The Future of Student-Athletes’ Name, Image, and Likeness Rights

By Ari Fryer
3/9/2021

Student-athletes dedicate long hours to their sport, and that dedication generates significant revenue and creates exposure for their universities. However, student-athletes are “prohibited from receiving pay” for the use of their name, image, and likeness (“NIL”).  Soon, this may change due to recently proposed federal legislation and state laws regarding NIL rights. During the past few months, there has been a large amount of discussion and activity around the NIL rights of student-athletes.  The topic of NIL rights will shape the future of college sports and potential financial opportunities for student-athletes.  Senator Chris Murphy (D-Conn) and Representative Lori Trahan (D-Ma) recently introduced a Bill, the “College Athlete Economic Freedom Act.” This proposed legislation would make name, image, and likeness rights a federal right that the National Collegiate Athletic Association (“NCAA”) would be unable to limit.  Additionally, the bill is the first proposed federal legislation that would provide NIL rights to prospective student-athletes.

The College Athlete Economic Freedom Act enables student-athletes to earn proceeds when their name, image, and likeness is used in a business related manner.  The Act also allows student-athletes to seek the advice and services of attorneys and agents to discuss name, image, and likeness opportunities while still attending college. Further, the College Athlete Economic Freedom Act would establish “robust enforcement for violations by colleges, conferences, or the NCAA in restricting” the name, image, and likeness rights for current and prospective student-athletes. This enforcement includes per se antitrust penalties, which means that a restriction may be illegal despite the restriction’s pro-competitive qualities. Also, the Act enables student-athletes to have private rights of action to pursue civil action and enables the Federal Trade Commission (“FTC”) to establish “unfair or deceptive practice” penalties. The proposed legislation would preempt state laws and enable all student-athletes to have a “uniform framework” for their ability to earn money.

Moreover, the College Athlete Economic Freedom Act prevents the NCAA and conferences from prohibiting student-athletes “from organizing under collective representation,” which allows student-athletes to have the opportunity to sell group licensing rights.  Group licensing arrangements are important because they allow student-athletes to collectively bargain, which enhances bargaining power, for media rights and jersey sales.  Further, the Act enables student-athletes to profit from social media platforms, endorsing businesses, and deals with apparel brands or video games. The proposed legislation also allows businesses to enter into sponsorship deals with student-athletes which makes it easier for companies like EA Sports to use a student-athletes’ NIL in games.

There are currently six states, including California, Colorado, Florida, Idaho, Nevada, and New Jersey, that have approved versions of NIL laws and there are around two dozen other states that are considering NIL laws. Florida’s law will go into effect on July 1, 2021, while the California and Colorado laws will go into effect on January 1, 2023. Additionally, there have been various attempts at the federal level to pass NIL legislation. In December 2020, Senator Cory Booker (D-NJ), Senator Richard Blumenthal (D-Conn), Senator Kirsten Gillibrand (D-NY), and Senator Brian Schatz (D-HI) proposed a bill, the “College Athlete Bills of Rights,” that enables student-athletes to receive compensation for the use of their NIL, promotes health standards, and increases educational opportunities.  Senator Roger Wicker (R-Miss.) introduced the “Collegiate Athlete and Compensator Rights Act,” which would enable student-athletes to be paid through commercial and endorsement deals. Additional proposed NIL legislation includes the “Student Athlete Level Playing Field Act,” introduced by Representative Emmanuel Cleaver (D-Mo.) and Representative Anthony Gonzalez (R-Ohio), and the “Fairness In Collegiate Athletics Act,” introduced by Senator Marc Rubio (R-Fla).

 Historically, the NCAA has resisted attempts to provide compensation to student-athletes because of the belief that it would remove the distinction between amateur sports and professional sports. However, in November 2020, the NCAA announced proposed rules regarding student-athletes NIL rights to ensure consistency and fairness.  The NCAA has argued  the fact that different states have different rules regarding NIL rights may impact the school a prospective student-athlete chooses because the student may have significant financial opportunities if attending a different university in a different state that has enacted NIL laws.  However, under the NCAA’s proposed rules student-athletes may profit from the use of their name, image, or likeness in various ways, but with certain restrictions, which would create equal competitive opportunities for every NCAA member school.  The NCAA proposed NIL legislation includes antitrust protection, preemption over state NIL laws, and enables the NCAA to have the authority to develop all rules regarding student-athlete compensation. The proposed rules were set to begin August 1, 2021.

On January 11, 2021, the NCAA delayed the vote on the new rules regarding student-athlete compensation. In fact, the Division I Council indefinitely delayed the vote because of the need for additional information.  The NCAA Board of Governors stated that the delay was due to “recent judicial, political, and governmental enforcement events. . . .”  These events came under scrutiny due to the NCAA’s receipt of a letter from the antitrust division of the Department of Justice on January 8, 2021, which asserted that the proposed rule changes, including the limit on the amount that student-athletes are able to make from endorsement deals, may implicate antitrust laws.  The chair of the NCAA Division I Council stated that “[t]he council remains fully committed to modernizing Division I rules in ways that benefit all student athletes.”  As a result of the delay, the current NCAA rules will remain in place for the 2021-2022 school year. Under the current NCAA regulations, Division I student-athletes are not allowed to promote or endorse commercial products or services, even if the student-athlete is not being paid. Division II and Division III athletes can promote and endorse commercial products or services and receive payment under certain conditions.

There has been some criticism of the proposed federal legislation and state laws regarding NIL rights.  For example, criticism of a proposed federal legislation states the concern of whether the legislation prevents student-athletes from obtaining outside employment and the NCAA being exempt from antitrust lawsuits. If the NCAA is exempt from antitrust lawsuits, that would prevent student-athletes from challenging the NCAA’s restraints of trade and enable NCAA member schools to limit the financial rights that student-athletes have. There is also the legal issue of how the compensation of student-athletes would affect federal income taxes for colleges.  If student-athletes receive compensation, the revenue generated from college sports may be considered unrelated business income, which is subject to federal income taxes.  It has also been argued that student-athletes are already being paid through their scholarships and other benefits, such as tutoring, academic advising, nutritional counseling, strength training and personal access to physical therapists, not received by other students. However, not all student-athletes receive scholarships and these additional benefits. 

The proposed legislation regarding NIL rights at the federal level and states approving laws that enable student-athletes to have NIL rights demonstrate positive moves towards student-athletes receiving compensation. However, as Congress deals with the COVID-19 pandemic, political upheaval, and other immediate national crises, some members of Congress do not believe that any NIL legislation will be brought to the floor until at least this summer. The questions that remain are whether the NCAA will decide to finalize NIL rules in the near future and whether additional state legislatures will act quickly to remain competitive with other states that have enacted NIL laws.