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The NIL – What is Good for the Goose is not always good for the Gander
Neil Young wrote – “I’ve seen the needle and the damage done” in one of his many hits. That same thought comes to mind, transmuted from the world of rock-and-roll to the world previously known as amateur sports in the NCAA. LegalEagle here – coming at you with my extremely conflicted thoughts on the NIL and what it had done, is doing, and will continue to do to the world of college sports (specially herein, NCAA Division I football).
A Little About Me (First)
Brief introduction – I am an attorney, licensed to practice in Florida. That said, this is not my area of practice. I mention this only to give you perspective on where I am coming from and why I am fascinated by the legal ramifications of the liberty interests involved in NIL-related issues for NCAA athletes.
I love college sports, in part, because of the amateur nature. The lack of money; love of the game; the respect and embrace of the school and its history…all being the driving force make it a different game (admittedly, many players are there only to get to the NFL, which I recognize, but the removal of money as a focal factor was essential in developing the thrill of the game and the love of your school). Instead of the military equivalent of mercenaries in the NFL (playing for money and “me” vs the team and the honor of the game and school), we have the military equivalent of countries in schools. Fighting for the flag.
Full disclosure, my views are a mixture of juxtapositions and oxymorons – a compassionate conservative with a penchant for individual liberty over all (what I believe the Founders of the United States intended, with a healthy dose of social understanding). I say that to say that the NIL issues, legally, are extremely challenging to my views (i.e., the liberty our laws seek to uphold vs. the amateur nature of NCAA sports). I am a strict constructionist and originalist in terms of the interpretation of the Constitution and application of law; from that I find it very difficult to restrict a citizen of the USA, that is 18 years of age or older, the right to their own NIL. That said, the NIL issues, legally, highlight where such views run into problems with real world applications of that viewpoint. And, to say the least, I am conflicted.
Legal Intro to NIL – Very Brief, Abridged, and Incomplete
A brief history of the NIL so that we are all operating on the same page. To understand the backdrop legally of NIL in one limited view, a landmark case can help give some information as to where the “name, image, and likeness” as a legal concept for celebrities came into being. See, White v. Samsung Electronics America, Inc., 989 F.2d 1512 (9th Cir. 1993). This was a federal case about Vanna White, the woman who made an incredible living out of doing very little on the Wheel of Fortune.
Samsung made commercials to help sell their VCR players and consciously presented a figure to resemble Vanna White without paying her for the appropriation of her likeness. In the commercial, there was a robot dressed with a gown, jewelry, and a wig to strongly resemble her likeness. Samsung Electronics used the robot in the commercial, along with an identical game board matching that of White’s on Wheel of Fortune. The commercial used other celebrity likenesses as well, but according to White, she was the only one not compensated or asked permission of before the airing of the commercials. Ad executives at Samsung Electronics even referred to this series of commercials as the “Vanna White commercial.”
White ultimately won the lawsuit and was awarded over $400,000 in damages. This case was a turn of events in changing from common law and in so doing was a springboard to what we now understand as NIL seen in the NCAA. (legally, there is a lot more to it, but for our purposes here, this is enough jargon to get the point).
Obviously there is MUCH MUCH MUCH more to it, legally and otherwise, but for brevity sake – take an all star player for a big school like the most winningest school and best example of STUDENT athletics, the University of Michigan, or another big name program like Ohio State University (no”the”, they lost that patent application attempt, thank God… OSU Cannot Patent “The”) or University of Georgia. That star is the face of the team – think of the jerseys sold, the tickets sold, the paraphernalia, and (at times in history) the NCAA video games that were solid (albeit back in our formidable years, they weren’t allowed to use the names of the players on NCAA games for this very reason). SO -here starts the schism. You are an All-American Division I NCAA football player, your school sells a bajillion dollars worth of products, tickets, games, etc. and you make “no money” (No money in this example would be nothing beyond the insanely large scholarships, room and board, etc. which at some schools tops out around $1 million for a 4 year ride).
So, there you are, in many ways your likeness is being used by another, without your express consent (sometimes there is consent in accepting a scholarship or playing for the team and that’s a different legal issue), and they are making bank.
Amateur sports or just another professional league that is tangentially related to academics. Here comes the battle. David versus Goliath. The love of sport and team vs. money. If you grew up in my generation, you undoubtably saw the movie Camp Nowhere with Christopher Lloyd in which the main character (Mudd) is surrounded by all of his classmates while they shout “money Mudd”. Not too far off from 99% of the players. But at what cost does the money come? Do we sell the soul of amateur athletics by converting?
One of the beatific things about NCAA athletics is you have poor college students coming together to suffer the burdens of playing together. Much like a group of young trainees at Parris Island learning to become Marines. The nature of the training and ensuring Crucible for those wanting to become marines, or the trip to Pine Island for those in the Q Course for the Green Berets for trying their hand at Robin Sage…the suffering and difficulty goes from troublesome, to a bonus by way of the team coming together and working as a unit. There is something beautiful about a team getting together and boarding a bus in their sweats and cut T-shirts all striving to the same goal. It is not the same when the same college kids take their new Teslas to the airport in their fancy clothes to board their private jets. I don’t care what anyone says – it is not the same.
Now for a timeline of events leading up to the big changes and the involvement of the United States Supreme Court (a/k/a “USSC”or “SCOTUS”).
- September 30, 2019 – California legislation (shock) is introduced that will prohibit schools from punishing student-athletes who profit from endorsements, beginning in 2023. NCAA considers this a threat to amateurism.
- October 29, 2019 – The 3 NCAA divisions are directed to modernize their NIL rules January 2021.
- April 29, 2020 – Group is appointed NCAA to give rules changes suggestions
- June 12, 2020 – Florida passes state NIL law that will go in effect July 1, 2021
- July 22, 2020 – The NCAA president requests help creating a federal NIL law. Senators encourage the NCAAA to increase reform if they want.
- September 24, 2020– A bipartisan federal NIL bill is introduced, co-authored by Anthony Gonzalez and Emanuel Cleavor. The proposed law provides restrictions on types of endorsements college athletes may participate in.
- December 10, 2020– Senator Roger Wicker introduces legislation that allows some NIL deals and antitrust exemption. The exemption could protect the NCAA from some future lawsuits.
- December 16, 2020- Supreme Court agrees to hear the NCAA’s appeal of the Alston v. NCAA antitrust lawsuit
- December 17, 2020 – Senator Cory Booker and Richard Blumenthal call for overhaul of NCAA rules, in the hope that revenue sharing and further changes would be implemented.
- January 11, 2021 – The NCAA delays its vote on NIL rules for an indefinite amount of time.
- February 4, 2021- Senator Chris Murphy and Lori Trahan introduce federal legislation that would create an unrestricted market.
- March 31, 2021 – The Supreme Court hears arguments in the NCAA v. Alston lawsuit.
- June 18, 2021 – Six conferences propose individual schools become responsible for NIL policies. In a letter obtained by ESPN, the conference heads declare that previous NCAA proposal changes would cause “inevitable confusion, uncertainty and likely litigation against the NCAA and its member conferences and institutions.”
- June 21, 2021– The Supreme Court rules against the NCAA in the Alston Decision, in a unanimous 9-0 vote. The decision opens up further ways for student athletes to be compensated. Justice Neil Gorsuch, who delivered the court’s opinion, explained the NCAA was violating antitrust law.
- June 30, 2021– The NCAA board of directors adopts a temporary change to allow NIL activity to occur legally. Schools and institutions are instructed to create policies to explain specific guidelines to college athletes.
- July 1, 2021– NCAA new rules go into affect and as the clock strikes midnight, student-athletes start signing NIL deals, beginning to profit on their name, image, and likeness
The Alston Decision – National Collegiate Athletic Association v. Alston, 141 S.Ct. 2141 (2021); 594 U.S. _______ (2021).
The SCOTUS takes up a ruling from the 9th Circuit Court of Appeals that struck down the NCAA caps on student-athlete academic benefits (i.e., reimbursements and pay for academic-related expenses) on antitrust grounds.
Writing for the majority and opinion of the Court, Justice Gorsuch found that by limiting education-related compensation that college athletes may receive, the NCAA is acting in violation Section 1 of the Sherman Act, which prohibits any “contract, combination, or conspiracy in restraint of trade or commerce.” The Court reached this conclusion by by echoing the lower court’s “rule of reason” – a judicial doctrine of antitrust law – to scrutinize the NCAA’s regulatory scheme, dealing a blow to the NCAA’s hope for more antitrust liberty from the Court.
In particular, Justice Kavanagh’s more expansive concurrence was the legal equivalent of a smack down. He said without saying, be lucky this is all that is happening….for now. Kavanagh took issue with the NCAA’s argument that the public benefit from the NCAA’s restrictions on benefits, metaphorically comparing it to a group of restaurants that cut cooks’ wages on the theory that customers prefer to eat meals prepared by low-paid cooks. Where the NCAA saw consumer benefits, Kavanagh saw only flawed logic behind the NCAA’s “no pay” apparatus, which he sharply quipped as“[p]rice-fixing labor is price-fixing labor.”
What does Alston mean for college sports moving forward? In the short term, the decision simply invalidates NCAA restrictions on educational benefits. Sorting out how individual schools will now define and dispense educational benefits alone will be complex and unpredictable. But that is not the only navigational challenge ahead for the NCAA and other stakeholders in the system. In the long term, the NCAA is not likely to receive special judicial dispensation from antitrust scrutiny on matters of student-athlete pay. In particular, Justice Kavanagh’s concurrence suggests a heavy hand waiting to assist the players in the future.
To be sure, the Alston decision could bring a wellspring of student-athlete antitrust litigation on a variety of compensation restrictions (and “combinations” beyond the NCAA could find themselves in the crosshairs, including, e.g., college conferences and high school sports associations). In addition, with increasing focus on state and federal legislation designed to challenge the NCAA’s name, image and likeness prohibitions or grant employment status to student-athletes, the NCAA’s historical and comprehensive restrictions on athlete compensation continues to be under attack on multiple fronts. The question before the Supreme Court in Alston did not require the Court to address the legality of all NCAA prohibitions on student-athlete compensation—nor did it. But the NCAA and its members must prepare for a changing landscape that will undoubtedly require universities to develop “all of the above” strategies for student-athlete monetization in the very near future. Other stakeholders, such as student-athletes, athlete representatives, marketing agencies, brands, and broadcasters should also seek to understand the intricacies of this shifting student-athlete compensation model. Alston alone, with its limited holding, did not revolutionize the college sports landscape, but it may well serve as a fulcrum for the massive change that the system is set to undergo and that, in many respects, is already underway.
To add the confusion of all of this, we look at the multiple sovereigns involved in our nation – state laws, federal laws, and sometimes a third set of administrative laws that deviate from the other two and waive the flag of the Chevron Doctrine. So – flashback to 2021 (usually in July when new laws take effect in most jurisdictions), Alabama, Florida, Georgia, Mississippi, New Mexico, and Texas all enacted state laws that allow NCAA athletics to monetize their NIL. That said, there was no federal law that allowed the same- hence the NCAA provided guidance indicating students were allowed to engaged in NIL activities so long as they “consistent with the law of the state where the school is located” and allows students in states without NIL to participate without breaking NCAA rules. Mark Emmert, President of the NCAA, made statements to that decree: NCAA President’s Comments on NIL
Legally, this poses another issue for the school’s and a new layer of issues to handle for players and parents since “collages and universities are responsible for determining whether those activities are consistent with state law.” Does this mean that the players are now contenders to receive the services of a legal staff for the college? Is that something the NIL can cover as a part of their earnings for their NIL? Can a law firm be the “face of the [insert school of choice]” and represent every player for every regard in exchange for their NIL in commercials? So many questions, so much that seems to cut against the amateur fun NCAA sports but for the liberty of the adult citizen of the US (in most all cases).
Flash forward to 2022. What are we talking money wise for these kids coming into NCAA Division I football? As of March 11, 2022, the Athletic reported an incoming 5 Star recruit inked a $8 million deal which would be concluded and paid in full before his junior year. This was on the tail of a report indicated Texas A&M Boosters spent nearly $30 million in NIL deals and recruitment to ensure its reign at the top of the thrown of the upcoming recruitment class….outranking even Nick Saban. The rumor mills indicated this $30 million was a coordinated sum used to target the best players for key positions – frighteningly similar to that of a pro team and all without any regard for allegiance to a school of interest in an actual education.
So here is the true scales of justice. For those of us who appreciate amateur sport and kids fighting for their flag in return for and education, the changes are FAR from welcomed. For those of us who appreciate the liberty and privacy interests infringed upon by schools effectively (previously anyway) stealing and freezing the NIL rights, these changes are welcomed. For those of us who like both amateur sport and the liberty interests at steak – it’s a Jekyll and Hyde, back and forth, whiplash wave pool of emotions seeking for the pros of one to outweigh the other….and the search continues.
What’s the Fix? Can NIL and NCAA Amateur Sports Coexist?
The number of solutions possible are endless and the fact that we have state laws, possible federal laws, and the NCAA guidance all circling the same issue, at the same time, with different approaches….that is a recipe for disaster. But from the chaos comes best possible outcome (practically speaking). And in that, I am hopeful that perhaps…and perhaps sooner rather than later, a national approach might hold sway that is fully implemented in every state so that the NIL issue is not something by which recruitment is superseded. Players should choose their school based on education, loyalty to a school, coaching, etc – but not financial gain (at least directly).
So what would I propose? This is a loose, very loose, approach and it does not even come close to solving everything. This framework, however, might solve the issues and provide a path forward to level the playing field:
- All student athletes engaged in NCAA sports are provided an escrow account upon their matriculation to school;
- All NIL funds are immediately deposited in escrow, via trust, and managed in part by the NCAA to ensure compliance. Funds from this trust are held until such time as the player’s eligibility for NCAA sports expires, or the player verifies that they are forfeiting any remaining eligibility (i.e., early entrance to the draft, a career-ending injury, etc). The interest from those funds in trust are used to facilitate scholarships to assist lower-skill players pay for their education.
- Rules will ensure that no player is a able to access those funds while playing so as to ensure we do not have precocious teenagers (albeit adults) running around with millions of dollars to waste while in school and playing NCAA sports.
- Obviously there is great potential with how to facilitate these funds – allow portion to be used to pay for any unpaid education costs and living expenses, etc. – but all of these exceptions would have to be strictly regulated to facilitate the amateur nature of NCAA sports to remain intact. Players should arrive together on a bus or team plane…not via a private jet while wearing fur coats and diamonds. That is the analogy to what we should attempt to do.
- The end result of this would be to ensure that players are compensated for their NIL legally and fairly, ensure a semblance of NCAA amateur athletics, and have the bonus side effect of providing for the players after their NCAA time is complete (especially in cases of players who get injured or otherwise do not go on to make millions in professional sports).
- I would also look to infuse some sort of incentive to graduate and maintain a certain grade point as well so as to allow the educational aspect of NCAA sports to be imperative.
This is by no means a perfect fix and the legal implications involved are endless. Challenges and problems will be a constant struggle. The number of ways “around” limitations like this would be endless as well…people opening different forms of trusts, corporations, LLCs, etc. with “unrelated” funds to NIL being given to family, friends, etc. The possibilities are endless – all of which would keep compliance people on constant alert.
But, if we do not do something to both allow the NIL to flourish but also address the problems that will bring, NCAA athletics will look more like a younger professional league and less like schools playing sports. Gone will be the days of sports in college as we know them.
Do we want teams to wear their schools colors with pride and represent the schools? Or do we want players to represent themselves with the afterthought being the school. Mo Money, Mo Problems. I, for one, am hopeful that the rights to NIL can be implemented by the players while at the same time those proceeds be withheld while the student athletes are just that – student athletes.
– Legal Eagle