A Highlights Reel on NIL Rights for Pupil Athletes – Kattison Avenue Fall 2021 | Concern 7 | Katten Muchin Rosenman LLP
In our spring edition 2021, we reported on potential new advertising opportunities in relation to the naming, image and similarity rights (NIL) of student athletes. There were several balls in the air:
- An antitrust challenge to the NCAA rules was pending in the Supreme Court.
- The first state law granting college athletes NIL rights is about to go into effect.
- Several bills had been introduced in the US Senate and House of Representatives.
- The NCAA had tabled amendments to its bylaws that would allow student athletes to benefit from the use of NIL.
We’ll be back to you now in the third quarter for an update and a quick recap of each game.
On June 21, the US Supreme Court issued an advisory opinion in the National Collegiate Athletic Association v Alston case. The court unanimously confirmed the preliminary injunction of the lower court against regulations restricting education-related expenses. It found that the NCAA and its members qualified as a monopoly power in the relevant market, and imposed rules that were stricter than necessary to achieve their pro-competitive purpose of maintaining consumer demand for college sports. In a concurring statement, Judge Kavanaugh pointed out the narrowness of the court ruling, but noted that “the remaining NCAA compensation rules also raise serious antitrust issues.” In short, the court only found that the NCAA rules restricting education-related expenses that could be paid to student athletes were in violation of antitrust law, but it left the rather strong impression that other NCAA restrictions could pose the same problem . Lawyers may have filed new lawsuits to challenge some of these restrictions.
While Congress has been under pressure to pass a single law to cover NIL rights and advertising contracts for student athletes, it has not yet done so. In the absence of federal law, many states were quick to get going with their own actions. California was on the line for the first time with the Fair Pay-to-Play bill, but that bill won’t come into effect until 2023. Florida closed the gap, being the first to cross the goal line with a law that went into effect July 1. Under this law, college athletes may receive fair market compensation for their NIL rights from a third party (not the school) and that colleges may not adopt or maintain any contract or rule that unreasonably restricts those rights. Nor should they inappropriately restrict the ability of athletes to hire agents to ensure such compensation for NIL rights.
The state recognition of NIL rights for student athletes will quickly become a matter of course. Laws similar to those in California and Florida have now been passed in over half the states and are in effect in over a dozen, including many with popular teams in the SEC, AAC, and the Big 10 Conference. The NCAA responded with a preliminary NIL policy that went into effect July 1 for all of its three divisions. Students can now participate in NIL activities that are compatible with the laws of the state where their school is located. Students residing in other states are also not breaking NCAA rules as long as they can find ways to use NIL rights.
Thousands of players have small advertising deals. The Wall Street Journal reported in July on a local Arkansas BBQ joint making a deal with some quarterbacks and offensive lines from the University of Arkansas. The restaurant can use them for social media advertising and players are paid with goods and brisket. For some, the payout was significantly higher. Before 19-year-old Hercy Miller joined the Tennessee State basketball team, he reportedly signed a $ 2 million deal with Web Apps America. Miller’s father is the son of rapper Master P, so he may have a head start in representation, but NIL consulting firms have already set out to represent others and have their share.
For many, including the NCAA, a uniform federal law remains the goal. But the states have been quick to adopt the program, and the financial opportunities for student athletes (and brands) seem to be coming quickly.
To read the full issue of Kattison Avenue, please click here.