Georgia NIL Law to Allow Schools to ‘Share’ Athlete Revenue
Georgia Gov. Brian Kemp (R) on Thursday signed a name, image and likeness bill, House Bill 617, that will go into effect on July 1. Georgia joins Florida, Alabama, New Mexico and Mississippi, among other states, with NIL laws set to begin on that date. These laws share many basic attributes, including making it illegal for colleges in their states to adopt or enforce rules—such as NCAA amateurism policies—that interfere with their athletes’ rights to profit from their identities.
Georgia’s NIL law, however, contains a unique feature: Colleges in the Peach State can elect to require their players (on all of their teams) to share up to 75% of compensation received for the use of their name, image, or likeness—including through endorsements, sponsored business arrangements and influencer deals on social media. The forced “sharing” would occur pursuant to what House Bill 617 terms a “pooling arrangement,” with the shared compensation directed to “a fund for the benefit of individuals previously enrolled as student athletes in the same [college].”
The fund would be fashioned as an escrow account controlled by the athletic director. After they graduate (or after 12 months pass from leaving early), former players could draw pro rata shares of the fund’s pooled contributions “based on the number of months the individual was a student athlete.” The legislation warns that schools can’t share or distribute funds in ways that discriminate on the basis of race, gender or other protected demographic traits.
At first glance, the compensation sharing feature of Georgia’s NIL law is reminiscent of a federal bill proposed by Sens. Cory Booker (D-N.J.), Richard Blumenthal (D-Conn.), Kirsten Gillibrand (D-N.Y.) and Brian Schatz (D-Hawaii). Under the federal bill, every eligible DI college athlete in a covered sports team (expected to be football and men’s basketball) would receive a share of funds contributed by schools that generate more revenue than expenses, after deducting grant-in-aid costs. The key difference in Georgia’s bill is that the athlete—not the school—would relinquish money.
Another crucial aspect of Georgia’s NIL law is that the decision to compel sharing is at the discretion of the school. UGA, Georgia Tech and other colleges might decline to “provide for a pooling arrangement.”
One obvious reason why a school would be reluctant to adopt a pooling arrangement is recruiting. If a high school football player is recruited by Miami, Ole Miss and UGA, he or she could keep all their post-tax NIL compensation by attending one of the first two schools. If the player instead attends UGA, and if UGA adopts a pooling arrangement, the player will lose some portion of his endorsement, sponsorship and influencing compensation.
Georgia’s NIL law contains other features of note. For instance, it compels colleges to provide at least five hours of a “financial literacy and life skills” workshop during freshman and sophomore years. This instruction would cover such topics as financial aid, debt management, budgeting and time management. The workshop would be barred from “any marketing, advertising, referral or solicitation by providers of financial products or services.”
Georgia’s law adds to the unsettled NIL landscape for college sports. This landscape could spark multiple lawsuits over the next seven weeks.
As explained in a recent Sportico legal story, the NCAA could seek restraining orders in each of the NIL states by arguing their laws violate the Contract Clause (Article I, Section 10) and the Commerce Clause (Article I, Section 8) of the U.S. Constitution. The NCAA successfully adopted that legal strategy In the 1993 case NCAA v. Miller, and convinced a district court and federal court of appeals to stop Nevada from guaranteeing due process disciplinary protections in violation of NCAA rules. Here, the NCAA could insist that NIL states have created a “patchwork” legal problem by implementing NIL statutes that contradict one another in scope and procedure—a dynamic that, in turn, interferes with the contractual relationship between member schools and the NCAA.
Restraining orders would prevent NIL states from implementing their NIL laws. They would also buy time for Congress and President Joe Biden to come up with a federal NIL law or for the NCAA to adopt NIL standards to go into effect in 2022 or beyond.
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