By Daniel Cundiff
College athletics has undergone a seismic shift. For decades, athletes participating in Division I college athletics were unable to receive compensation for the use of their name, image, and likeness (“NIL”), and they risked becoming ineligible to participate in their sport for doing so.[1] Today, National Collegiate Athletic Association (“NCAA”) guidelines allow student athletes to profit off of their NIL,[2] over half of states have enacted some form of NIL legislation,[3] and progress is being made toward federal NIL legislation.[4]
In National Collegiate Athletic Association v. Alston,[5] the United States Supreme Court provided a push for the NCAA to change course with respect to NIL rules.[6] While the majority of the Court avoided the question of NIL on review,[7] Justice Kavanaugh’s concurrence squarely attacked the issue.[8] Justice Kavanaugh expressed doubt that the portion of the NCAA’s compensation rules that were unaddressed by the majority (including NIL) were legally valid, stating that “[t]he NCAA’s business model would be flatly illegal in almost any other industry in America.”[9] Finally, seeing potential difficulties in changing NCAA compensation rules through litigation, Justice Kavanaugh proposed that the issue could be resolved through either legislation or collective bargaining by the student athletes themselves.[10] In any event, the writing was on the wall for the NCAA, which decided to take action.
Just nine days after the Alston opinion, on June 30, 2021, the NCAA announced a change to its compensation rules that allowed student athletes to profit from their NIL beginning the next day.[11] Now, student athletes in states that have passed NIL legislation “can engage in NIL activities that are consistent with the law of the state where the school is located.”[12] Further, student athletes in states without NIL legislation “can engage in this type of activity without violating NCAA rules related to name, image and likeness.”[13] So long as it is consistent with applicable law, student athletes can also engage a professional service provider for NIL activities.[14] At least for the time being,[15] gone are the days of students being forced to choose between NCAA eligibility and compensation for their NIL.[16]
Today, twenty-eight states have passed NIL legislation with varying nuances and restrictions.[17] Common restrictions include prohibiting contracts from extending beyond the time an athlete participates in sports at a particular institution,[18] directly tying compensation to participation,[19] otherwise known as “pay-for-play,”[20] and allowing institutions to restrict athletes’ use of team logos for personal NIL activity.[21] Moreover, some states prohibit specific industries from contracting with student athletes.[22] Prohibited industries include adult entertainment, alcohol, tobacco, and firearms.[23] Other states, favoring a more ambiguous approach, prohibit all industries that “negatively impact[] the reputation or the moral or ethical standards” of the institution.[24]
North Carolina is poised to be a key player in NIL based on its position in college sports. Home to Duke University and the University of North Carolina at Chapel Hill, each with multiple NCAA basketball championships,[25] and the current top two football teams in the Atlantic Coast Conference (“ACC”)—Wake Forest University and North Carolina State University[26]—the State has the potential to attract top-flight high school talent to its institutions. Roy Cooper, the Governor of North Carolina, signed an Executive Order regarding NIL on July 2, 2021, providing guidance on the future of NIL in the state.[27] Student athletes in North Carolina can now “earn compensation, and obtain related representation, for the use of their name, image, and likeness while enrolled at the institution, and such compensation and representation . . . shall not affect a student-athlete’s scholarship eligibility.”[28] Restrictions include prohibitions against the use of NIL contracts “as a direct inducement to enroll . . . at a particular institution.”[29] Further, the institutions themselves may not compensate student-athletes for use of their NIL.[30] Similar to Mississippi,[31] institutions in North Carolina “may impose reasonable limitations or exclusions on the categories of products and brands that a student-athlete may receive compensation for endorsing” when the institution “reasonably determines that a product or brand is antithetical to the values of the institution or that association with the product or brand may negatively impact the image of the institution.”[32] Moreover, as is the case in Illinois,[33] an institution in North Carolina “may limit a student-athlete’s compensation for their name, image, and likeness as it pertains to use of the institution’s intellectual property,” and the Executive Order does not give “any student-athlete the right to use the name, trademarks, service marks, symbols, logos or any other intellectual property that belong to an institution, athletic conference, or athletic association.”[34] Finally, in anticipation of an influx of NIL compensation for student-athletes, “[p]ostsecondary educational institutions are encouraged to provide financial literacy and life-skill programs to their student-athletes.”[35] Therefore, Governor Cooper’s Executive Order provides the framework for NIL dealings in North Carolina, though this is unlikely to be the end of the issue.
Beyond state legislation, Senator Roger Wicker of Mississippi declared that there is “broad consensus” that the federal government should pass NIL legislation, which would unify the various restrictions of states under one common federal standard.[36] Even the President of the NCAA, Mark Emmert, called on Congress for a “federal framework.”[37] Emmert and others claim that the current “patchwork” of state NIL legislation leads to confusion and an uneven playing field in college athletics.[38] Therefore, while the current landscape of NIL in college athletics remains a variety of state laws and, in states without NIL legislation, NCAA rules, preempting federal legislation is likely to pass and reshape college athletics once again.
[1] See Matthew N. Korenoski, O’Bannon v. NCAA: An Antitrust Assault on the NCAA’s Dying Amateurism Principle, 54 Duq. L. Rev. 493, 497–98 (2016).
[2] Michelle Brutlag Hosick, NCAA Adopts Interim Name, Image and Likeness Policy, NCAA (June 30, 2021), https://www.ncaa.org/about/resources/media-center/news/ncaa-adopts-interim-name-image-and-likeness-policy.
[3] See NIL Legislation Tracker, Saul Ewing Arnstein & Lehr LLP, https://www.saul.com/nil-legislation-tracker#2 (last visited Oct. 20, 2021) (“To date, the 28 states listed below have passed NIL laws.”).
[4] See id. (“[T]he most recent NIL bill . . . suggests that there is continued interest in getting a federal law on the books.”).
[5] 141 S. Ct. 2141 (2021).
[6] See id. at 2167 (Kavanaugh, J., concurring).
[7] See id. at 2141–66.
[8] See id. at 2166.
[9] Id. at 2167.
[10] Id. at 2168.
[11] Hosick, supra note 2.
[12] Id.
[13] Id.
[14] See id.
[15] See Gregory A. Morino, The NCAA Declares Independence from NIL Restrictions, Foley & Lardner LLP (Aug. 20, 2021), https://www.foley.com/en/insights/publications/2021/08/ncaa-declares-independence-nil-restrictions.
[16] See Barret Sallee, UCF Kicker Ruled Ineligible after Refusing to Agree to Terms over YouTube Channel, CBS Sports (July 31, 2017, 5:05 PM), https://www.cbssports.com/college-football/news/ucf-kicker-ruled-ineligible-after-refusing-to-agree-to-terms-over-youtube-channel/ (Donald De La Haye, a former Division 1 NCAA football player, chose to quit football after the NCAA determined that De La Haye could not earn income from his NIL on athletics-based YouTube videos.).
[17] Saul Ewing Arnstein & Lehr, supra note 3.
[18] See, e.g., Fla. Stat. Ann. § 1006.74(2)(j) (2021) (“The duration of a contract for representation of an intercollegiate athlete or compensation for the use of an intercollegiate athlete’s name, image, or likeness may not extend beyond her or his participation in an athletic program at a postsecondary educational institution.”).
[19] See, e.g., Exec. Order No. 2021-418 (Ky. 2021).
[20] See, e.g., Katlyn Andrews, Navigating the NCAA’s Interim NIL Policy and State Regulations, Baker Tilly (Aug. 18, 2021), https://www.bakertilly.com/insights/navigating-the-ncaas-interim-nil-policy-and-state-regulations (“Subject to state law, the NCAA’s interim policy prohibits compensation . . . [f]or athletic participation or achievement (i.e., pay for play) . . . .”).
[21] See, e.g., Student-Athlete Endorsement Rights Act, 110 Ill. Comp. Stat. Ann. 190/1-99 (LEXIS through P.A. 102-450 of the 2021 Session of the 102nd Legislature).
[22] See, e.g., Ark. Code Ann. § 4-75-1307(b) (Westlaw through the 2021 Regular and First Extraordinary Session of the 93rd General Assembly) (effective Jan. 1, 2022).
[23] Id. at § 4-75-1307(b)(1)–(9).
[24] See, e.g., Mississippi Intercollegiate Athletics Compensation Rights Act, Miss. Code Ann. § 37-97-107(14) (Westlaw through the 2021 Regular Session).
[25] See Championship History, NCAA, https://www.ncaa.com/history/basketball-men/d1 (last visited Oct. 20, 2021).
[26] See 2021 Football Standings, ACC, https://theacc.com/standings.aspx?path=football (last visited Oct. 20, 2021).
[27] Exec. Order No. 223 (N.C. 2021).
[28] Id.
[29] Id.
[30] Id.
[31] See Mississippi Intercollegiate Athletics Compensation Rights Act, Miss. Code Ann. § 37-97-107(14) (Westlaw through the 2021 Regular Session).
[32] Exec. Order No. 223 (N.C. 2021).
[33] See Student-Athlete Endorsement Rights Act, 110 Ill. Comp. Stat. Ann. 190/1-99 (LEXIS through P.A. 102-450 of the 2021 Session of the 102nd Legislature).
[34] Exec. Order No. 223 (N.C. 2021).
[35] Id.
[36] Ralph D. Russo, Lawmakers Agree NCAA Needs NIL Help, but How Much and When?, Associated Press (June 9, 2021), https://apnews.com/article/in-state-wire-college-sports-football-stanford-cardinal-football-laws-188c6c20ad6032f6f633a1113f57904a.
[37] Maria Carrasco, Congress Weighs In on College Athletes Leveraging Their Brand, Inside Higher Ed (Oct. 1, 2021), https://www.insidehighered.com/news/2021/10/01/congress-holds-hearing-creating-federal-nil-law.
[38] Id.
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