United States: The Constantly Evolving Landscape Of Student-Athlete NIL Contracting

In response to the United States Supreme Court's decision in National Collegiate Athletic Association v. Alston, ¹ as well as, impending state laws taking on its policies, on June 30, 2021, the National Collegiate Athletic Association (NCAA) announced that it was ending its long-standing policy of preventing student-athletes from profiting from their name, image, and likeness (NIL). In its place, the NCAA adopted an interim policy permitting students to “engage in NIL activities that are consistent with the law of the state where the school is located.” ² While the NCAA committed to “continue to work with Congress to adopt federal legislation to support student-athletes,” no legislation addressing student-athlete NIL activities has passed—and the “interim” policy remains in effect (with periodic clarifications by the NCAA).  

As a result of federal inaction, student-athletes and the businesses that wish to enter into NIL agreements with them face a constantly evolving landscape where the applicable laws and rules vary from state to state and school to school. For example, while some state laws contain no prohibitions on the subject matter of NIL agreements, other states explicitly prohibit student-athletes from entering into agreements involving the athlete's endorsement of certain products, often including tobacco, casino gambling, alcohol, and marijuana. ³ However, even in states where student-athletes are not explicitly prohibited from endorsing any specific products, the schools themselves often do. For example, despite a lack of a prohibition in state law, our alma mater, the University of Michigan (Go Blue!), maintains a policy that prohibits student-athletes from “engag[ing] in name, image and likeness activities that may harm the reputation” of the university, including by “promoting products or services such as gambling, adult entertainment, tobacco, or banned substances.” ⁴ Of course, this is just one area where state laws diverge. States also differ in other aspects critical to businesses considering entering into NIL deals, including the time limitations schools are permitted to impose upon when student-athletes are allowed to engage in NIL activities, ⁵ the amount of lead time the parties must give the school to review (and potentially object to) an NIL agreement prior to execution, ⁶ and whether schools can require that student-athletes “pool” their NIL compensation, ⁷ among a myriad of other issues. 

Further, as the landscape evolves, states have already begun amending their NIL legislation that was only recently enacted. For example, to become more competitive in recruiting, Connecticut has done away with a prohibition on student-athletes using their school's logos as part of their NIL deals. ⁸ Moreover, many states have amended or are in the process of amending their laws to allow for greater university involvement in connecting student-athletes with NIL opportunities to make those states more attractive to potential recruits. ⁹ 

Facing this evolving patchwork where non-compliance can lead to liabilities and reputational harm, it is critical that businesses (and the lawyers representing them) engage in an in-depth analysis of state law and school rules prior to committing to any NIL agreement. Simply put, this is an area of law where a one-size-fits-all nationwide form contract will not work. That is why we take an individualized approach to NIL issues and contracting to help our clients further their business goals while maintaining compliance in an increasingly complex area of law. 

Footnotes

1 141 S. Ct. 2141 (2021).

2 NCAA Media Center, June 30, 2021, "NCAA Adopts Interim Name, Image and Likeness Policy," available at https://www.ncaa.org/news/2021/6/30/ncaa-adopts-interim-name-image-and-likeness-policy.aspx.

3 Compare New York Educ. Law § 6438-A*2 (containing no product-specific NIL restrictions), California Educ. Code § 67456 (same), and Michigan Compiled Laws § 390.1731 et. seq. (same), with Texas Educ. Code 51.9246 § (requiring that a student-athlete "may not enter into a contract for the use of the student athlete's name, image, or likeness . . . in exchange for an endorsement of alcohol, tobacco products, e-cigarettes or any other type of nicotine delivery device, anabolic steroids, sports betting, casino gambling, a firearm the student athlete cannot legally purchase, or a sexually oriented business") and 110 Illinois Compiled Stat. 190/20(i) ("No student-athlete shall enter into a publicity rights agreement . . . for the endorsement or promotion of gambling, sports betting, controlled substances, cannabis, a tobacco or alcohol company, brand, or products, alternative or electronic nicotine product or delivery system, performance-enhancing supplements, adult entertainment, or any other product or service that is reasonably considered to be inconsistent with the values or mission of a postsecondary educational institution. . .").

4 University of Michigan Name, Image and Likeness Policy for Student-Athletes, available at https://mgoblue.com/documents/2021/7/1/name_image_likeness_policy.pdf.

5 Illinois law allows schools to impose "reasonable limitations" to protect the school's "educational mission and intercollegiate athletics program" without further specification of those limitations, see 110 ILCS 190/15(c), while Michigan law expressly provides that a school can only limit a student-athlete's NIL activities "when the student is [] engaged in official team activities," Michigan Compiled Laws § 390.1737(3).

6 Michigan Law requires that the student-athlete disclose the NIL agreement "at least 7 days prior to committing to the opportunity or contract." Michigan Compiled Laws § 390.1737(1)-(2). New York law merely requires that the athlete "disclose the contract in advance of executing it" New York Educ. Law § 6438-A*2 (6)(c)-(d). Accordingly, schools in New York have adopted varying requirements on the timing of disclosure. See, e.g., Oswego State University NIL Guidelines, available at https://oswegolakers.com/sports/2022/4/15/nil-reporting-form.aspx; (requiring disclosure at least seven (7) days prior to the commencement of NIL activities); Pace University Interim NIL Guidelines, available at https://paceuathletics.com/documents/2021/7/22/Pace_NIL_Guidelines_Final.pdf (requiring disclosure at least three (3) days prior to entering into any NIL agreement).

7 Unlike any other state that we are aware of, Georgia law expressly permits schools to require "a pooling arrangement" whereby student-athletes who receive NIL compensation must contribute up to seventy-five (75%) of their NIL-related compensation "to a fund for the benefit of individuals previously enrolled as student athletes in the same postsecondary educational institution." Ga. Code. Ann. § 20-3-681(4).

8 "Governor Lamont Signs Legislation Making it Easier for Student-Athletes to Obtain Endorsement Deals," May 10, 2022, available at https://portal.ct.gov/Office-of-the-Governor/News/Press-Releases/2022/05-2022/Governor-Lamont-Signs-Legislation-Making-It-Easier-for-Student-Athletes.

9 See Sports Illustrated, "Florida NIL Amendment to Give Schools More Power in Facilitating Deals," February 10, 2023, available at https://www.si.com/college/2023/02/10/florida-nil-law-amendment-schools-athletes-deals (noting that Florida, Alabama, Nevada, Mississippi, Tennessee, Illinois, and Louisiana had recently amended, repealed, or are in the process of amending NIL laws to make those states more competitive in recruiting).

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