NIL new to college world, but not novel

After the U.S. Supreme Court in 2021 found that college athletes may be compensated for their name, image and likeness, states and schools have enacted a patchwork of rules to guide previously amateur sports stars in cashing in on their fame.

Enter Missouri, which put into effect on Aug. 28 a statute that allows students to sign endorsement deals upon committing to a Missouri school and permits schools aid them in doing so.

Curry Sexton, an attorney with the sports law practice at Seigfreid Bingham in Kansas City, said Missouri’s new law “is probably the most progressive law in the country” at this point.

“Missouri basically took what other states had done and other really progressive approaches that other states had done, and compiled it all into one bill,” he said.

For attorneys in the evolving practice of “NIL law,” that could bring more opportunities to advise student athletes on the varying, and sometime conflicting, thicket of athletic association rules, state laws and school policies.

“If there are more deals, you are going to need attorneys — hopefully — to review those deals,” said Mit Winter, an attorney with Kennyhertz Perry in Kansas City. “NIL deals aren’t always being reviewed by attorneys, but in most cases, they probably should be.”

NIL defined

Once upon a time, student athletes were not allowed to accept even a dollar for their autograph or an appearance. Today, while many NIL deals are for nominal amounts of money or goods, upper-tier athletes can make hundreds of thousands of dollars.

In the United States, “NIL rights” is a slang term for the right of publicity, which prevents the unauthorized commercial use of an individual’s name, image, likeness or other recognizable aspects of their persona. It bestows the exclusive right to the individual to license the use of their identity for commercial purposes. These rules allow student athletes to profit from their personal brands through certain services and products using social media, personal appearances, sponsorships, autographs and endorsements, among other avenues.

Despite the nuances associated with new NIL regulations and law, it is not really a new area of law.

“I feel like it ties into so many different areas of law,” said Jessica Visser, a partner with Varnum in Grand Rapids, Michigan, who co-chairs the firm’s NIL practice. Those range from intellectual property to contracts to trust and estates. “I think it’s really very unique and doesn’t fit neatly into any other existing area of law.”

Michael Reuda, partner and head of U.S. sports and entertainment at Withersworldwide in New York, agreed, saying he gets a little suspect when he hears someone refer to themselves as a “NIL lawyer.”

“That’s not really a thing. … There are different elements to every deal,” Reuda said. “It’s highly dependent on how a deal is structured.”

Alston

The 2021 Supreme Court decision that kicked the practice into high gear, NCAA v. Alston, was much to the chagrin of the National Collegiate Athletic Association, which has long pointed to “amateurism” — a term inconsistently defined by the NCAA — in contending that paying student athletes could erode the distinction between collegiate and professional sports.

Noting the “highly profitable” and “professional” nature of college athletics, particularly basketball and football, the court unanimously found that college athletes can be compensated for their use of their name, image, and likeness. As the high court put it, American colleges and universities have always “had a complicated relationship with sports and money.”

The Supreme Court’s ruling didn’t address every associated issue, such as whether student athletes are employees, but it did find that NCAA rules limiting education-related compensation violate antitrust law under the Sherman Act.

After the Alston decision, the NCAA enacted an interim NIL policy allowing student athletes to be compensated. Today, Reuda said, that guidance is loose.

“It sort of punts a lot of rulemaking authority and control over the situation to individual schools and conferences and states,” he said. “It allows for more disparity among the rules and the lack of consistency could lead to problems. That’s why initiatives are being pushed in Congress for more comprehensive rules, which I think is challenging.”

So far, more than a dozen federal bills have been proposed, but none have so much as received a debate among a full Senate or House committee, the initial step in the process of becoming law.

To date, more than 30 states have enacted similar laws.

Missouri law

Missouri’s law updates a statute enacted in 2021 and updated in 2022. Among its major provisions:

• School officials, including coaches, can “identify, create, facilitate, negotiate, support, enable, or otherwise assist” student athlete in their efforts to earn compensation. They can be present at negotiations but cannot be paid for their efforts.
• Schools can grant licenses to third parties to use “unique identifiers,” such as school logos, team colors and other symbols as part of athletes’ NIL campaigns.
• A student’s compensation cannot be conditioned on his or her athletic performance, though it can be tied to attendance at a particular school.
• Athletic associations and conferences (such as the NCAA) cannot prevent or penalize students or schools over NIL compensation.
• High school athletes can earn NIL compensation after signing an athletic letter of intent with a Missouri college or university.

“We’re trying to keep Missouri at the forefront and get the state’s and nation’s best athletes to want to come to college and play sports here in the state of Missouri,” Rep. Kurtis Gregory, R-Marshall, said during a hearing on an early version of Missouri’s bill in April. Gregory, a former University of Missouri football player, championed the legislation during this year’s session.

Role of attorneys

Sexton — who in addition to being an attorney is a former All-Big 12 wide receiver at Kansas State University — said the states’ varying response to NIL’s development create complications within conferences, such as the Kansas City-based Mid-America Intercollegiate Athletics Association, which Seigfreid Bingham represents.

“You’re advising Kansas institutions without [an NIL] law and the implications of that, and you’re advising Missouri institutions on all that that law now affords them,” he said.

It also means the need for student athletes to get competent advice is growing more acute.

Winter, a former Division I basketball player at the College of William & Mary, said student athletes often sign contracts without consulting an attorney or even another adult. He doesn’t recommend this, even for deals with low monetary compensation because those deals can have serious, long-term consequences for the student athlete.

“For example, many deals offered to athletes have very broad exclusivity provisions, term lengths, and other provisions that often aren’t in the athlete’s best interest,” Winter said. “Some of these provisions can limit the types of deals an athlete could enter into in the future, even if they end up as a professional athlete.”

Winter said that NCAA rules prohibit most schools from providing legal services to their student athletes but that some organizations are working on solutions that will include free legal services for college athletes.

Among the provisions of Missouri’s law is a requirement that schools must offer athletes at least two workshops per year on topics such as “financial literacy, life skills, time management, and entrepreneurship.”

“My hope is that all institutions across the country, whether they have a statute in place like this that requires this level of guidance and counseling, that they’re doing that anyway,” Sexton said. “It’s in the best interests of the student athlete.”