL uniformity in November 2023.

C4FCA stands out from other advocacy groups because money talks. C4FCA is comprised of 28 Division I athletic conferences, including heavy hitters such as the SEC, basketball’s Big East and the Power Five football conferences. The Power Five alone reached a record $3.3 billion in combined reported revenues in 2022.

The C4FCA calls for legislation that will preclude patchwork and, as per its principle, “pre-empt divergent state-by-state laws that disadvantage certain students, academic institutions and states.”

C4FCA’s position is also unique in that it calls for student-athletes to be recognized as non-employees. This helps maintain the students’ individualism and harkens back to its focus on the students’ education. It’s possible this last voice of 2023 might have been the loudest. The theme speaks to the general consensus on both sides that a federal framework will protect current and future generations of student athletes.

A federal bill could also eliminate the disparity with current compliance issues, the definition of “amateur status,” and address the following questions:

● Will scholarships be taxable now that athletes are earning NIL compensation?

● Will agents, representatives and advisors be subject to federal or state vetting and licensing?

● Can schools across the country allow marks, emblems, and logos for their athletes to use in their NIL deals? Can these schools trumpet their players’ NIL deals?

● Will co-licensing and group licensing be allowed?

● Who will govern high school athletes, and how will they be governed? Finally, will international student athletes with a visa be able to earn NIL compensation?

Our policymakers are used to creating laws, legislation, and uniform codes in their daily work. There are several bipartisan bills proposed and one of them needs to land in order for the Congress to protect their constituents and institutions. They should be keenly aware that cultivating rising star athletes in their states and schools will attract national brands, visitors who spend money, lucrative TV, cable, and internet streaming deals, along with piles of tax revenue.

Cautious optimism for big gains in 2024

New developments sprouted regularly in 2023. This momentum could position 2024 to be the year when meaningful NIL reforms are passed or enacted. Student athletes and their families need to carefully follow the progress on NIL deals, because though opportunities may arise to earn substantial compensation in endorsements, they run the risk of signing away life rights or unwittingly violating a school, state or policy term.

Aligning with an experienced lawyer can help athletes leverage their status so that what might seem like a cash grab could instead be a strategic investment in their future.