On June 30, 2021, the NCAA announced a new interim policy suspending its “name, image, and likeness” (“NIL”) rules for collegiate athletes. Under its previous rules, the NCAA prohibited student athletes from using their NIL for commercial purposes. Many criticized these rules as unfair for the students, whose athleticism helps to generate millions of dollars per year for the NCAA and schools, without any compensation. Following various lawsuits, a key U.S. Supreme Court decision issued on June 21, 2021 (discussed in our previous legal briefing), and new NIL legislation slated to go into effect in many states on July 1, 2021, the NCAA clawed back the long-standing NIL rules clearing the way for collegiate athletes to profit off of their NIL.
Under the new interim policy, student athletes may engage in NIL activities, consistent with school policies and state law. Student athletes may sign endorsement and marketing deals, create new business ventures using their name, make public appearances, etc., all without losing their eligibility status. Student athletes can also now use a professional services provider for NIL activities such as a marketing agent, accountant, or attorney. However, the NCAA’s interim NIL policy comes with corresponding restrictions under NCAA rules, state/federal laws, and/or school policies. For example, compensation cannot be based on athletic performance or in exchange for enrollment at a particular school. Student athletes must be compensated by third parties and not by the schools or universities. The subject matter of endorsement deals may be limited to prohibit endorsement of products related to gambling, drugs, alcohol, or a company that conflicts with a school’s sponsorship or policies. Additionally, student athletes may be required to report their NIL activities to their school or university, if required by law or school policy.
It is not just students whose activities are affected by the new interim NIL policy, as schools and universities may find their list of permissible activities changed. The interim policy largely defers to state law to outline the NIL activities in which schools may engage. However, navigating the new laws and regulations still leave many schools questioning to what extent they may get involved in NIL activities. Are schools allowed to arrange for NIL opportunities, or create logos for their athletes, or restrict student athlete’s use of school uniforms in their NIL deals? These questions all present unique and novel legal issues for schools and universities, primarily with respect to avoiding “play-for-pay” and impermissible inducement rules prohibited by the NCAA. But there are other considerations for schools and universities before engaging in NIL activities, such as contract law, employment issues, and Title IX.
The interim policy goes into effect July 1, 2021 and is intended as a temporary change until such time that federal legislation or new NCAA rules are enacted. Currently there are several bills before Congress, addressing a myriad of issues pertaining to NIL and student athlete compensation directly from the schools and NCAA (e.g., revenue sharing and collecting wages). As the law continues to evolve, schools and student athletes should consult with professionals who can advise them on their legal rights and responsibilities.
Our firm has extensive experience representing both schools and athletes with respect to NCAA rules and by-laws, state and federal statutory/regulatory compliance, contract review and litigation, education laws, and employment matters. If you have any questions about this Legal Briefing or how this change in policy affects your rights, please contact any member of our Firm at (585) 730-4773.
This Legal Briefing is intended for general informational and educational purposes only and should not be considered legal advice or counsel. The substance of this Legal Briefing is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. © 2021 Law Offices of Pullano & Farrow PLLC