It’s a Brand-New Day—College Athletics in the NIL Era
Effective July 1, 2021, the National Collegiate Athletic Association (NCAA) adopted an interim policy lifting its prohibition on incoming and current student-athlete’s ability to profit from their name, image and likeness (NIL). This represents a major change to the traditionally accepted concept of what it means to be an amateur student-athlete. However, the change still leaves some guidelines unaddressed and has prompted additional questions from the community. In particular, the current policy requires that NIL activities be governed by a combination of laws of the state where the school is located (there are 13 states with NIL laws that took effect in July 2021), rules of the student-athlete’s conference and/or rules of the student-athlete’s individual school.
In this blog, we’ll discuss how institutions can work alongside their student-athletes to properly identify new NIL opportunities as a result of the policy change, while remaining compliant with the current policies.
History of the NIL Debate
The NCAA’s prohibition on student-athletes receiving payment for participation in sports, or ability to profit from their status as student-athletes, has long been under fire. Lawsuits brought against the NCAA in 2009—most notably, the class-action suit filed by former All-American basketball player Ed O’Bannon—challenged the use of athletes’ image and likeness to drive profits for the NCAA as part of licensing deals, while the student-athletes themselves received no compensation and could not control the use of their likeness.
This case received an initial ruling in O’Bannon’s favor from a District Court in August 2014, ruling that the NCAA’s practices violated anti-trust laws and ordered that schools should be allowed to increase the amounts of scholarships provided to student-athletes to include cost-of-living expenses previously prohibited by the NCAA. The NCAA’s appeal of the verdict was denied by the Supreme Court, leaving the NCAA to pay over $40M in fees and costs.
O’Bannon v. NCAA paved the way for a number of class-action suits against the NCAA and colleges in the coming years, challenging similar restrictions on funding allowed for student-athletes. These cases were ultimately combined into a single suit heard by the same District court, with a similar ruling against the NCAA coming in March 2019. A final, unanimous affirmation of the ruling was delivered by the Supreme Court in June 2021.
In concert with the legal battles fought against the NCAA, states began passing legislation enabling student-athletes to receive compensation for use of their NIL. The first such law was passed in California in September 2019, and now 28 states have laws in place as of this writing—with more in the works. Several related proposals have also been made in Congress, with the NCAA pushing for the enactment of a federal law to establish a consistent expectation across the industry.
Considerations for the Current Environment
With so much in flux regarding NIL rules at the moment, colleges and universities must do their best to establish policies and practices based on the information they have at hand. To start, institutions should consider what requirements currently are in place and which apply to them at the moment (e.g., state laws or rules from their athletic conference). Even if state laws have not yet hit their implementation date, it is recommended that an organization consider the expectations and requirements of the law that will govern development of any institutional policy or practice to aid in compliance going forward.
Overall, colleges and universities must support activities with appropriate and consistent controls for student-athlete NIL needs. The first few weeks of the NIL era have already shown a variety of factors that play into deals student-athletes are negotiating, from the characteristics of the athletes involved to the dollars associated with each deal. Schools need to be coordinating with their athletes, ensuring compliance with expectations and maintaining eligibility. Further, since the student-athletes are still representatives of the college or university, it is important to maintain open communication and consistent interpretations regarding any limitations or prohibitions needed in consideration of the institution’s reputation or needs.
Paving the Way Forward
While the NCAA’s interim policy has opened the door for a change that’s been requested by student-athletes for over a decade, it ushered in an era fraught with uncertainty and inconsistency. For now, NIL is in an experimental phase with many unknowns, and higher education institutions are left in the precarious position of working to establish standards for themselves and their athletes under requirements they don’t control. As the NIL era hits full swing, institutions should continue to monitor the impact this freedom has on their athletes as individuals, teammates and students, while also considering resulting downstream effects and compliance concerns.
Be sure to keep up with the latest happenings in the nonprofit industry by subscribing to our blog and following us on Twitter @BDONonprofit.