‘Damn if I Know’: College Athlete Pay Rules Clouded by Disclosure Limits
With name, image and likeness reform in college sports meant to stop short of an entirely free market for athletes, disclosure requirements—for contractual information between the companies and individual players involved in NIL deals—are seen as a necessary guardrail to prevent financial opportunities from veering into pay-for-play.
The NCAA’s Division I Council has proposed that a third-party administrator would help oversee the NIL disclosure process. But what exactly will that process entail? And how far can it go before it starts to interfere with college student privacy rights?
The issue came to the fore last month at a committee meeting of the Uniform Law Commission, an organization that crafts nonpartisan legislation that seeks to bring “clarity and stability” to state statutory law across jurisdictions. Harvey Perlman, a law professor who served as Nebraska’s chancellor from 2001 to 2016, attempted to convince his fellow ULC committee members to install a mechanism that would ensure the NIL financial terms athletes provide to their schools would not become public information.
In an interview, Perlman explained that one of his overarching concerns about NIL is that it will create yet another appendage to the college sports financial arms race.
“The whole idea is to avoid, as much as you can, the use of these payments to recruit student athletes,” said Perlman. “The temptation [will be] for alumni to offer larger payments.”
In recent weeks, Sportico has raised the issue of NIL disclosure with more than a dozen experts, from athletic department consultants to First Amendment scholars, only to be met with many more questions. With just a month before five state athlete compensation laws are set to take effect, there is a growing sense that this issue alone could knock NIL reform off its already precarious fulcrum.
The dilemma over what institutions and the wider world should know about college athletes’ newfound take-home pay entails concerns ranging from privacy rights and safety, to institutional liability and team camaraderie.
“As with a lot of issues, compare the regular university student to a college athlete, and if a university student strikes an endorsement deal or has an Instagram endorsement arrangement, they don’t have to disclose anything,” said Tim Nevius, a former NCAA enforcement official who now works as a college athlete lawyer and advocate. “Starting from that point, we should ask the question of why there is a difference.”
Despite Perlman’s urging, the ULC committee decided, in the end, that its model law would not include specific language prohibiting the public release of college athlete NIL information. The current draft recommends that athletes disclose to a designated person at their institution copies of any NIL agreements worth $300 or more.
Gabe Feldman, the sports law director at Tulane who serves as the committee’s reporter, explained that in deciding not to put down inhibitory language, the ULC is operating on the assumption that athlete NIL contracts could be subject to state sunshine laws.
“The question is: Do we want to put a mechanism in place to ensure they remain private?” Feldman said. “And the committee has landed on ‘no,’ that there is a benefit to these becoming public.”
Perlman, however, says that on the matter disclosure, the ULC has effectively punted.
“If you are in the process of drafting a statute and you see this as a problem,” said Perlman, “it strikes me that, rather than leaving it open, you should probably resolve it one way or the other. Otherwise, it may be worse.”
This criticism would seem to extend to the scores of state NIL bills proposed since 2019, which have largely avoided the nitty gritty of what athletes are supposed to divulge to their schools and what then happens to that information. Congress, meanwhile, has been all over the map when it comes to disclosure.
The bipartisan Student Athlete Level Playing Field Act, which was reintroduced this session by Reps. Emanuel Cleaver (D-Mo.) and Anthony Gonzalez (R-Ohio), contains no disclosure language regarding athlete NIL deals, although it does demand that athletes alert their schools’ athletic directors within 72 hours of signing with an agent.
Sen. Marco Rubio’s (R-Fla.) Fairness in Collegiate Athletics Act entrusts the NCAA and other college sports governing bodies with making the specific rules for NIL disclosure.
Sen. Jerry Moran’s (R-Kans.) Amateur Athletes Protection and Compensation Act, which reportedly has received a private vote of confidence from NCAA president Mark Emmert, requires high school recruits to disclose their NIL contracts prior to signing letters of intent, while current college athletes are ordered to remit copies of agreements within seven days of entering them.
As arguably the most pro-player legislation put forward, Sens. Cory Booker’s (D-N.J.) and Richard Blumenthal’s (D-Conn.) College Athletes Bill of Rights legislation sets out a series of specific disclosures that institutions would have to make about their athletic department spending and athletes’ educational experiences, but it does not compel athletes to provide their schools any NIL information.
The College Athlete Economic Freedom Act, introduced by Democratic Sen. Chris Murphy (Conn.) and Rep. Lori Trahan (Mass.), similarly does not contain athlete-to-school disclosure requirements, although it does empower the Secretary of Commerce to award a grant each year to an independent entity, which would be tasked with conducting a market analysis of college athlete publicity rights. The bill would make public any of the surveys and interviews that the entity conducted, as well as its top-line data findings.
In an email statement, Trahan’s spokesperson Francis Grubar says that the market provision is designed to make sure that the benefits of NIL extend equitably to college athletes beyond football and men’s basketball players.
“Although the bill requires that the entire market analysis and related materials… be made publicly available, it purposely leaves flexibility around the manner in which it is done to preserve confidentiality as may be necessary,” Grubar said.
(Last week, Murphy and Trahan introduced a new bill that would allow college athletes to collectively bargain as employees of their universities.)
In December, Sen. Roger Wicker (R-Miss.), then the chair (now ranking member) of the Senate Commerce Committee, proposed the College Athlete Compensation Rights Act, which also calls for a third-party, independent entity to compile and disseminate data findings related to college athlete NIL deals. Notably, Wicker’s bill puts the onus of reporting the NIL contract information on the athletes and their representatives.
The bill states that the availability of this information is meant to serve athletes “in evaluating certified agents and licensing opportunities.”
In an email, a Republican Commerce staffer told Sportico, “As more stakeholders have provided feedback to the Senator’s NIL bill, the proposed disclosure requirements are likely to change in any proposal introduced by the Senator this Congress.”
Heeding the NCAA’s urgent pleas for a national solution, the current Commerce Committee chair, Sen. Maria Cantwell (D-Wash.), has been leading negotiations on a compromise piece of bipartisan legislation that is meant to pass Congress before next month and thereby eliminate the possibility that different schools will be at once subject to different and contradicting NIL regulations. A spokesperson for Cantwell did not respond to a request for comment.
Of the state laws set to commence July 1, those in Florida, Georgia, Alabama and Mississippi call for the schools to determine the manner and extent to which their athletes must disclose their publicity deals, while New Mexico’s law doesn’t mention disclosure whatsoever. Nebraska and, as of this week, Oklahoma have passed NIL laws through which schools can permit athletes to sign publicity deals at any point from now until July 2023. Oklahoma’s requires that athletes disclose agreements to schools within 72 hours, while Nebraska’s includes some language to keep athlete NIL information private.
While a general impression emerges that institutions want more NIL information from athletes, while athletes want to provide less, Lyle Adams, a former college soccer player at Wake Forest who now runs the NIL compliance platform Spry, said that the stakeholder matrix is actually quite a bit more complicated. For example, Adams says that in his recent conversations with universities, school offices have repeatedly expressed their concerns about the unforeseen consequences that come with holding athlete NIL information.
“It puts the institution in a very compromising situation,” Adams said. “Do they want to ask for too much information? And would that put them in the realm of being too institutionally involved?”
Casey Schwab, CEO of Altius Sports Partners, says that the precise timing of when athletes disclose outside deals to their schools can have significant consequences.
The recently passed Missouri NIL bill is one of the few that gets specific on the sequence of disclosure, stipulating that athletes must provide the information to schools prior to receiving any compensation. If its key objective is to allow schools to preempt agreements before a potential NCAA violation has taken place, then the provision has its logic. Nevertheless, Schwab still thinks it is riddled with repercussions.
“If I am in an athletic director’s chair, do I want the potential exposure and liability of [obtaining] these deals prior to the services being executed?” said Schwab. “Personally, I don’t think it is the spirit of liberalization of NIL rules for the prior approval of the institution. I think disclosure is good, if not necessary, but the spirit of NIL rules liberalization is that these athletes, these college athletes, are going to do deals on their own.”
Ramogi Huma, executive director of the National College Players Association, said that his organization is flatly opposed to disclosure requirements for athletes that are not otherwise mandated for other college students, calling it an untenable “double-standard.”
To that point, Nevius worries that disclosure could have a chilling effect on the college athlete endorsement market by creating fear among companies that their contract provisions and trade secrets will get out.
“If there is a disclosure requirement, it should be strictly limited to the name of the third party, a summary of terms and the value being provided, because when businesses are required to disclose provisions of contracts, they will think twice of entering a deal that could potentially harm them,” Nevius said.
Harkening to his own college playing experience, Adams says he’s concerned about the consequences of coaches using information about athletes’ outside income to determine how they distribute grant-in-aid money for soccer and the other so-called equivalency sports—those that allow partial scholarships.
For this reason, Adams said that while he thinks disclosure is necessary to maintain order, he doesn’t see a good rationale for coaches to be clued in on what their players are making. But Nevius contends that it’s not just coaches that could leverage these insights to the disadvantage of athletes.
“Disclosure requirements could also allow schools to use the information to bid against the athletes and usurp opportunities when they are overlapping,” he said.
In April, Sportico reported on what a number of college head coaches earned in “athletically related” outside income, which the NCAA requires athletic department employees to disclose to their institutions on an annual basis. The information was gleaned through freedom of information requests to public universities, many of which turned over copies of the income disclosure forms.
In a similar way, could media outlets, industry competitors and curious college sports fans soon obtain the financial details of college athlete endorsement deals—at least for those who attend public schools?
Legal experts note that there are already laws and norms in place that will do some work in concealing this information—at least in its unredacted form.
Many state public record statutes include exemptions for materials that are deemed to contain student information or company trade secrets, both of which are likely to be weighed by university record custodians.
In denying public record requests, schools routinely cite the Family Educational Rights and Privacy Act (FERPA), which states that federal funds can be withheld from any university that, in policy or practice, releases “education records” or non-directory, “personally identifiable information” of students to unauthorized parties.
LeRoy Rooker, the former director of the Department of Education’s Family Policy Compliance Office, says that college athlete NIL deals would fall squarely within FERPA’s scope of protection.
“Once a copy of [an endorsement contract] is given to and maintained by the institution, it becomes an ‘education record,’ because it fits that broad definition, and it doesn’t fit under any of the exceptions,” said Rooker, who now serves as senior fellow for the American Association of Collegiate Registrars and Admissions Officers.
But Frank LoMonte, director of Florida’s Brechner Center for Freedom of Information, said that while schools may be inclined to claim a FERPA-related exemption for this information, they shouldn’t be.
“FERPA has been interpreted to say that, if you hold a job that can only be held by virtue of being a student, like a graduate teaching assistant, then your employment records are part of your federally protected ‘education record,’” LoMonte said. “I do not think an athlete endorsement agreement qualifies as a FERPA record because the position of ‘endorser’ is not a position exclusively reserved for students.”
That said, LoMonte notes that judges have typically sided with schools in public record disputes over the parameters of student privacy.
LoMonte, a leading national advocate for the free speech rights of college athletes, says from a public interest standpoint, there’s much greater value in knowing the side deals of coaches and athletic officials.
“At a state university, those people are government employees drawing a nice healthy government paycheck,” LoMonte said.
Then again, LoMonte thinks there’s a “real and compelling public interest” in the forces that may threaten the “integrity of the sport.”
“Billions of dollars are changing hands on sports gambling, and if Soprano Family Waste Management is putting college players on the payroll, we probably need to know that,” LoMonte said.
Nevius, however, argues that disclosure of this kind is both an unfairly invasive and ultimately impotent means to curb impermissible benefits to college athletes.
“If schools and boosters want to violate the rules, they will violate the rules, and most of the time, with impunity,” he said. “It is happening now, and it will continue to happen so long as there are restrictions on paying the players.”
Courtney Altemus, an athlete financial advisor who now counsels schools on NIL matters, said that the rules governing the flow of athlete endorsement information is almost beside the point. For one thing, she says, you can expect that many athletes are going to be publicizing their endorsement deals on their own.
“For the most part, they are going to flaunt it, and I can tell you, student athletes aren’t ready for this,” Altemus said. “What they don’t understand is the potential harm to them if they do that, and that harm could be everything from breaking a [NCAA] rule to having someone emotionally react to them making more or the business owner being upset—and they could put themselves in harm’s way.”
Between athletes boasting of their takings and schools perhaps quietly encouraging them to do so, Feldman questions whether privacy concerns will be rendered moot.
“I get how these are treated in other contexts, but it just seems it is going to be difficult in practice to insist these remain private,” he said.
That thought recently dawned on Harvey Perlman as well: Should there be a restraint on college athletes publicly disclosing their own NIL agreements?
“Damn if I know,” Perlman said in a follow-up email. “I suspect it would be very difficult to enforce a provision prohibiting them from disclosure. There would be First Amendment concerns. I’m not sure you could attach such a condition to athletic eligibility. Surely, the third party could insist in the agreement that the payment is a trade secret or require nondisclosure agreements. But that would also be hit [or] miss. Maybe this problem leads back to just not saying anything and letting folks work it out.”
