Folks in the Golden State have long believed that as goes California, so goes the nation. Hubristic as it may be, it is an apt description of how states have rapidly replicated a 2019 California law allowing college athletes to profit from their on-field success.
To date, 25 states have followed California’s lead and adopted measures to allow college athletes to be paid for the use of their name, image or likeness (NIL). Of those, 23 came via legislation, two by executive order and one (Pennsylvania) is embedded in the state’s recently-signed budget bill. Similar bills remain pending for this year in Massachusetts, Rhode Island and North Carolina.
“I knew other states would follow us because as soon as I introduced the bill, we started getting calls,” says California Sen. Nancy Skinner (D) who authored the 2019 measure. “But when the NCAA (National Collegiate Athletic Association) threatened California and basically said they wouldn’t let our schools participate in NCAA playoffs, I thought other states might chicken out. But they didn’t. Instead everybody called their bluff.”
The Supreme Court’s landmark decision in June in Halston v. NCAA also helped galvanize the NIL issue. While the ruling, which says the NCAA can’t limit education-related payments to student-athletes, was not directly tied to NIL, the scathing rebuke by Justice Brett Kavanaugh made clear the court is open to the bigger question of whether the NCAA violates antitrust laws.
With the floodgates opening, the NCAA issued a temporary edict on June 30th allowing college athletes in all states to similarly profit from endorsements, autograph sales, social media followings and other forms of income derived from the use of their name and image.
The move is, by the NCAA’S own admission, a stopgap intended to hold the fort in hope that Congress will eventually “develop a solution that will provide clarity on a national level.” But while several bills have been proposed in both houses of Congress, none has made much headway. And as Skinner notes, whatever Congress comes up with might not look any different than what states have already done.
“Even if they get a national law, it still can’t violate antitrust laws,” she says.
Opportunities and Pitfalls Abound
The explosion of these measures – and the rush by several high profile college athletes to sign endorsement deals - has prompted some observers to call the new conditions “the wild west,” an allusion to the potential negative ramifications some of these young people might face for signing on to bad deals that ultimately cause them more harm than good.
Darren Heitner, a Florida lawyer who helped draft the Sunshine State’s NIL bill, notes the plethora of misinformation out there but says the idea that the situation is a free for all is incorrect.
“It’s not the Wild West. It’s not chaos. It’s not anarchy,” he says. “It’s college athletes simply having the same rights every other individual in the United States has.”
And for some, those rights have already proven to be spectacularly lucrative. Sophomore Bryce Hill, the University of Alabama’s presumptive starting quarterback this fall, has leveraged a large social media following into almost $1 million in endorsement deals. As astounding as that is, the real marvel is that Hill has not even started a single college football game yet.
NIL Money is Real but so is Risk
Not that some chaotic and confusing things aren’t part of the new NIL scene. Heitner is among many legal observers concerned that some athletes may be too quick to take any deal that comes their way without concern for “the fine language within the agreement that they are entering into, including the intellectual property rights of the universities they represent.”
As marketing end endorsement opportunities start to come at athletes from every direction, that fine language can indeed be very problematic.
Heitner specifically notes offers coming from the likes of YOKE Gaming, a video game company that allows fans to play video games with a favorite athlete. The company’s pitch is to pay athletes who sign with them for sharing the company’s social media posts on their own social media feeds.
But the offer also grants YOKE “the worldwide, perpetual, transferable, sublicensable, royalty-free, and irrevocable right to store, broadcast, modify or make derivative works of, make copies of, distribute, publicly perform and publicly display their likeness, voice, image, etc. in any and all media and format, whether now known or created in the future.”
And what do the athletes get in return? About $20.
Another potential problem awaits athletes who sign up with Barstool Sports, a digital media company owned by Penn National Gaming, which owns dozens of casinos and racetracks across the country. What becoming a “Barstool Athlete” entails remains unclear even to company CEO Dave Portnoy, but it could well mean trouble for athletes in states or at schools that bar college athlete endorsement with companies that have connections to gaming.
The company took steps to mitigate that possibility by filing for a federal trademark of Barstool Athletics on July 6, which could serve to distinguish it from the parent company. What that means for current deals also remains unclear.
There is also the question of whether this brave new world includes NIL rights for high school athletes. The National Federation of State High School Associations issued a statement on July 7th making clear their belief that high schoolers are not able to take advantage of NIL opportunities, and could lose their athletic eligibility if they try to do so.
Heitner is less sure. He says many state laws bar high school athletes from profiting from their on-field play, but the new NIL laws are simply not clear on the issue. In that regard, he urges caution while the issue is being sorted out.
“Hopefully more clarity will come out across the board because right now it is a very difficult situation for high school athletes and their families to navigate,” he says.
Skinner is less circumspect, but says she will look into and possibly address the matter going forward should it become an issue. Given the lucrative contract just signed by a 17-year-old California basketball phenom last week, she might not have long to wait.
Compliance Pressure on Schools
While navigating the new conditions might be challenging for athletes, it will be equally so for college and university compliance officers around the country, who are now working under a broad patchwork of rules, regulations and timelines.
Those in the 13 states where NIL laws went into effect on July 1st will abide by those standards. Colleges and universities in states without an NIL law in effect will follow guidelines set down by individual schools or conferences until either a pending law takes effect or new state or federal guidelines come to pass.
Which is where the challenges begin. Most state NIL laws are similar in design, but there are also many key differences:
Florida, Kentucky, Louisiana, Tennessee, Texas and Alabama require colleges to provide student athletes with financial literacy and life skills programming. The NIL measure in Nevada allows schools to offer such programs but does not require it.
Georgia’s bill (HB 617) has the distinction of being the only one that requires athletes to pool up to 75 percent of their NIL earnings in an escrow account that would then be shared with other athletes. The money could also not be accessed until a year after the students leave school.
Michigan’s law (HB 5217) is the only one that allows a student-athlete to access NIL endorsement opportunities outside of official team activities and contracts.
Arkansas (HB 1671) very explicitly bars student-athletes, institutions, or representatives of a prospective student-athlete from negotiating an NIL deal or receiving compensation for one prior to enrollment.
The California law (SB 206 2019) is the only one to establish a working group to study applying NIL provisions to community college athletes.
Mississippi (SB 2313) is the only state to bar boosters from providing NIL compensation to athletes.
Laws in New Jersey (SB 971) and Tennessee (HB 1351) bar students from endorsing products related to alcohol, drugs, gambling and adult entertainment. The Garden State bill also prohibits endorsement of pharmaceuticals or firearms.
With measures like these sweeping across the country, several private companies and dozens of colleges and universities have been readying programs to help athletes properly take advantage of their new opportunities.
NIL Speed Lures CA Back into the Game
When Skinner authored California’s 2019 NIL measure, she did so with the hope and belief that other states would follow. With that in mind she intentionally gave it an effective date of Jan. 1, 2023 to give other states a chance to catch up. But Skinner says even she was taken aback at how fast those states have followed suit, so she introduced a new bill (SB 26) that would move the start date for the Golden State’s NIL law to September 1st this year.
The bill cleared the Senate unanimously on June 1st and the powerful Assembly Appropriations Committee on a 13-0 vote last Wednesday. It is scheduled for the Assembly floor in August, where it is expected to pass and be forwarded to Gov. Gavin Newsom (D), who is anticipated to quickly sign it into law.
-- By RICH EHISEN
Over Half of States Have Addressed College Athlete Pay
As of July 16, 26 states had taken action allowing college athletes to be paid for the use of their name, image or likeness (NIL), according to Opendorse, a sports technology company that seeks to maximize athletes’ endorsement value. In the majority of those states the action was legislative, including in Pennsylvania where NIL provisions were added to a budget bill (SB 381). But in at least two states the action came via executive order.