Recent “name image and likeness” (“NIL”) legislation created a new market for goods and services that have never existed before in college athletics. The NCAA has enacted policies to allow student athletes to enjoy the benefits of this NIL and receive compensation for its usage on their terms. However, understanding NCAA NIL policies will ensure that athletes and school avoid potential pitfalls that may away the unwary.
- What is NIL?
From a legal perspective, the term “NIL” generally refers to an individual’s legal right to control the usage of their name, image, or likeness. NIL includes any trait of a person that serves to identify that person to an ordinary viewer or listener, including their name, signature, photograph, image, likeness, voice, or a substantially similar copy of any of the foregoing. Individuals have a legal right to protect their NIL from others who attempt to publish, print, display or otherwise publicly use a person’s NIL for trade, commercial, or advertising purposes, without consent.
- Previous NCAA NIL Compensation Restrictions
For decades, the NCAA restricted college athletes from exercising the legal rights associated with NIL, clinging to the “amateurism” philosophy. Founded in 1905, the NCAA regulates intercollegiate sports. Its mission statement is to “maintain intercollegiate athletics as an integral part of the educational program and the athlete as an integral part of the student body and, by so doing, retain a clear line of demarcation between intercollegiate athletics and professional sports.” The 1906 bylaws of the IAA, as the NCAA was originally known, expressly prohibited student-athletes from receiving any compensation whatsoever, even athletics scholarships, in exchange for their participation in college sports. In 1956, the NCAA enacted a new set of rules permitting schools to award athletics scholarships, known as “grants-in-aid,” to student-athletes. These rules imposed a limit on the size of the grant-in-aid that schools were permitted to offer. The limit precluded student-athletes from receiving any financial aid beyond that needed for commonly accepted educational expenses, which were tuition, fees, room and board, books, and cash for incidental expenses such as laundry.
On August 7, 2014, the NCAA adopted a new legislative process for the Power Five, that allows those five conferences collectively to adopt legislation in specific areas, which include limits on grants-in-aid. Soon afterward, in January 2015, the Power Five voted to increase the overall limit on grants-in-aid, from the limit then in place, to a higher limit based on the cost of attendance at each school. This became effective on August 1, 2015. The revised “full grant-in-aid” comprises “tuition and fees, room and board, books and other expenses related to attendance at the institution up to the cost of attendance[.]” The Power Five also created new forms of permissible compensation for student-athletes, and expanded the scope of previously permissible benefits or compensation. These changes permitted student-athletes to borrow against their future professional earnings to purchase loss-of-value insurance; expanded reimbursement or payment of travel expenses for certain family members to attend certain events; provided unlimited food and required schools to pay for medical care for athletics-related injuries for at least two years after graduation.
Although the Power Five’s legislative enactments resulted in greater compensation for student-athletes, such compensation remained still capped by overarching NCAA limits that prevent the Power Five and all NCAA members from expanding compensation beyond a point determined by the NCAA through its traditional rulemaking process.
- Current NCAA NIL Compensation Restrictions
- The Interim NIL Policy
Following Alston and duly enacted state NIL statutes, the NCAA implemented an Interim NIL Policy, effective July 1, 2021, to support student-athlete use of NIL. The Interim NIL Policy provides: “NCAA Bylaws, including prohibitions on pay-for-play and improper recruiting inducements, remain in effect, subject to the following:
- For institutions in states without NIL laws or executive actions or with NIL laws or executive actions that have not yet taken effect, if an individual elects to engage in an NIL activity, the individual’s eligibility for intercollegiate athletics will not be impacted by application of Bylaw 12 (Amateurism and Athletics Eligibility).
- For institutions in states with NIL laws or executive actions with the force of law in effect, if an individual or member institution elects to engage in an NIL activity that is protected by law or executive order, the individual’s eligibility for and/or the membership institution’s full participation in NCAA athletics will not be impacted by application of NCAA Bylaws unless the state law is invalidated or rendered unenforceable by operation of law.
The NCAA’s Interim NIL Policy had the effect of allowing athletes to receive compensation for their NIL with jeopardizing the eligibility with the NCAA. However, The Interim NIL Policy interestingly noted that state law invalidated or rendered unenforceable by operation of law could potentially impact eligibility for individual or member institutions to participate in NCAA athletics.
A November 2021 question-and-answer document clarifies that schools may not use NIL transactions to compensate student-athletes for athletics participation or achievement or as an improper inducement. Additionally, the NCAA additional guidance related to the NIL interim policy in May 2022, stating that institutional coaches and staff may not organize, facilitate or arrange a meeting between a booster/NIL entity and a prospective student-athlete or communicate directly or indirectly with a prospective student-athlete on behalf of a booster/NIL entity.
- October 2022 Clarifications
On October 26, 2022, the NCAA provided updated guidance on the Interim NIL Policy to offer further clarification on its policy and positions. The October 2022 guidance was geared towards attempting to regulate NIL collectives (“collective”), where boosters pooled funds to provide to student athletes (SAs). The October 2022 guidance further sought to impose additional limitations on university participation in NIL affairs. The NCAA also concluded institutions were prohibited from performing the following activities:
- Communicating with collectives regarding specific SA request/demand for compensation (e.g., SA needs X dollars in NIL money) or encouragement for collectives to fulfill SA’s request.
- Proactively assist in the development/creation, execution or implementation of a SA’s NIL activity (e.g., develop product, develop promotional materials, ensure SA performance of contractual NIL activities) unless the same benefit is generally available to the institution’s students.
- Providing services (other than education) to support NIL activity (e.g., graphics designer, tax preparation, contract review, etc.) unless the same benefit is generally available to the institution’s students.
- Providing access to equipment to support NIL activity (e.g., cameras, graphics software, computers, etc.) unless the same benefit is generally available to the institution’s students.
- Provide assets (e.g., tickets, suite) to a donor as an incentive for providing funds to the NIL entity.
- Having Athletics department staff member employed by NIL entity.
- Having an individual or entity acting on behalf of the athletics department (e.g., third party rights holders, third party agents) representing enrolled SAs for NIL deals, including securing and negotiating deals on behalf of the SA.
The NCAA also prohibited athletes performing the following activities:
- Receiving compensation directly or indirectly for promoting an athletics competition in which they participate
- Receiving compensation from a school coach to promote the coach’s camp
- Having Athletics department staff member employed by NIL entity.
- Communicating with collectives regarding specific SA request/demand for compensation (e.g., SA needs X dollars in NIL money) or encouragement for collectives to fulfill SA’s request.
- Impact on Current NCAA NIL Compensation Restrictions
The July 1, 2021, Interim NIL Policy and October 26, 2022 guidance appears to represent a strategic approach taken by the NCAA to target and regulate universities and boosters/collectives instead of student athletes. The NCAA’s approach appears to be in response to state NIL statutes that have generally prevented the NCAA from restricting an athlete’s right to NIL compensation but have not addressed the NCAA’s authority to regulate for institutions universities and boosters/collectives located within the state. The is likely to continue to attempt to enforce its NIL policies against universities and boosters/collectives, without jeopardizing the eligibility of student athletes.
Conclusion
Navigating the NIL landscape as an athlete, university, or school requires a careful understanding of the underlying legal authority spurring the recent NIL wave. The NCAA has appeared to shift its approach to NIL regulation by targeting universities and boosters/collectives instead of student athletes. However, the potential remains for the NCAA to change its policy the event state NIL laws are struck down based on the United States Supreme Court’s ruling in Alston.