July 29, 2021

College Athletics: Name, Image, and Likeness Rights


KEY TAKEAWAYS

  • The NCAA recently began allowing student athletes to enter into endorsement and other deals that pay them for their name, image, and likeness.
  • Governors in 28 states have signed legislation or issued executive orders that allow these athletes to profit off of the deals.
  • The NCAA is at an inflection point, with some people suggesting that it take a smaller role in governing intercollegiate athletics.

The U.S. Supreme Court issued an antitrust decision last month that sent shockwaves across the college sports landscape. The 9-0 decision in NCAA v. Alston said that National Collegiate Athletic Association rules capping the amount schools could pay student athletes in education-related benefits violate antitrust law. While the ruling itself was narrow, the striking down of some limits on compensation portended increased scrutiny of other NCAA amateurism rules.

On June 30, the NCAA approved an interim policy that allows student athletes to make money off of their “name, image, and likeness,” effective July 1, the same day that some states’ NIL laws went into effect. The interim policy rescinds long-standing rules that prohibited student athletes from making money through endorsements and other ways of selling and monetizing the rights to their NIL.

The NCAA policy will stay in place until the organization adopts a new rule or Congress passes a federal law. Under the new rules, student athletes may hire agents, lawyers, and tax advisers to help them navigate the process and must comply with their state’s rules on the subject. Student athletes can take advantage of NIL deals even if their state does not have a law, and the NCAA’s “pay-for-play” prohibition and related rules still apply. The additional income also could affect student athletes’ eligibility for need-based financial aid.

Student athletes already have struck deals to monetize their NIL through social media posts, public appearances, endorsements, merchandise, and autograph sales. Some have signed endorsement deals for cereal brands, cell service providers, and pet stores. Others have announced deals to partner with a podcast, sell their own clothing lines, and make paid appearances.

Paying Student Athletes

College Athletes

state action

Over the past few years, governors in 28 states have signed legislation or issued executive orders that allow student athletes to profit off the use of their NIL. Laws in Arizona, Florida, Georgia, Texas, and some other states went into effect this month, and those in other states will take effect over the next several years.

In general, these laws do not allow colleges to pay student athletes for use of their NIL. Instead, they allow students to hire an agent or lawyer to represent them in licensing the use of it. The state laws clarify that students will not jeopardize their eligibility to receive scholarships if they profit off of their NIL. Some of the laws explicitly say that student athletes are not employees of their college. The laws also tend to require student athletes to disclose contracts for compensation to their schools.

The states also take different approaches to some things. Under Georgia’s law, schools could choose to require student athletes to put up to 75% of their NIL earnings into an account to benefit other student athletes at their school. These athletes could take out their share of the money after at least one year has passed since they graduated or left the school. The laws in Mississippi, Illinois, and Tennessee prohibit student athletes from promoting tobacco, alcohol, and gambling, while other states allow schools to set similar rules. Florida, Louisiana, and some other states require colleges to provide financial literacy and life skills programs for their student athletes.

States With NIL Compensation Laws or Executive Orders

College Athletes

Amateurism has been a core tenet of the NCAA since its creation in 1905, and creating and enforcing amateurism rules has been one of the organization’s chief functions. It is unclear what role the institution, which has more than 1,100 member schools, will play in collegiate athletics in the future. A number of observers have made recommendations regarding its role and structure.

NCAA president Mark Emmert has suggested a much smaller role for it and says that the Alston ruling and the interim policy should be a catalyst to rethink the NCAA completely. He has proposed a “decentralized and deregulated” college sports landscape, in which conferences and schools would have much more power, and the NCAA’s role would be the “bare minimum.”

ESPN basketball analyst and former college basketball player Jay Bilas proposed a model similar to that of the Olympics, where athletes receive no direct payments for participating in the sport but can capitalize on their value in the marketplace through endorsement and other deals. Olympic athletes like Michael Phelps, Mia Hamm, and Carl Lewis made millions of dollars endorsing products, making appearances, and otherwise monetizing their NIL rights and opportunities. He also suggested the NCAA should create simpler, sport-specific rules.

The Knight Commission on Intercollegiate Athletics has suggested reforming the structure of the board of governors of the NCAA so that it is led by a majority of independent directors, including former student athletes. It made additional recommendations after a review of the association concluded “it is the time for transformational change.”

Congressional Action

Senate committees have held several hearings on NIL and other college athletics issues. On June 9, the Senate Committee on Commerce, Science, and Transportation held a hearing examining federal NIL proposals. Witnesses included Mr. Emmert of the NCAA, who reiterated his organization’s commitment to “allowing NIL opportunities for student athletes consistent with the college athletics model.” He also pressed the case for federal legislation, arguing that “because of the engagement of state legislatures and the multiple, recurring lawsuits related to NIL and other regulation around establishment of national standards, there is an urgent need for a federal solution so that we may continue to provide all student-athletes with broad-based opportunities and a fair system of participation and competition.”

Commerce Committee leaders are working to develop bipartisan legislation for introduction this Congress. At the June 9 hearing, Senator Wicker said: “There is broad consensus that Congress should pass a law that guarantees college athletes the right to enter into NIL agreements with third parties – the same right that all of their fellow non-athlete students have.”

On July 1, 2020, the committee held a hearing on the process the NCAA uses to update its rules and the need for federal NIL legislation.

In September 2020, the Committee on Health, Education, Labor, and Pensions held a hearing on the potential effects of NIL compensation. Senator Alexander suggested that Congress should authorize the NCAA to set NIL rules, under a guiding principle that any money students receive should benefit all students at their school, such as for academic support, health insurance, and help for injured players. He talked about how student athletes already receive scholarships that enable them to earn a college degree that gives them a lifelong financial advantage. Some of the witnesses noted that only a small share of student athletes would likely earn substantial amounts from NIL deals, and they talked about avoiding pay-for-play arrangements.

Issue Tags: Education, Labor, Economy