Less than a year ago, the NCAA removed a number of limitations on student-athletes’ ability to earn compensation while in college/university through an interim name, image, and likeness (NIL) policy.  In the short timeframe since this occurred, varying state laws and school policies have created an uneven playing field for institutions and student-athletes alike.  In addition to differing restrictions, wealthy boosters have now joined the game and are making big waves that will surely benefit institutions as student-athletes determine which school offers them more opportunities to connect with donors and can create the best deals for them.  As more activity occurs centered around NIL and as the various parties involved try to navigate the unclear waters, litigation and legislation also continues to take place throughout the nation.

Landmark Court Decision Clears the Way for Student Athletes to Benefit from their Name, Image and Likeness

After the U.S. Supreme Court decision in NCAA v. Alston, which effectively removed the longstanding “amateurism” label for college athletes and struck down NCAA caps on student-athlete academic benefits (i.e. reimbursements and pay for academic-related expenses) on antitrust grounds, the NCAA announced an interim NIL  policy for all three of its sport divisions in July 2021.[1]

The NCAA’s interim NIL policy maintains NCAA Bylaws related to prohibitions on pay-for-play and improper recruiting inducements.[2]  However, the NCAA is primarily employing a hands-off policy pointing student-athletes and schools to adhere to NIL laws within the state where the school is located, or in cases where there is no state law, to the school’s NIL policy. The result is a patchwork of policies and regulations that are inconsistent and can be confusing.   Policies can vary from school-to-school as it relates to trademarks, prohibited categories of deals, facilitation of the deals, steps required for student-athletes to disclose NIL deals, etc.  So what is allowed at one state or school may not be allowed in another making it difficult for student-athletes to compare offers apples to apples and to know what deals are permissible and where.

Are State NIL Laws Beneficial or Harmful?

To date, for the 28 states with effective NIL laws and many more with pending laws, the creators first believed that state-specific NIL laws and restrictions would provide an advantage to those who imposed statutes for the schools and student-athletes.  However, as time passed and the NCAA proved to limit regulation/enforcement of their policy, states have sought to modify (i.e. Florida)[3] or repeal their NIL laws entirely (i.e. Alabama)[4] in order to remove any potential restrictions or disadvantages compared to other states.  The NIL policy states, “[c]ollege athletes who attend a school in a state without a NIL law can engage in this type of activity without violating NCAA rules related to name, image and likeness,”[5] so states with less NIL restrictions are more likely to benefit the schools and student-athletes.

As for the actual entities entering NIL agreements with student-athletes, this has also transformed considerably. Initially, local and small businesses in college towns stood to benefit significantly from partnerships with student-athletes in their community.  Now, however, high school recruits and student-athletes are noticing obvious trends that has increased the buying power of certain schools over others based on attractiveness of NIL potential.  To that end, schools are inherently increasing the “pitch” to recruits and student-athletes through collectives, which is a way of accumulating funds amongst various donors/fans that goes to the student-athletes, as well as the wealthy boosters and/or business owners tangentially assisted with certain institutions.  The dollar signs are now racking up in broad daylight in front of young recruits’ eyes thanks to wealthy boosters.

Boosters Enter the Game

In the past, the role of boosters was mainly limited to contributions to the athletic departments, facilities, or other areas that tangentially assisted the student-athletes, but there was a long list of restrictive activities to the student-athletes directly.

Now, however, the NIL policy allows student-athletes to enter agreements with boosters provided the activity is in accordance with state laws/school policy and is not 1) an impermissible inducement, and 2) it does not constitute pay-for-play (NCAA simply says that athletes cannot be compensated for performance or for their enrollment, and that the athlete must provide a service to be paid).[6]  In other words, boosters can pay students-athletes directly so long as there is a quid pro quo where the student-athlete is doing something on behalf of the booster/business even it is as simple as promoting a brand with their NIL.

State laws do vary on whether the institutions can facilitate or promote NIL deals.  For example, Florida law prohibits private colleges and universities from “compensating or causing compensation to be directed to a current or prospective athlete for her or his NIL.”[7]  However, state NIL laws vary to the extent that schools may or may not facilitate NIL deals for their student-athletes.  To that end, institutions have admitted utilizing NIL opportunities in their recruitment process either through formal presentations, or just word-of-mouth, because NIL does not prevent schools from supporting/promoting NIL efforts. 

However, outside of flagrant violations of “inducement” for recruiting purposes and “pay-for-play” that could potentially result in significant penalties for schools, boosters, and student-athletes themselves, everything else is largely open to interpretation, which creates uncertainty and risk.

Federal NIL Legislation Landscape

The uncertainty and risk could potentially be resolved if federal legislation is passed, but as of February 2022, there is no approved federal NIL legislation. However, there are currently eight federal bills related to NIL where Congress could take action.  It is unclear when any bill will be written into law and its likely effects.

Therefore, the student-athletes should seek legal guidance to help them navigate through these NIL laws, which continue to evolve.  It is important that each student-athlete understands the nuances of the contract and the legal issues involved.

With federal legislation unclear and as states, schools, and boosters take matters into their own hands based on the NCAA’s laissez-faire policy, some entities are further pushing for change by way of litigation.  To that end, the advent of student-athletes being paid from their NIL is spreading to the high school level. Read “Let’s Make and NIL Deal Part II—High School Student-Athletes Look to Get in the Game” to learn more.

[1] NCAA adopts interim name, image, and likeness policy, (June 30, 2021), https://www.ncaa.org/news/2021/6/30/ncaa-adopts-interim-name-image-and-likeness-policy.aspx#:~:text=Story%20Links,student%2Dathletes%20in%20all%20sports.

[2] Id.

[3] Darren Heitner, Florida May Amend its Groundbreaking NIL Law, Above the Law, (Dec. 17, 2021), https://abovethelaw.com/2021/12/florida-may-amend-its-groundbreaking-nil-law/.

[4] H.B. 404, 2021 Leg., Reg. Sess. (Ala. 2021) (repealed).

[5] NCAA adopts interim name, image, and likeness policy, (June 30, 2021), https://www.ncaa.org/news/2021/6/30/ncaa-adopts-interim-name-image-and-likeness-policy.aspx#:~:text=Story%20Links,student%2Dathletes%20in%20all%20sports.

[6] Michael Smith, NCAA, conferences and college leaders trying to come to terms with NIL turning into pay-for-play, New York Business Journal, (Feb. 4, 2022), https://www.bizjournals.com/newyork/news/2022/02/04/ncaa-conferences-and-college-leaders-trying-to-co.html.

[7] Ross Dellinger, New Florida Bill Would Allow Schools to Facilitate NIL Deals, Sports Illustrated, (Dec. 15, 2021), https://www.si.com/college/2021/12/16/new-florida-nil-bill-schools-power.