If Congress Wants to Fix NIL, We Need More Than Half Measures
Today’s guest columnist is Joe Moglia, chair of athletics and executive advisor to the president at Coastal Carolina University.
The next battle around regulation of name, image and likeness (NIL) deals in college athletics has begun. There are now multiple pieces of bipartisan draft legislation in Washington following a Capitol Hill blitz by new NCAA president Charlie Baker.
More from Sportico.com
Athletes.org Intertwined With Founder Cavale's For-Profit Entity
Powerade Launches College Football NIL Ad Campaign With 60 Players
Reggie Bush NCAA Defamation Suit Pits NIL Versus Pay-for-Play
While I applaud Baker’s efforts to get something done now, the NCAA abdicated its responsibility when NIL took effect prior to his arrival—even though it was the most significant thing to happen to college sports in decades. (I’ve written about this before.) Why would an institution willingly bring in the government to help solve its problems? I can’t think of any private institutions or businesses that would want to do that. Yet that is the point we have arrived at.
The overall goal of legislation is to fill the vacuum left by the NCAA and supersede the current patchwork of state regulations with a national policy. Unfortunately, while each bill has its merits, none goes far enough to create an NIL system that works fairly and transparently for athletes, athletics programs and sponsors.
The Contenders
While four NIL bills have been introduced, I’m going to focus on two of them. The College Athletes Protection & Compensation Act, introduced by Senators Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.) and Jerry Moran (R-Kan.), would, among other things, establish the College Athletics Corporation (CAC) to oversee NIL matters. Notably, while the NCAA would have the ability to enforce rulings made by the CAC, any NIL investigations would be made by the CAC.
A competing piece of legislation, the Protecting Athletes, Schools, and Sports Act of 2023 (PASS Act) from Senators Joe Manchin (D-W.Va.) and Tommy Tuberville (R-Ala.) proposes that the Federal Trade Commission step in to provide oversight of the mechanics of NIL deals.
Of all the potential bills, the Manchin and Tuberville bill has the most merits, and its authors seem to truly understand the challenges in the NIL landscape. This bill has been endorsed by Baker and a handful of university presidents. It’s certainly a step in the right direction.
However, even it fails to fully deliver a solution in key areas of the NIL dilemma. To truly fix NIL, we need the total package.
Transparency
One of the biggest problems with NIL today is a lack of transparency. It’s impossible to see what deals are being offered, to which athletes, and under what conditions. Athletes can be easily exploited, and collectives, recruiters and coaches can use deals as inducements for athletes to transfer. Pay-for-play has always been one of the NCAA’s hot-button issues, but despite their objections, that’s how the current system effectively operates.
Both pieces of new legislation aim to tackle this with transparency measures. However, the proposed policies would have a negligible impact on a practical basis. The PASS Act, for instance, requires that agents, boosters and other interested parties register with the FTC and that the FTC publish anonymized NIL contract data on a publicly accessible website. However, it would remain impossible to see which students were receiving which contracts. The competing bill is even weaker. This isn’t true transparency.
What is the explanation? Why are we afraid to discover a quarterback, gymnast or any other athlete is being paid millions of dollars a year?
We don’t need such half measures; we need true transparency. This means everybody knows what the deal is and can determine if the system is functioning fairly.
Transfer Portal
NIL deal transparency is so important because of the transfer portal. To be clear, I am not against someone transferring if they feel they need to, nor am I against them getting NIL money. But the ability to transfer and immediately get paid at the same time creates an auction. Was that the intent of these rules? Right now, while recruiters aren’t supposed to use NIL deals as inducements to transfer, the deals are definitely a major factor motivating players to change schools.
In the past, players were prohibited from playing the year after they transferred. Without this prohibition, however, they can seek out the highest bidder, making their school commitments virtually meaningless. This rewards organizations that use NIL deals as inducements.
The new legislation acknowledges there are issues with the transfer portal. The PASS Act handles it ably, since it would require players to once again sit out a year if they transfer, unless they have already completed three years of athletics eligibility. This change would restore an enormous amount of stability to college sports, although it would be much more effective if it were paired with more comprehensive transparency rules.
Deal Coordination & Inducements
Booster collectives typically put together NIL deals, and while collectives aren’t supposed to coordinate with coaches and recruiters, there are a million loopholes. Does anyone really believe that collectives are going out and offering multimillion-dollar contracts to college quarterbacks without feedback from the football program?
The PASS Act seeks to prohibit boosters or other third parties from offering NIL deals as inducements for athletes to commit or transfer. Yet how would “inducement” be defined and enforced? How would loopholes be closed? Beyond that: Why are we seeking to prevent the use of NIL deals as incentives at all? The whole point of NIL deals is to pay athletes, who, along with their representatives, consider these deals during recruitment.
Athletes deserve to be paid for their work and talent, and all the ban on inducements does is encourage cheating and push that activity into the shadows.
An Alternative NIL Model
If Congress is unable to get this done, there is another way forward: Let the schools take responsibility for the NIL process. With a universal NIL contract and full transparency, there’s no reason the universities themselves can’t act in place of the booster collectives. NIL deals are obviously intended to entice athletes to play for programs. So, let’s just be honest about that and make them work in a way that’s fair to the athletes, athletics programs and schools.
Universities and athletics programs could coordinate directly with boosters—and players’ agents—to generate NIL deals. With the right restrictions on the transfer portal, this would greatly simplify things and put an end to the fairy tale that NIL deals aren’t used as inducements. Ideally, there would be some kind of cap on NIL, but only if every institution and program agreed to abide by it and there was a significant punishment for those who didn’t. Getting the details right on such a cap would be challenging because it will be difficult to monitor.
If the universities become involved in directing money beyond scholarships—such as NIL deals—to athletes, then they might very well be considered employees. This isn’t a problem, although a more appropriate term would be something like professional student athletes. The best part of this would be that if the schools step up, outside oversight from the FTC or the proposed CAC wouldn’t be necessary.
Moglia is the former CEO and Chairman of TD Ameritrade, and current Chairman of Fundamental Global LLC and Capital Wealth Advisors. In 2012, he became Coastal Carolina University’s head football coach, leading the team to four conference championships and an overall record of 56-22. He is now the Executive Director for Football and Executive Advisor to the President at Coastal Carolina. You can find him on his website, on his LinkedIn page and on Twitter.
Best of Sportico.com
