A system where schools decide their own name, image and likeness rules could prove welcome news for athletes and the various companies that seek to do business with them—so long as that compensation isn’t performance-based, the NCAA says in its latest NIL guidance.
The NCAA, per new details revealed in its “Interim NIL Policy,” has decided to largely defer decisions on compensation for college athletes to states with their own laws or, in the event no such law is in effect, individual schools. The college governing body’s guidance, however, forbids on-field performance from altering the value of endorsement deals. Sports Illustrated’s Ross Dellenger tweeted the NCAA document on Saturday.
Provided there is sufficient support from member conferences and institutions, the policy would take effect on July 1.
The policy draws on more cautious language than is generally found with NCAA rules. For instance, athletes at schools “should” report their “NIL activities” consistent with school requirements. The use of “should”, rather than “shall” or “must”, is logical given that the NCAA’s policy consists of guidelines rather than express rules. Yet it also invites interpretative questions for athletic department compliance officers.
The policy appears more rigid in regard “prohibitions related to play for play, impermissible offers and inducements or extra benefits.” There it notes that NIL can’t disguise pay-for-play, such as NIL compensation being contingent on a recruit enrolling at a particular school. A violating school would breach their NCAA membership contract and face repercussions.
As alluded above, the policy also forbids NIL compensation tied to “specific athletic performance or achievement,” such as “financial incentives based on points scored.” While the policy acknowledges that “athlete performance may enhance” an athlete’s “NIL value”, such performance can’t be used as “consideration” (i.e., the bargained for exchange) for “athlete NIL competition. Therefore, college athlete endorsement deals won’t contain incentive clauses tied to touchdown passes or points per game etc.
Interestingly, the policy, which refers to individual athletes, doesn’t address the possibility of group licensing, which the NCAA has historically opposed. The lack of an express prohibition could potentially open a window for athletes to sign deals to be in video games. To that end, a trade association or nonprofit might attempt to bargain with a video game publisher on behalf of colleges athletes. Those athletes wouldn’t need to be classified as employees for such bargaining to take place.
The policy is intended to last until either Congress passes a federal NIL statute—an event that may never occur—or the NCAA adopting a more lasting NIL solution. In calling for a mostly free market, school-by-school approach, the policy reflects a stark contrast to the NCAA’s longstanding opposition to a decentralized, unregulated model for NIL, a form of athlete compensation prohibited by the NCAA Bylaw 12. The policy also conflicts with a core NCAA tenet that athletes’ rights are equal regardless of their institution or state.
To wit: Under the policy, if state law governs NIL, then the applicable state law establishes NIL rules for colleges and their athletes. Alabama, Florida, Georgia, Mississippi, New Mexico and Texas have state NIL statutes going into effect on July 1. Kentucky colleges and athletes are essentially in the same position. Their state’s governor, Andy Beshear, signed an NIL executive order that will take effect on July 1.
These seven states have adopted mostly similar procedures. College athletes can hire agents, sign endorsement deals, sponsorship contracts and influencing arrangements, so long as those financial instruments don’t conflict with a school contract or, in some cases, school values.
However, there are legal differences among those states’ NIL laws that could create more restricted markets for athletes at certain schools.
In Alabama and Texas, for example, college athletes won’t be allowed to sign endorsement deals that relate to tobacco products, gambling and other “vice” products. Texas will also require college athletes to enroll in basic finance workshops as a prerequisite to signing a deal. Over in Florida, athletes NIL deals won’t be allowed to exceed “market value,” though the mechanics of determining “market value” are unclear. Georgia schools, for their part, will be able to compel athletes to pool as much as 75% of endorsement money and redistribute it to other athletes in their program.
Meanwhile, 13 other states have adopted NIL statutes, and others are expected to join them. Gov. Beshear’s executive order might nudge governors across the country to consider the same action. Still, most statutes and executive orders won’t (as of this writing) take effect on July 1. In fact, depending on the state, weeks, months or years will pass before their NIL law changes.
This means that the NCAA’s interim policy would govern colleges and athletes in as many as 43 states on July 1. In those states, schools and conferences will enjoy sizable discretion to formulate their own NIL policies. A UCLA athlete, for example, could enjoy a different set of NIL rights than one at USC, Stanford or Cal. This is because California’s NIL statute doesn’t take effect until 2023 (though there is an effort to move that date up), leaving California schools to determine their own rules in the meantime.
If a school adopts a more restrictive NIL policy than a rival, that school could conceivably lose recruits to their rival. Schools might thus be incentivized to take a “hands off” approach with NIL or even, as some schools have already shown, unashamedly embrace NIL and help their athletes maximize NIL opportunities.
This effect might only be amplified by the U.S. Supreme Court’s Alston ruling. That ruling could lead to schools taking a “permissive” approach to labeling potential payments to athletes as “education-related benefits”. Title IX, which requires gender equity, will still govern these activities.
The result will likely mean more compensation for marketable college athletes, especially those at major programs with money to spend. What it means for more ordinary athletes, especially those at less-publicized and less affluent programs, remains to be seen.
(This story has been corrected in the ninth paragraph to show that Kentucky, not Tennessee, is subject to an NIL executive order, and also in the 13th paragraph that 13 other states, not 12, have adopted NIL statutes.)