On April 20, 2021, the governor of Alabama signed House Bill 404 into law permitting student-athletes enrolled in a “postsecondary educational institution” in Alabama to be paid for the use of their names, images, and likenesses, to hire representatives to represent student-athletes’ interests, and declaring that a student-athlete may not be compelled to forfeit his/her rights in order to participate in intercollegiate athletics.  Alabama becomes the eighth state to enact legislation that permits student-athletes to accept compensation for their names, images, and likenesses (following California, Colorado, Florida, Nebraska, New Jersey, New Mexico, and Mississippi,).  The law goes into effect on July 1, 2021.

In most respects, the Alabama act is similar to predecessor acts enacted in California, Colorado, Florida, Nebraska, New Jersey, New Mexico, and Mississippi.  In pertinent part, the act provides a student-athlete may:

• Earn compensation, commensurate with market value, for the use of the name, image, or likeness of the student-athlete while enrolled at a postsecondary educational institution.

The act further provides, in pertinent part, that postsecondary educational institutions and governing bodies may not:

• Adopt or maintain a contract, rule, regulation, standard, or other 25 requirement that unreasonably restricts a student athlete from HB404 1 receiving compensation for the student athlete’s name, image, or likeness;
• Prevent or unreasonably restrict a student-athlete from obtaining professional representation for the purpose of securing compensation for the use of the student-athlete’s name, image, or likeness; and
• Revoke or reduce a scholarship awarded to a student-athlete by a postsecondary educational institution as a result of the receipt of compensation by a student-athlete for use of their name, image, or likeness, or as a result of the student athlete obtaining professional representation pursuant to this act.

In turn, student-athletes are required to or prohibited from doing the using their names, images, and likenesses in the following circumstances:

• A tobacco company or brand, including any tobacco product, alternative nicotine product, electronic nicotine delivery system, or any electronic nicotine delivery system;
• A retailer, or any specialty retailer of electronic nicotine;
• Delivery systems or tobacco specialty store;
• Any alcoholic beverage company or brand;
• Any seller or dispensary of a controlled substance, including, but not limited to, marijuana;
• Any adult entertainment business; Any casino or entities that sponsor or promote gambling activities;
• Any entity or individual that, in the reasonable and good faith judgment of the postsecondary educational institution, negatively impacts or reflects adversely on the postsecondary educational institution or its athletic programs, including, but not limited to, bringing about public disrepute, contempt, embarrassment, scandal, ridicule, or  otherwise negatively impacting the reputation or the moral or ethical standards of the postsecondary educational institution; and
• Wear any item of clothing, shoes, or other gear with the insignia of any entity while wearing athletic gear or uniforms licensed by a postsecondary educational institution or otherwise competing in any athletic competition or institutionally-sponsored event.

Each postsecondary educational institution shall conduct financial literacy and life skills programming for student-athletes. At a minimum, the programming must include information concerning financial aid and debt management, as well as recommended model budgets for  student athletes based on that academic year’s estimated cost of attendance and the various scholarship statuses of student-athletes at the institution. The programming shall also  include information on time management skills necessary for success as a student athlete and available academic resources. The programming may not include any marketing, advertising, referral, or solicitation by providers of  financial products or services. However, a postsecondary educational institution is not required to provide tax guidance or financial safeguards to student-athletes outside of the programming required above.

For any questions, feel free to contact Christian Dennie at cdennie@bgsfirm.com.