A Scouting Report on the Fast-Moving and Chaotic Change of NIL

·8 min read

The U.S. Supreme Court’s ruling in NCAA v. Alston and the rise of name, image and likeness combined to make June one of the most transformative months ever for college sports.

Now that a few weeks have passed, the dust has begun to settle.

In conversations with compliance officers, university attorneys, coaches and agents, there are 20 recurring observations:

1. Some college athletes aren’t adhering to requirements to disclose potential NIL deals with athletic department compliance staff. College athletes are supposed to confirm that a prospective deal wouldn’t conflict with a school contract or policy. “No one checked with us,” one compliance director said of athletes who announced their NIL deals on social media. The absence of verification steps were apparent when many college athletes announced seconds after midnight on July 1 that they had signed deals.

2. Schools are unsure how to administer NIL policies. There are privacy and, for public universities, free speech considerations in attempting to compel athletes to reveal their NIL dealings; should a school go “too far,” it could be sued by the athlete. The NCAA’s interim NIL policy also doesn’t explain enforcement or potential consequences to the school or athlete. Is a college athlete ineligible if he or she violates an NIL policy? If so, according to whom, and what, if any, opportunities are there to appeal? These are not abstract or academic questions. The actions taken by schools in this uncertain period could later be described as NCAA violations or unlawful acts by attorneys who represent athletes or businesses.

3. Public universities are mindful of due process considerations in attempting to enforce NIL rules. College athletes are owed procedural protections from student handbooks, honor codes and, for those at public universities, U.S. and state constitutions. As NIL policies are crafted with greater care, they’ll need to be integrated and harmonized with university legal and academic documents.

4. Schools are unsure which, and how many, of their athletes are signing deals. Some schools are using interns to monitor social media pages to see if an athlete has revealed whether he or she has signed a deal. This approach can only capture so much. Some athletes might not reveal they’ve signed deals until later dates.

5. Compliance staff are worried that athletes will seek their guidance on NIL deals. Staff want to avoid unintentionally forming an agent-client or, in the case of staff who are attorneys, an attorney-client relationship. An attorney-client relationship, as noted by the American Bar Association, “may be inferred or implied from the ‘totality of the circumstances,’ including a course of conduct, communications between the parties, and a putative client’s reasonable expectations.” If such a relationship is formed, the staff member would be required to adhere to professional rules of conduct and could be later sued for malpractice.

6. Some schools have embraced NIL and launched programs to help college athletes. Texas, for example, offers Leverage, which involves training and strategies on building brands. Most schools, however, aren’t nearly as far along in the NIL implementation process to offer programming. Some face budgetary and resource limitations that could make such programs untenable.

7. While some college athletes appear to be capably advised, others are not. This has led to concerns that some athletes don’t realize what they are signing and may be unwittingly assigning valued rights—and for a longer period of time than merely the duration of college, including should they go pro. There’s also trepidation that athletes may unsuspectingly forgo rights, as some young musicians have experienced in signing with record labels. Expect disputes and breach of contract and fraud litigation to eventually surface.

8. In court, most college athletes would struggle to argue they lacked the capacity to sign. Generally, a person 18 or older is bound by the contracts they sign. Even those younger can be held responsible in certain situations.

9. College athletes might not realize that signing an endorsement deal with one company can make it more difficult to obtain one with another company. The deal, for example, could contain exclusivity language, particularly for certain industries, that forecloses other deals. Also, if the deal is with a small or unknown venture, it could hinder the athlete’s brand with more established companies.

10. The fact that teenagers in pro sports and in other industries, such as music and acting, have been able to sign NIL-like deals for decades doesn’t mean the same circumstances apply for college athletes. Player unions and established athlete/entertainment agencies often play crucial roles, whereas most college athletes lack a group advocating for their interests. Some businesses might eventually take on some of those functions.

11. There’s a sense that some college athletes are signing the first deal presented to them. This is in part due to naiveté and lack of guidance, and in part due to athletes seeking social status as someone marketable enough to land a deal (also known as “Keeping up with the Joneses”). By moving too quickly, they may be giving up better opportunities.

12. There’s unease that boosters will misuse NIL opportunities in ways that could land schools in trouble with the NCAA, but there’s little agreement on how to address that concern. Requirements that deals be “fair market value” is logical in concept but difficult to apply in practice. That is especially apparent given the lack of an established market for some NIL deals and the lack of expertise among compliance staff to conduct valuation analysis.

13. Athletes’ use of school marks, logos and other intellectual property in NIL deals is a persistent concern. Some schools are willing to consent to such usage though others worry about the value of their IP being diluted or misused by parties outside of their control.

14. There’s apprehension that college athletes are relying on Twitter, Instagram, news articles, discussion boards and friends for guidance that ought to be provided by a trained expert. Before an athlete signs a contract, he or she should have an attorney review it. There are also tax, financial aid and, for athletes in the U.S. on visas, immigration considerations that necessitate the counsel of experts. A student who is ill-advised is much more likely to fall victim to the dangers of unethical business partners.

15. The NCAA is widely blamed for the current NIL arrangement. Several compliance officers opined the NCAA badly miscalculated in believing that Congress would act before July 1. Instead, when it became clear that Congress wouldn’t act in time, the NCAA hastily cobbled together an interim NIL policy. However, that effort didn’t leave enough time to offer information sessions and training for compliance staff. Meanwhile athletes didn’t wait around to pass up deals.

16. There is an expectation that the NCAA will view this summer as a grace period and not attempt to punish schools or athletes for possible violations. However, the NCAA hasn’t communicated that message to schools.

17. Some believe the NCAA will allow the interim policy to continue through the 2021-22 academic year, hoping, perhaps in vain, that Congress will act in the meantime and pass a federal NIL statute. But the longer the current, largely free market system plays out and forms customs among schools and states, the harder it will be to reel it in later. “The time for strict parameters,” one school official mused, “was at the beginning, not mid-course.”

18. While NIL deals have been signed by both male and female athletes, schools must remain mindful of Title IX when providing any assistance to their athletes on NIL. Expect NIL policies to reference Title IX compliance and for schools to monitor that those policies are being honored in practice. Failure to do so could spark Title IX litigation.

19. Colleges are watching, with apprehension, the trajectory of House v. NCAA. As explained in Sportico, the federal case involves litigation brought by Sedona Prince and others against the NCAA, Power 5 conferences and member schools, arguing the longstanding denial of NIL constituted an antitrust violation and should lead to economic damages for past and current athletes. It’s possible players from the past might bring their own cases. Reggie Bush, for example, has argued he should have his Heisman Trophy—which he voluntarily relinquished in the wake of allegations his family took gifts while he played at USC—restored. One major hurdle for players from the past is that potential legal claims have likely expired due to statutes of limitation running out.

20. While NIL is disruptive to athletic departments, some within those departments view it as an opportunity to educate the athletes about new responsibilities as adults. This is an opportunity consistent with the academic mission of the schools and an experience that might help the athletes in their future business dealings.

The NIL era has brought newfound opportunities for athletes whose right of publicity had been suppressed by NCAA amateurism rules. But it also has brought a frenzied and abrupt change that will likely have a fallout of its own.

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