Colleges and universities, student-athletes and coaches, administrators and parents, lawyers, and agents are all trying to figure where we are in the NIL world today. In reality, no one really knows. The new NIL legislation and the rapidly changing world we face has been described by some as the Wild West. But is it completely awash in lawlessness, danger and racing out of control?
We have been thrust into a world where no common rules are in place, everyone seems to be scrambling to understand what the Alston decision by the Supreme Court means to the future of college and university athletic programs and student athletes. The NCAA’s interim Name, Image and Likeness policy and various state legislation are in many cases unenforceable and allow different things. Some states do not have any legislation which means the need to regulate NIL has been left to the schools by the NCAA to determine.
One thing is certain, the NCAA has been changed and will never be the same. Most of the values that it was originally founded on was shattered on July 1st, 2021. Many people argued against allowing Name, Image and Likeness. But it is here to stay. California opened the door with progressive legislation, Fair Play to Play Act, in 2019 initiated by California state senator Nancy Skinner. It was scheduled to go into effect on Jan. 1, 2023. This was soon followed by states like Florida and others jumping onboard by developing and passing similar but different legislation.
The NCAA has long held the belief that it should be exempt from anti-trust legislation. This belief was based upon the Supreme Court decision in the 1984 Oklahoma and Georgia Board of Regents case. Schools sued to be allowed to not be limited by their television appearances by the NCAA. I remember days when the local large university had to compensate the smaller college for lost ticket sales on days the larger school appeared on television. The Supreme Court gave the NCAA great liberties in that case mostly because they did not pay players. The Alston case shattered that anti-trust exemption opinion.
Justice Brett Kavanaugh wrote in a scathing rebuke of the NCAA, that what they do would be illegal in any other industry in the country. He further stated that the NCAA was not above the law. The 9-0 decision by the Supreme Court has completely opened the door for others to bring forward anti-trust cases against the NCAA. It seems it is that threat that has moved the NCAA to quickly fall in line with the NIL.
Several states like Ohio either passed or through executive actions created legislation so their powerhouse athletic programs would not be penalized by not having legislation allowing NIL in place. The fear of a negative impact on their recruiting classes prompted many state politicians to move the efforts forward quickly. The NCAA passed an emergency stopgap measure to allow student athletes to immediately prosper off their NIL.
Ultimately, we arrived at the described Wild West moment as roughly two thirds of the states passed NIL legislation which differs quite differently between states. The NCAA passed temporary measures allowing it and granted schools in states without legislation the right to set their own policies. And Congress did nothing to pass anything on a federal level. Even though Ohio Congressman Anthony Gonzalez and Missouri Congressman Emanuel Cleaver had proposed legislation in September 2020.
We are facing a time where federal legislation is needed by a Congress that seldom works well together. The Congress can provide national legislation that would allow everyone to operate under the same standards and policies. The problem is Congress has balked at passing such legislation. Congress could provide the NCAA with an anti-trust exemption as an organization which they are actively seeking. The advantage here is the NCAA member organizations can establish the policies and bylaws to be applicable on a consistent basis to the 1200 plus members of the NCAA.
All of this leaves us with the question of who currently oversees compliance for all of this? The easy answer is no one knows. The schools ultimately have responsibility for oversight but if there are no teeth in the punishment for violators, will NIL become a major nightmare for all to provide compliance and oversight. Expect every school to eventually hire a Director of NIL. This will need to happen at all 1200 plus NCAA institutions. Or they need to hire an outside organization like EMP to provide oversight and compliance for them.
NIL is here for good. The horse has left the barn. Athletic Directors across the country are searching for best practices on this monumental issue. They all are trying to find their moral compass. Executive Management Partners believes the following will need to be quickly addressed in the future of NIL.
Major IRS decisions need to be made. If an athlete is making $1,000,000 from NIL can his parents really claim him or her on their taxes. How are gifts in kind handled? Is an athlete who asks for his teammates to be provided a weekly dinner as part of their NIL agreement responsible for the taxes on those meals or are those eating them responsible for the tax? Lawyers are chomping at the bit to become involved with student-athletes and their NIL deals. Even the smallest deal needs to be reviewed.
Lawsuits are going to happen. Anti-trust suits will be coming at the NCAA and universities in bunches until Congress passes an exemption or devises new legislation concerning the anti-trust status of the NCAA. Greater efforts to form athlete unions will most likely arise. Recruiting will be impacted greatly at all levels by the perceived ability to get an NIL deal. The transfer portal will blow up as athletes will learn quickly you get better deals for playing, not being third string. Every single athlete has some initial following. They all have the possibility to make income and although the level of compensation will be highly different, the same oversight and compliance is needed by the institution for every transaction.
Expect NIL legislation to impact high schools and beyond. Non-revenue sports will be impacted in a negative manner. Colleges will face financial issues as boosters decide whether to give their funds directly to the athletic department or to the businessperson-student-athlete.
Where are we? No one really knows!