By: Bruce B. Siegal, Esq.
As college sports commenced new seasons this fall and spring, college athletes took to the playing fields and courts and also began entering into paid sponsorships, endorsements and licensing agreements for use of their respective name, image and likeness (NIL) rights.
College athletes in all sports are now able to market their respective NIL rights, and many are actively doing so. For example, Miami quarterback D’Eriq King and Florida State quarterback McKenzie Milton were among the first recipients of NIL money; and the two even co-founded a business called Dreamfield that allows companies to book college athletes for appearances. The Cavinder twins (Hanna and Haley), women’s basketball players at Fresno State, with their strong social media followings, have done blockbuster deals with nutritional and wireless carrier companies. Alabama coach Nick Saban reported that Heisman quarterback Bryce Young is up to $1M in endorsement money. The list goes on and on.
This time last year, college athletes entering such deals would have wreaked havoc with the NCAA’s then-present rules prohibiting the commercial use of NILs, causing them to lose eligibility and their schools scrambling to deal with NCAA compliance.
However, the times they are a changin’; the paradigm has shifted.
Effective July 1, 2021, the NCAA “temporarily” suspended its restrictions and limitations on the ability of college athletes to generate income from their NIL. College athletes can now actively market their NIL rights, themselves or through agents. They may now get a paycheck for lending their name to a brand or product just like any other celebrity or athlete – getting paid while maintaining their eligibility to continue playing college sports.
Gary McKillips, an Atlanta-based sports broadcaster and podcaster, noted that “for years, athletes lived under such strict and archaic NCAA rules that even receiving a cup of coffee from a fan or booster could result in severe penalties. Finally, the rules were adjusted somewhat so as not to discriminate against an athlete who, unlike other students, could not even work part time due to his/her commitments to their sport. Now the door is wide open and rightly so.”
While the issue of college athlete compensation has been percolating for some time now, the real changes commenced in 2019, when multiple state legislatures, upset over NCAA NIL restrictions, began to pass laws to overturn those restrictions in their states. While California was the first state to pass legislation, Florida was first to pass a law with the earliest of effective dates – July 1, 2021.
The NCAA has also faced an increasing number of lawsuits, including the case that resulted in the June 21, 2021 Supreme Court decision in NCAA v. Alston , 141 S. Ct. 2141 (2021). In Alston , the Supreme Court’s decision essentially found the NCAA’s restrictions regarding educational benefits to be an illegal restraint of trade, raising implications about restrictions on the ability of athletes to profit from their NIL, and leaving the NCAA vulnerable to lawsuits any time it makes a new rule that impacts athletes. Although the case didn’t involve name, image and likeness, the decision has appeared to dissuade the organization from trying to regulate NIL amid the new state laws.
As things stand, there is a patchwork of rules governing NIL use, including various state laws and university policies. Companies looking to enter the NIL space need to carefully navigate and ask the right questions.
First, what state is the athlete in; and second, what college does the athlete attend? With the current absence of federal legislation, state law applies (in those states that have passed legislation). While many state laws are similar, they are not entirely the same. The generally consistent state law terms provide that college athletes must be allowed to receive compensation for their NIL; however, the schools themselves may not compensate the student-athlete for their NIL or for playing the sport at their school.
After checking state law to confirm its guidelines, the next step is checking the specific school’s policy, which typically covers things including disclosure of NIL deals to the school to determine whether any conflict exists with the schools’ current sponsorships. Some state laws prohibit deals involving activities such as gambling, adult entertainment, tobacco, or banned substances.
College athletes in states without NIL laws are generally free to engage in NIL activities without violating NCAA rules. However, the NCAA has kept in place prohibitions on pay-for-play arrangements and restrictions on NIL compensation related to recruiting inducements. There cannot be any consideration provided to an athlete without some sort of quid pro quo.
Like professional athletes, student athletes can now file with the USPTO for word or design mark protection for their nicknames, slogans or logos, including of their likenesses, including a random design. For example, University of Wisconsin’s quarterback, Graham Mertz, has filed to register a design mark that he uses to represent his personal brand. UConn basketball star Paige Bueckers has an application on file to register “Paige Buckets”. The sooner athletes file their trademarks with the USPTO, the better.
The NCAA is in the process of formalizing its position, possibly providing some degree of guidance. NCAA president Mark Emmert called for the constitutional convention over the summer. In January 2022, NCAA members approved the adoption of a new constitution, which requires each NCAA division to establish guidelines regarding commercialization of a student athlete’s NIL. On February 18, 2022, the NCAA Division I Board of Directors tasked the Division I Council with reviewing how NIL policies are impacting college athletes and college athletics. The Division I Council has been asked to provide a preliminary report on its findings by April and a final report, with recommendations for possible actions, in June.
One of the principles detailed in the new constitution focuses on NIL, stating that student athletes cannot be compensated for participating in a sport but should be able to “receive educational benefits and benefit from commercialization through use of their name, image and likeness.” In essence, it appears that it will be left up to the divisions, conferences and institutions to continue to establish the rules of the road.
This constitutional change to embrace allowance of pay for the use of NIL is significant as current NCAA reforms allowing such pay had heretofore only been adopted on an “interim” basis.
In an interesting twist, states with NIL laws are seeing themselves operating under more restrictions than the states without such laws. As a result, the focus of many states that have adopted NIL legislation has shifted to repealing it or revising it to make it more flexible in the light of the minimal restrictions provided under the NCAA guidelines.
Nevertheless, there currently remains a patchwork of state laws in place, resulting in non-uniform NIL policy across the United States, creating some confusion with respect to what NIL activities are permissible and what NIL activities are prohibited. While there have been discussions and even a few proposed federal bills in the past, a federal NIL law does not appear to be happening any time soon. While it may come at some point, for now, businesses, fans, donors, colleges, and student athletes will need to continue to monitor NCAA policy as well as their respective state laws and college policies.
Looks like NIL licensing is here to stay. For more information on how the Greenspoon Marder Intellectual Property and Sports & Entertainment practice groups can assist athletes with their NIL, contact [email protected]
