Sports

The New Race By States To Remove NIL Restrictions On College Athletes

On July 1, 2021, the NCAA finally removed its prohibition on college athletes monetizing their fame. Can the states keep up?

By  
on
NCAA Men’s Final Four – Previews

(Photo by Streeter Lecka/Getty Images)

By September 1, 2020, four states (Florida, California, Colorado, and Nebraska) had created laws to allow college athletes the capacity to earn money from the use of their names, images, and likenesses (NIL). More than 30 other states were considering similar legislation at the time while the NCAA was dragging its feet, but promising legislative proposals to reform its prohibition on athletes exploiting their publicity rights. Many of those states have since established NIL laws and, on July 1, 2021, the NCAA finally removed its prohibition on college athletes monetizing their fame.

The NCAA announced its “interim” NIL policy which, 10 months later, remains in place in the same form as it was initially described. There are four basic guardrails: athletes must provide something of value in exchange for compensation (quid pro quo); compensation to athletes cannot be contingent on their enrollment at particular schools; compensation to athletes cannot be predicated on their athletic participation or achievement; and schools cannot provide compensation to athletes in exchange for the right to use athletes’ NIL.

Those are the rules. However, schools can add to those rules through the implementation of NIL policies, and states have the capacity to enact laws that further restrict what athletes, agents, and schools can do as part of the NIL process.

Nobody was prepared for the NCAA’s NIL policy, which was announced one day prior to its enactment. Many people believed that the NCAA would either sue the states that had created NIL laws or implement much more restrictive measures prior to July 1, 2021. However, that all changed when the NCAA was labeled the loser, by a decision of 9-0, in the Supreme Court case of NCAA v. Alston, where Justice Kavanaugh wrote in a concurring opinion that “the NCAA is not above the law and hinted that the NCAA’s remaining compensation rules (other than those regarding caps on education-related benefits, which was the subject of the case) could also be found to violate antitrust laws.

While the NCAA may not wish to admit it, it was trapped by the Supreme Court decision. It had a choice to either consider overbroad legislation that it had previously drafted and tabled or provide an extremely barebones policy with little time for schools to adjust to the new rules. The NCAA chose the latter route.

When the dust settled, many states that had been leaders in paving the way for athletes to enjoy NIL rights felt as though they were now at a disadvantage compared to states that did not consider such legislation and those that enacted less restrictive laws. It has now led to those early adopters scrambling to either modify their NIL laws or eradicate them altogether so that they are at least perceived to play on an even field in an industry where perception is paramount.

Sponsored

In February 2022, Alabama Gov. Kay Ivey signed a bill to entirely repeal the state’s NIL law. Rep. Kyle South, the sponsor of the bill to repeal the law, said it needed to be done because the NCAA “passed a set of rules for their member institutions, and where we find ourselves is state rules were more restrictive than what the NCAA set forth.” He very clearly supported the legislation to ensure that schools such as the University of Alabama and Auburn University (both of which publicly supported the bill) were not disadvantaged in their recruiting efforts.

Fast forward to April 2022, and many other states have prioritized at least modifying their respective NIL laws to more closely mirror the basic regulations of the NCAA. Tennessee has amended its NIL law to remove the provision that restricts schools from being involved in the development, operation, or promotion of a current or prospective college athlete’s NIL, including actions that compensate or cause compensation to be provided to athletes. Mississippi Gov. Tate Reeves also signed a bill that will allow schools to communicate with third parties interested in brokering deals with college athletes in the state. Additionally, the modification to Mississippi’s existing NIL law states that athletes do not need to be enrolled at a school to execute a NIL deal; they can enter into these contracts as soon as they offer a verbal commitment to a Mississippi junior college or university.

Florida, which was the first state to sign a NIL bill with a July 1, 2021, effective date, could have also become the first to approve a modification similar to what Tennessee recently enacted; however, the bill was never considered during its 2022 session. Rep. Chip LaMarca, the sponsor of the bill that established Florida’s NIL law, sponsored legislation that would have removed the restriction on schools causing compensation for college athletes in the state. It simply never got any traction.

“To a certain extent it’s like a race to the bottom in college sports,” House Speaker Chris Sprowls said in reference to the amendment. “How many sports cars can we put in the hands of 18-year-olds?”

Yet, while Florida sits on the sidelines with its law that is more restrictive than the NCAA’s policy, and while the NCAA does not seem to be interested in making changes to its very pedantic NIL rules at any time in the near future, expect other states to now follow in the footsteps of Alabama, Tennessee, and Mississippi by either completely eradicating their NIL laws or substantially modifying them to provide more power to the athletes and colleges within those states to transact and be a part of NIL opportunities.

Sponsored

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 [email protected] and follow him on Twitter at @DarrenHeitner.

Topics

, , ,