Sports Law Roundup on the NCAA and Name, Image & Likeness Rights
College sports and the legal system seem to be inexorably linked this summer as substantive legal changes reform how student-athletes may profit off their rights of publicity.
The Supreme Court, Congress, and state governments have all recently turned attention to NCAA amateurism rules. July 1 will see several states allow athletes to profit off their name, image and likeness (NIL) rights, rights usually associated with intellectual property known as rights of publicity or personality rights. The Senate held two hearings as the NCAA lobbies Congress to enact a federal NIL statute that preempts the emerging patchwork of different state NIL laws. Separately, on June 21, the Supreme Court unanimously ruled in Alston v. NCAA that the NCAA’s strict caps on “non-cash education-related benefits” (think scholarships or technology) violated antitrust laws, opening up financial opportunities previously unavailable to student-athletes compared to other collegians.
THE AMATEURISM ISSUE
NCAA rules forbid student-athletes from receiving compensation for such participation, claiming their amateur status is a unique and defining attribute of college sports. This applies to athletes in all university sports programs besides football or men’s basketball, the two sports that generate the most revenue in ticket sales and broadcasting rights. The NCAA has interpreted these rules broadly to bar student-athletes from endorsements or economic opportunities otherwise available due to a student’s notoriety or success in college athletics. Other university students are not broadly subject to similar amateurism prohibitions: college musicians enrolled in a university orchestra can be paid to perform at a local church. Similarly, college journalists are not forbidden to freelance with a newspaper. But the NCAA expressly forbids a college quarterback from earning money hosting a football camp or endorsing a local sports retailer. These constraints include social media opportunities for student-athletes to become influencers posting sponsored content. These prohibitions have prompted some high-profile high school athletes to forego college and compete overseas after graduation or in pre-professional leagues (like the NBA G-League or Overtime Elite) before starting professional careers in the United State.
The NCAA claims its amateurism rules avoid unseemly pay-to-play activities and preserve a level playing field among university athletic programs. It vigorously enforces these rules against circumstances of “improper benefits” or “recruiting inducements” paid to students by coaches or boosters. Sports and legal experts have detailed the inconsistencies of the NCAA’s amateurism framework and enforcement efforts. The NCAA created an Independent Accountability Resolution Process (IARP) after criticism of the NCAA’s role in resolving disputes involving its rules and its objectivity punishing schools in relation to revenue they bring in NCAA participation. No IARP rulings have been issued to date, but several high-profile cases have been referred to the IARP, including an improper benefits case against the University of Memphis and cases related to the FBI’s probe into college basketball impacting programs at LSU, Arizona, and Kansas. Practically all of these cases involve issues of black-market athlete compensation from boosters or corporations inducing players to attend certain universities. These and other related controversies impinge on current NBA stars like Deandre Ayton, James Wiseman, and Zion Williamson. Some sports commentators argue such “dirty money” would disappear if the NCAA allowed “clean money” athlete compensation.
Athlete compensation prohibitions have been scrutinized against the lucrative broadcast rights packages signed by the NCAA and its Division I athletic conferences such as the SEC and the Big Ten. These packages have exacerbated a divide between the football “Power 5” conferences and other NCAA conferences and schools. The difference in media rights payouts for Power 5 schools versus others can be tens of millions, with drastic payout disparities between, say, the University of Alabama compared to the University of Alabama-Birmingham. These media revenues have funded coach salaries, school facilities, and the NCAA itself, but none goes to athletes participating in NCAA sports.
Challenges to athlete compensation prohibitions have increased in recent years, leading to the seminal class action O’Bannon v. NCAA over athletes’ rights to compensation for unlicensed NIL used in NCAA-branded video games. In O’Bannon, the Ninth Circuit affirmed a district court finding that NCAA rules and bylaws violated the Sherman Act as an unreasonable restraint of trade.
In Alston, plaintiffs claimed caps on scholarships and other education-related benefits were also unreasonable restraints on trade. The Supreme Court agreed. While NIL rights were referenced in briefs and oral argument, Alston’s antitrust violations were limited to education-related benefits. Justice Neil Gorsuch, author of the Alston opinion, seemingly alluded to NIL in writing, “The national debate about amateurism in college sports is important. But our task as appellate judges is not to resolve it.”
But in a scathing concurrence that should galvanize pending litigation, Justice Brett Kavanaugh seemed to tackle the NCAA’s entire amateurism model. “Everyone agrees the NCAA can require student-athletes to be enrolled students in good standing,” wrote Kavanaugh, “but the NCAA’s business model of using unpaid student athletes to generate billions of dollars in revenue … raises serious questions under the antitrust laws.” Kavanaugh ended his opinion writing the NCAA’s traditional concepts of amateurism “cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student-athletes who are not fairly compensated. Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.”
STATE AND FEDERAL LEGISLATION
There is no federal NIL law nor any federal rights of publicity statute. Unlike most IP, rights of publicity are not protected by any federal statute, with significant variance state to state, especially in postmortem rights of publicity often at issue in the estates of deceased celebrities. The NCAA has long promised to address NIL, but after years without NCAA action, states began implementing their own NIL statutes. Starting July 1, Florida, Georgia, Alabama, Mississippi, Texas, and New Mexico will have laws allowing athletes to profit off their name, image and likeness. Kentucky announced by executive order on June 24 it will also allow NIL compensation on July 1. Other states’ NIL laws will take effect over the next one to two years. If the NCAA eventually does create NIL frameworks that conflict with a state NIL statute, athletes in states with NIL laws could have standing to sue the NCAA (or their NCAA-member university) for violating state law. It is uncertain if the NCAA will file injunctions against states to prevent athletes from signing endorsements.
Both houses of Congress have introduced athlete-friendly NIL bills. Once state NIL laws began to pass, the NCAA amplified its Congressional lobbying efforts to pass a federal NIL bill to supersede the state laws and provide the NCAA an antitrust exemption. Congressional NIL action culminated in a June 9 hearing held by the Senate Committee on Commerce, Science, and Transportation, with NCAA president Mark Emmert advocating for a federal NIL statute. Many senators indicated a federal statute should offer NIL rights as robust as any state law, taking aim at the NCAA’s arguments. A second hearing was held on June 17. However, when asked after the second hearing about federal NIL’s passage, Committee Chair Senator Maria Cantwell (D-WA) said, “It’s safe to say something isn’t going to make it through the halls of Congress by [July 1].”
On June 23, NCAA’s Emmert issued a memo to university administrators pushing for temporary guidance allowing athletes to monetize NIL as of July 1, with athletes likely to be granted relief from existing NIL prohibitions. Some see this as a strategic move where the NCAA avoids enacting rules that might be subject to lawsuits and delaying regulating NIL while schools and states create their own frameworks. Jay Bilas, of counsel with Moore & Van Allen and ESPN college basketball analyst, reacted to this move by tweeting, “everything the NCAA said about needing a uniform, national standard for fair competition was total BS.” A final version of the NCAA’s interim NIL guidance will be submitted to its Board of Directors Wednesday.
Unanswered questions remain as NIL will remain largely unregulated even after July 1. Will universities offer guidance and counsel to students in negotiating deals? Or will student-athletes have to negotiate contracts themselves or secure their own attorneys? An athlete signing with an agent signaled the end of their collegiate careers, but how will agents now fit into this new picture? Eventual NCAA guidance could (and should) include group licensing options, which would allow NIL use in video games like those at issue in O’Bannon, but this is unlikely if the NCAA or conferences don’t oversee licensing themselves. Title IX compliance issues arise as antitrust rulings open educational benefits for athletes and if NIL compensation is secured and paid by universities on athletes’ behalf. Further, one proposed bill in Congress would classify student-athletes as university employees to receive NIL compensation, impacting employment issues previously inapplicable. And some sports, notably golf, have additional amateurism rules outside the NCAA that NIL permissions could violate.
The past month has made clear rights of publicity reform is coming to college sports. But questions of when and what it looks like remain unresolved.
Peter Colin is a New York-based sports and entertainment attorney and a Thomson Reuters associate account executive. The views expressed are entirely those of the author and not Thomson Reuters.