Last week, the NCAA Board of Governors (“Board”) accepted the recommendation of the Federal and State Legislation Working Group (“Working Group”) to move forward with legislation relating to the use of student-athletes’ names, images, and likenesses (“NIL”) for remuneration. On April 17, 2020, the Working Group presented the Board with a thirty-one (31) page report recommending adoption of legislation permitting use of NIL for compensation with such legislation adopted by January 31, 2021. This date is prior to the date that state legislation relating to NIL will take effect.
Although the Working Group’s work is commendable and this certainly will move the ball forward, the devil will be in the details of what the legislation states. On May 4, 2020, two (2) United States Senators (Cory A. Booker and Christopher S. Murphy) drafted correspondence to President Mark Emmert stating “we write to express our concern that this framework still does not come close to providing college athletes with the right and opportunities they deserve.” The primary concern presented by Senator Booker and Senator Murphy is the use of the limitations dubbed “guardrails” to fit within the intercollegiate model. These “guardrails” could be very limiting to a point where student-athletes are presented with no legitimate opportunities to receive compensation from NIL. Conversely, the “guardrails” could be simple limitations that ensure that student-athletes attend class rather than photo shoots. Again, the devil is in the details.
The Working Group’s report also sets forth concerning limitations on categories of endorsement. It is not uncommon for governing bodies to prohibit endorsement of alcohol, tobacco and sports gambling (as the Working Group recommends here), but it is a substantial disadvantage for student-athletes to be prohibited from endorsing apparel and shoe products. On p. 24 of the Working Group’s report, it states:
Whether certain categories of third-party businesses (e.g., athletics shoe and apparel companies) should be precluded from, or have limited participation in, the newly permitted activities, due to their history of encouraging or facilitating recruiting and other rules infractions[.]
For athletes, apparel and shoe endorsements often times garner the highest compensation. By limiting this exposure and opportunity, athletes will lose one of the largest categories of endorsement compensation merely because some apparel companies purportedly provided compensation to athletes to attend certain schools. Why should that prohibit all apparel companies or even some apparel companies? Permitting student-athletes to endorse apparel and shoe products would eliminate the risks of athletes being induced to attend certain universities based on the apparel relationship.
Additionally, the Working Group does not foreclose the opportunity to penalize prospective student-athletes for receiving endorsement income prior to initially enrolling at a four-year college or university. Most high school athletic programs are governed by a state governing body. Why is it necessary for high school athletes to be punished? There is no reason for the NCAA to take control of high school endorsements when it would otherwise be permissible once the athlete enrolls in college.
Finally, there has been much debate about whether EA Sports (or a competitor) will produce video games using student-athletes NIL. Some have commented that group licensing deals are not possible without a union. Such an assertions is inaccurate. Student-athletes do not have to join a union to convey their NIL for the purposes of group licensing agreements, which could include jersey sales, trading cards, video games, and many other opportunities. A trade association can gather the rights and interests of student-athletes for purposes of group licensing and advocacy. Rather than going through the requirements to form a union as required by the NLRB, the trade association only requires filing for entity status, seeking nonprofit protection under 501(c)(6), and obtaining the rights of student-athletes. It can be done.