The Wild West of name, image, and likeness: Be prepared when the dust settles – A series
Part 1 in the series "The Wild West of name, image, and likeness: Be prepared when the dust settles"
Amateur (noun): a person who pursues a particular activity or field of study independently from their source of income.
Although fiercely competitive and incredibly popular (and lucrative) today, collegiate athletics comes from humble beginnings. Formalized participation in the first college athletic teams began with crew in the 1840s, baseball in the 1850s, football in the 1860s and track and field in the 1870s. For nearly two-centuries, athletes who competed in collegiate sport were amateurs. On July 1, 2021, that all changed.
Starting over a decade ago in 2009, a string of antitrust suits against the National Collegiate Athletic Association (“NCAA”) has culminated in the recent Supreme Court case National Collegiate Athletic Association v. Alston et. al. The Supreme Court unanimously held that the NCAA was violating antitrust law by placing limits on education-related benefits that schools can provide to its athletes. The landmark decision allows schools to provide student-athletes with unlimited compensation as long as it is some way connected to their education. The NCAA is now forced to abandon the standard of amateurism that it vigorously defended through legal battles, and which resulted in hundreds of millions of dollars in legal settlements and attorneys’ fees for the NCAA and its major conferences.
As of July 1, the NCAA allows student-athletes throughout the country to profit from their name, image, and likeness (“NIL”). For the first time in history, college athletes are free to engage in activities, including endorsement deals, leveraging social media for pay, and getting compensated for coaching, making personal appearances, and signing autographs.
Various state legislative bodies have rushed to enact NIL laws that established July 1 as an effective date. As of today, a dozen states have passed laws that are currently effective and several more will become effective in the coming year. This prompted the NCAA to urgently seek federal legislation. The NCAA has sought not only a federal legal standard on athletes’ NIL activity, but also protection from continued antitrust challenges. However, five proposed bills have already stalled as lawmakers have responded by demanding improvements from the schools in other benefits for athletes, such as health care and safety standards.
As it stands, neither the NCAA nor the federal government have addressed NIL laws. The current system varies from state to state. Student-athletes will be operating in an environment that, at least for now, will have far fewer guidelines than the schools had anticipated would be in place. It is truly the “Wild West.”
According to the NCAA, schools in states with laws about NIL activity "are responsible for determining whether those activities are consistent with state law." Schools in states without NIL laws will be able to develop their own policies, with the NCAA saying only that the association will be maintaining its "prohibitions on pay-for-play and improper recruiting inducements." That is the extent of guidance that the NCAA has provided. This means student-athletes will be able to work with agents and make deals with boosters, "provided the activity is in accordance with state laws and school policy."
The current setup will remain in place until federal legislation or new NCAA rules are adopted. NIL laws will forever alter the collegiate landscape for the NCAA, student-athletes, universities, agents, boosters, and businesses looking to collaborate with student-athletes. Each actor must be cognizant of the various legal foundations at play. From school and local policy to NCAA policy, and from state to federal laws. Who will bear the risk when the inevitable dispute arises? Is it solely for the student-athlete or should the university also be responsible? What about the businesses that are collaborating with the student-athletes?
This series will untangle the webs and provide a framework for navigating name, image, and likeness laws within the new era of college athletics. In the following weeks, we will continue to monitor and provide updates on NIL developments. The upcoming series will discuss:
- State-by-state analysis of NIL laws.
- Proposed federal legislation.
- Current restrictions for entering into contracts with student-athletes.
- Student-athlete compliance standards.
- Risk transfer – from the perspective of the business, the university, and the student-athlete, through contract clauses, including:
- Non-liability clauses to shift compliance responsibility.
- Tailored non-compete provisions to accurately reflect the actual business, products, or services of the athlete’s brand or sponsor.
- Moral clauses, which attempt to hold student-athletes to specific behavioral standards to not bring disrepute, contempt, or scandal to a brand or sponsor
- Intellectual property considerations, including trademarks for an athlete's brand, logos, and slogans; and copyrights for athlete’s photos, videos, and other creative content shared on social media.