Beginning July 1, 2021, National Collegiate Athletic Association (NCAA) student-athletes across the country obtained the ability, through state laws or institutional policies, to commercialize their name, image, and likeness (“NIL”). The opportunity of NIL compensation has changed the landscape of college athletics. The following summarizes the rules relevant to this new landscape.
I. NCAA NIL Policy Guidance
- Interim NIL Policy
On June 30, 2021, just ten days after the Supreme Court's decision in NCAA v. Alston and one day before several state NIL laws were slated to go into effect, the NCAA approved an “Interim NIL Policy” that drew some clear lines but tossed most of the compliance regimes to individual states and institutions to create. The half-page NIL Interim Policy permits all NCAA student-athletes to engage in NIL activities consistent with law of the state in which the student’s school is located. The NIL Interim Policy made the following key pronouncements:
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Student-athletes may use professional service providers such as agents and attorneys for NIL activities;
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Student-athletes should report NIL activities consistent with state law or school and conference requirements;
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Schools and conferences can adopt their own policies to build upon the framework provided in the Interim Policy;
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Student-athletes who attend a university in a state with an active NIL law must comply with that law, in addition to any university and conference policies. Students who attend school in a state without a state NIL law need only comply with university and conference policies.
The NCAA’s NIL Interim Policy remains in effect until federal legislation or new NCAA rules are adopted. Importantly, it leaves prohibitions on pay-for-play and improper recruiting inducements in effect. In other words, student-athletes may not receive NIL compensation directly in exchange for play, and schools or representatives of athletic interests (“boosters”) are not allowed to offer improper inducements—including NIL opportunities—for recruits to attend a particular school with which they are associated.
To date, the Office of General Counsel (OGC) is not aware of any policy enforcement actions in this space by the NCAA. However, OGC is aware of the NCAA at least monitoring the actions of a few institutions—in the pay-for-play or improper inducement areas—through letters of inquiry. Some reported NIL transactions appear to push the envelope between pay-for-play and legitimate endorsement opportunities. For example:
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One university’s agreement with American Top Team to pay all 90 football team members to promote products.
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Another university’s partnership with the protein bar maker, owned by a booster of the institution, that provided compensation for all 123 members of its football team, including full tuition scholarships for all 36 of its walk-ons.
- NIL Policy Guidance Regarding Third Party Involvement
In February, the NCAA’s Division I Board of Directors requested its Division I Council to review NIL’s impact upon college athletes, including areas such as booster involvement in NIL, transfer options and opportunities, and student-athlete mental health. On May 9, 2022, the NCAA added to its Interim NIL Policy a guidance document entitled NCAA Interim Name, Image and Likeness Policy Guidance Regarding Third Party Involvement (“Third Party Involvement Guidance”) that pertains to the rise of third-party business entities—or “collectives”—that an institution’s boosters may create in order to pool revenue to fund NIL opportunities for student-athletes at the collective’s associated school. (See Part V, below, “Collectives”). The guidance stated that the NCAA’s guidance was effective immediately. For violations occurring prior to May 9, 2022, NCAA enforcement staff will review the facts of individual cases but pursue only those actions that “clearly are contrary to the [Interim NIL Policy], including the most severe violations of recruiting rules or payment for athletics performance.”
The new guidance is short, ambiguous in certain areas, and essentially reiterates the status quo in four general categories: third parties as boosters; recruits; current student-athletes; and current NCAA Division I Legislation. The primary takeaway for campus counsel is that the NCAA's existing rules for booster involvement and recruiting continue to apply in full force to NIL-related entities and collectives. In a landscape often described as the “wild west” (Atlanta Journal-Constitution, Bleacher Report, ESPN), and dominated by social media speculation, high-profile coach sound bites, very public recruiting wars, and a healthy amount of legal risk concern on the part of general counsel, the generalized NCAA guidance document at the very least provides some concrete standards to bring to the table when advising clients.
1. Third Parties Defined as Boosters
While it never uses the term “collective,” the NCAA certainly had such entities at top of mind when it published its Third Party Involvement Guidance. The first section of that document underscores the definition of “representative of athletics interest” from NCAA Division I Bylaw 13.02.12, and concludes that because the mission of “many, if not all” of third-party entities is to promote or support a particular school by increasing NIL activities by its current or prospective student-athletes, such entities are boosters. Accordingly, collectives are restricted by NCAA rules from engaging in recruiting activities or conversations on behalf of a school; providing benefits to prospective student-athletes (PSAs); or providing “pay-for-play” through NIL compensation. Additionally, this portion of the Guidance reiterates that institutional staff cannot be involved, directly or indirectly, with the provision of benefits to a PSA—including NIL compensation.
2. Collectives and Prospective Student-Athletes (PSAs)
The above guidance repeats in the section regarding PSAs, in addition to the following reminders, phrased in all but the final instance as “thou shalt nots”:
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No recruiting conversations between an individual or entity that has triggered booster status (“booster/NIL entity”) and a PSA.
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No communications (e.g., call, text, direct message) by a booster/NIL entity with a PSA, a PSA’s family, or others affiliated with the PSA for a recruiting purpose or to encourage the PSA’s enrollment at a particular institution.
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An NIL agreement between a PSA and a booster/NIL entity may not be guaranteed or promised contingent on initial or continuing enrollment at a particular institution.
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Institutional coaches and staff may not organize, facilitate, or arrange a meeting between a booster/NIL entity and a PSA (e.g., provide the individual or entity with a recruiting list or watch list, including the NCAA Transfer Portal).
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No communications (direct or indirect) by institutional coaches and staff with a PSA on behalf of a booster/NIL entity.
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NIL agreements must be based on an independent, case-by-case analysis of the value that each athlete brings to an NIL agreement as opposed to providing compensation or incentives for enrollment decisions (e.g., signing a letter of intent or transferring), athletic performance (e.g., points scored, minutes played, winning a contest), achievement (e.g., starting position, award winner), or membership on a team (e.g., being on roster).
3. Collectives and Current Student-Athletes
What is most interesting about the NCAA’s guidance regarding collectives is what it does not include in the section concerning current student-athletes namely, bullets (1), (4), and (5) above. This would seem to permit conversations between institutional staff and NIL entities—presumably to educate and/or help ensure compliance with state law and NCAA rules. What is less clear, but seems implied by omission, is that institutional staff may help to facilitate, coordinate, and/or arrange meetings between a current student-athlete and an NIL entity, so long as it is permitted by NCAA rules and the applicable state NIL law. The guidance states as follows:
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An NIL agreement between a SA and a booster/NIL entity may not be guaranteed or promised contingent on initial or continuing enrollment at a particular institution.
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NIL agreements must be based on an independent, case-by-case analysis of the value that each athlete brings to an NIL agreement as opposed to providing compensation or incentives for enrollment decisions (e.g., signing a letter of intent or transferring), athletic performance (e.g., points scored, minutes played, winning a contest), achievement (e.g., starting position, award winner), or membership on a team.
Though the pay-for-play prohibitions are rather obvious considering the final bullet, OGC does not believe an NIL deal can be contingent on a current student-athlete or PSA making the starting lineup—e.g., starting five, starting offense, starting defensive front, starting pitching rotation, etc.
4. Reiteration of Existing NCAA Bylaws
Finally, the NCAA reiterated the following NCAA rules related to the involvement of boosters—and thus institutionally-aligned NIL entities/STET 2—in recruiting activities:
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Bylaw 11.1.3 — Athletics department staff members are prohibited from representing an enrolled student-athlete or PSA in marketing their athletics ability or reputation.
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Bylaw 13.10 — Before a PSA signs a National Letter of Intent or written offer of admission and/or financial aid or before the school receives a financial deposit, a school may comment publicly only to the extent of confirming its recruitment of the PSA.
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Bylaw 13.1.2.1 — Boosters (and thus institutionally-aligned NIL entities/collectives) may not engage in recruiting activities, including recruiting conversations, on behalf of a school.
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Bylaw 13.02.14 — Recruiting is defined as “any solicitation of a PSA or a PSA’s family members by an institutional staff member or by a booster [(and thus institutionally-aligned NIL entity/collective)] for the purpose of securing the PSA’s enrollment and ultimate participation in the institution’s intercollegiate athletics program.”
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Bylaw 13.2.1 — Boosters (and thus institutionally-aligned NIL entities/collectives) may not be involved in making arrangements for or giving or offering to give any financial aid or other benefits to a PSA. Receipt of a benefit by a PSA is not a violation if the same benefit is generally available to the institution’s prospective students.
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Bylaws 12.1.2, 12.1.2.1.4.1, and 12.1.2.1.5 — No pay-for-play, whether for performance or on an incentive basis.
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NCAA Constitution 2.1.2 and 2.8.1, and Bylaw 13.01.2 — Institutions are held responsible for any impermissible recruiting activities by representatives of athletics interests (presumably including institutionally-aligned NIL entities/collectives).
- Oregon's NIL Law
As of June 1, twenty-nine states have passed NIL laws (opendorse NIL legislation tracker). Ironically, after initially racing to pass state law permitting NIL compensation, many states realized after the publication of the NCAA Interim Policy that less legislation provided institutions and student-athletes with more flexibility—whether in terms of institutional assistance in the arrangement of NIL deals, athlete agent requirements, NIL agreement reporting requirements placed on student-athletes. As a result, 2022’s legislative cycle saw an uptick in proposals, amendments, and repealing efforts (See Alabama House Bill 404; Georgia House Bill 617 on opendorse legislation tracker).
The twenty-nine state NIL laws (and amendments) generally apply to student-athletes attending a public or private NCAA institution in the respective state, as well as any applicable conference and athletic associations. In addition to creating a statutory right to NIL compensation, most state NIL laws provide that student-athletes may obtain professional representations (e.g., agents, lawyers, financial advisors) and require the disclosure of NIL contracts to the institution. They also prevent institutions from compensating student-athletes for use of their NIL or revoking scholarships for the same. Interestingly, most state NIL laws prohibit student-athletes from obtaining NIL compensation if a provision of their NIL contract conflicts with an institutional contract. Many state NIL laws prohibit restrict student-athletes from NIL agreements associated in any way with certain “vice” or embarrassing categories, products, or industries; NIL agreements that conflict with the institution's values, opinions, or morals; or NIL deals that would adversely affect the reputation of the institution. Some states also prohibit student-athletes from using institutional marks, logos, or facilities in exercising their newfound NIL rights.
The Oregon Legislature passed Senate Bill 5 (SB5) on June 22, 2021, and Governor Brown signed the bill into law on June 30, 2021. Oregon’s NIL law does not contain many of the NIL restrictions listed above. In that way, Oregon’s law is decidedly more “pro-student” and “pro-NIL.” For example, SB5 does not prohibit a student-athlete’s authorized use of institutional logos, marks, and facilities; does not prohibit NIL deals of certain categories, products or services; and explicitly permits NIL deals that conflict with institutional contracts, so long as the student-athlete does not perform NIL activities during official team activities.
SB5 prohibits institutions from compensating student-athletes for their NIL, but does not include the language prohibiting the facilitation of NIL deals—though any institution who does so invites Title IX and NCAA bylaw concerns that are beyond the scope of this article. Moreover, SB5 expressly bars institutions from:
- Prohibiting, preventing or restricting a student-athlete from exercising the student’s rights.
- Penalizing or retaliating against a student-athlete for exercising the student’s rights; or
- Prohibiting a student-athlete from participating in an intercollegiate sport for exercising the student’s rights.
SB5 requires student-athletes to disclose NIL contracts to their institution so that the institution can conduct a conflict review, but as noted above, so long as the proposed NIL activity takes place outside of official team activities (e.g., practices and training sessions, games, team meetings, pre- and post-game activities), conflicts with institutional sponsors can exist.
On July 1, 2022, the latest amendment to SB5, Senate Bill 1505 (SB 1505) took effect. This amendment also supports NIL activities, as it provides more avenues for student-athletes to obtain NIL compensation and creates more flexibility for institution-run NIL programs designed to educate and serve student-athletes as well as students across campus with an interest in NIL. As to the first issue, SB 1505 requires persons or entities that produce a university team jersey, video, game, or trading card for profit to make a royalty payment to each student-athlete whose name, image, or likeness is used in the creation of such a product. Second, SB 1505 permits the creation of clinics, studios, labs or other programs created by the institutions for NIL educational, training, or support purposes.
- Federal Legislative Efforts
NCAA leadership, conference leaders, college presidents, athletics directors and others have encouraged the passage of federal NIL legislation. Several federal bills have been introduced by both Republicans and Democrats on a bipartisan basis (see opendorse federal bill comparison). Beyond some initial media attention, however, the bills have not gained traction. After the Alston decision, other federal “solutions” such as a federal antitrust exemption for the NCAA to rulemake or collective bargaining for student-athletes have been suggested as possible options, but there appears to be limited appetite for these solutions in Washington D.C. Absent either one, the NCAA will continue to look to the states, athletics conferences, and member schools to navigate the evolving landscape. That may cure the antitrust problem but may create several new problems, depending on the state, the institution, the third party, the citizenship of the student-athlete, and any number of the variables discussed above.
- Conclusion
In sum, the opportunity of NIL compensation has changed the landscape of college athletics. NCAA rules in this area provide both flexibility and guardrails, and OGC expects more changes are afoot. The Oregon legislature has embraced this changed landscape and has created a statutory scheme that creates and bolsters the NIL rights of student-athletes attending institutions like ours. The Office of General Counsel stands ready to provide the institution with legal advice to help further the mission of the University in this exciting new landscape.
For additional OGC Articles in this area, see generalcounsel.uoregon.edu/news
—By Bryan Dearinger, Associate General Counsel