Sports

Conflicts Arise With College Athlete Name, Image, And Likeness (NIL) On The Horizon

As many as 150 NIL platforms have been created to provide a variety of services to athletes and universities. What could go wrong?

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As of today, five states — Florida, Alabama, Mississippi, Georgia, and New Mexico — have laws providing name, image, and likeness (NIL) rights to college athletes with an effective date of July 1, 2021. There is no federal law in place to preempt these state laws, and the NCAA, even if it does enact its own legislation concerning NIL as it prepares to respond to state-by-state action on the issue, would be subservient to those state laws unless the laws are overturned by litigation that has yet to commence.

Ross Dellenger of “Sports Illustrated” says that as many as 150 NIL platforms have been created to provide a variety of services to athletes and universities. A common question that I receive is whether any of these companies may be conflicted based on the breadth of their services and whether there should be concern about violating the laws of the states that will be providing NIL rights to players as of July 1.

The relevant portion of Florida’s law states as follows:

A postsecondary educational institution, an entity whose purpose includes supporting or benefiting the institution or its athletic programs, or an officer, director, or employee of such institution or entity may not compensate or cause compensation to be directed to a current or prospective intercollegiate athlete for her or his name, image, or likeness.

Alabama’s NIL law includes extremely similar language:

A postsecondary educational institution, an entity with the purpose of supporting or benefiting the institution or its intercollegiate sports, or any officer, director, or employee of the institution or entity may not compensate or cause compensation to be directed to a student athlete or the family of a student athlete for use of their name, image, or likeness.

Georgia, the most recent state to institute its own NIL law, falls largely in line with Florida and Alabama:

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A postsecondary educational institution, an entity whose purpose includes supporting or benefiting such institution or its intercollegiate athletic programs, or an officer, director, employee, or agent of such institution or entity shall not provide a current or prospective student athlete with compensation for the use of the student athlete’s name, image, or likeness.

The key provision in Mississippi’s NIL law looks a bit different:

A postsecondary educational institution, athletic association, conference or other group or organization with authority over intercollegiate athletics programs, including, but not limited to, the National Collegiate Athletic Association and the National Junior College Athletic Association, shall not, directly or indirectly: (a)  Enter into, or offer to enter into, a name, image and likeness agreement with a prospective or current student-athlete; or (b)  Provide a prospective or current student-athlete or the student-athlete’s family compensation in relation to the use of the student-athlete’s name, image or likeness.

Finally, New Mexico’s NIL law says:

An entity or individual that represents a post-secondary educational institution or has represented that post-secondary educational institution in the previous four years shall not represent a student athlete who is attending that post-secondary educational institution in any business agreement.

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On April 22, I tweeted in agreement with INFLCR CEO Jim Cavale’s comment that “you can’t be the marketplace and work with the institutions who are paying you.” That led to a back-and-forth with the CEO of another company looking to provide a multitude of services in the NIL space (Opendorse) about the possibility that his company’s offerings conflict with these newly created state laws.

As I mentioned to Blake Lawrence, the CEO of Opendorse, a company paid by a university to provide services and/or guidance to the school and/or athletic department arguably falls within the scope of each of the above provisions in the respective state laws. For instance, Opendorse promotes products for college teams, athletic departments, and college conferences to help win recruits, develop best practices, and stay ahead of the competition. Under Florida’s law, such services clearly qualify Opendorse as “an entity with the purpose of supporting or benefiting the institution or its intercollegiate sports.”

Separately, Opendorse has promoted a product called Opendorse Deals, which it describes as end-to-end endorsement management. Per Opendorse’s announcement of Opendorse Deals on November 20, 2020:

With Opendorse Deals, everyone from fans and brands, to national advertisers and local SMBs, can browse and book promotions with the 28,000+ athletes in the Opendorse Open Network. From social media endorsements and event appearances to video shoutouts and individual autographs; Deals makes athletes more accessible to paying partners than ever before.

It certainly appears that this Opendorse Deals platform serves the purpose to “cause compensation to be directed to a current or prospective intercollegiate athlete for her or his name, image, or likeness” which, under Florida’s law by way of example, would mean that Opendorse is both supporting and benefiting the institution and causing compensation to be directed to college athletes at that institution. This, in my opinion, would be a clear-cut violation of the statute.

My opinion, which I previously posted on Twitter, caused a back-and-forth between Lawrence and Cavale to help determine whether INFLCR should have the same types of concerns as Opendorse with regard to potentially violating state NIL laws. It was made clear that, while Opendorse was earning a fee from the deals it hopes to help curate by and between college athletes and third parties (causing compensation to be directed to college athletes), INFLCR takes no percentage or fee on any transaction and does not charge companies a price to integrate into its application. In essence, INFLCR is offering information to college athletes about potential partners while Opendorse is actively seeking to connect athletes with brand partners while taking a fee for such a service. On its own, there should be no issue with that. However, because Opendorse is also supporting and benefiting the institution, there appears to be legal exposure in play.

Separately, there have been some recent rumblings that the NCAA will soon appoint a third-party administrator (TPA) to help monitor and record all NIL marketing deals if/when the NCAA officially changes its bylaws to allow for a limited form of athlete NIL rights. Companies in this space that are set up to provide services to college athletes and that are interested in winning the right to serve as the TPA should be cognizant of the potential and/or actual conflict of interest that may arise with both providing services to athletes and/or colleges as well as the NCAA. Those groups of individuals and entities may not always be on the same side when it comes to ensuring that this process of providing college athletes with true rights of publicity is effectively administered.

Darren Heitner is the founder of Heitner Legal. He is the author of How to Play the Game: What Every Sports Attorney Needs to Know, published by the American Bar Association, and is an adjunct professor at the University of Florida Levin College of Law. You can reach him by email at heitner@gmail.com and follow him on Twitter at @DarrenHeitner.

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