In November 2022, McGuireWoods reported on the evolving framework surrounding student-athletes’ ability to profit from their names, images and likenesses (NIL). Recent developments have given new life to the NIL legal landscape.
Details regarding a recent congressional hearing, a new NCAA bylaw creating an NIL presumption against universities, and the NCAA president’s recent statements surrounding current and future NIL regulation are below.
Congressional Hearing
On March 29, 2023, a subcommittee of the House Committee on Energy and Commerce held a hearing titled “Taking the Buzzer Beater to the Bank: Protecting College Athletes’ NIL Dealmaking Rights.” The hearing included testimony from six witnesses, including two college sports administrators, a former NFL player, the president of a Division II university, a current student-athlete and one of the leaders of an athletes’ advocacy group.
The memorandum from the hearing highlighted the lack of clarity and uniformity among state laws and the concerns student-athletes have raised about navigating a “confusing” regulatory environment. The memorandum also outlined the need for federal action in the NIL space, noting that Congress has been reviewing concerns about fair market value and transparency; collectives, boosters and companies; recruiting, transfer rules and roster spots; and endangering future Olympic competitiveness due to the potential of universities cutting Olympic sports.
Additionally, the memorandum identified seven issues for future consideration:
- Should college athletics follow a different compensation model than professional sports?
- Who (e.g., conferences, the schools themselves, agents, other third parties) should be allowed to negotiate and coordinate NIL deals on behalf of athletes?
- How can lawmakers and schools ensure recruiting rules promote fairness, encourage athletic competition and protect students?
- What entity should be responsible for enforcing NIL laws?
- How is the lack of a national standard impacting competition and recruiting between universities in states with different or no NIL laws?
- How would small universities and conferences, such as Division II or III, be impacted by new requirements for athlete education, compliance and enforcement?
- How would a revenue-sharing model impact the ability of a university to fund non-revenue-generating sports?
Expect to see more congressional hearings aimed at addressing these issues in the coming months, as NIL continues to evolve against a backdrop of legal challenges — including antitrust challenges stemming from the Alston decision and challenges regarding whether student-athletes should be classified as employees for purposes of the Fair Labor Standards Act and National Labor Relations Act.
Bylaw 19.7.3 — The NIL Presumption
The NCAA adopted Bylaw 19.7.3, informally referred to as the NIL presumption, in October 2022, effective Jan. 1, 2023. The bylaw “presume[s] a violation occurred if circumstantial information suggests that one or more parties engaged in impermissible conduct” related to NIL offers, agreements and/or activities (which includes collectives).
The bylaw places the burden on the involved individual or member institution to prove that a violation has not occurred. The bylaw further allows NCAA enforcement staff to make a formal allegation based on the presumption. Lastly, unless the involved individual and/or member institution can unseat the presumption of a violation “with credible and sufficient information” that “clearly demonstrates” the NIL activity complied with NCAA legislation, the hearing panel “shall conclude a violation occurred.”
The presumption will give teeth to the NCAA’s ability to enforce its NIL rules through investigations of potentially violative conduct. However, given the uncertainty surrounding NIL legislation, it remains to be seen how the NCAA will utilize the presumption.
New NCAA President Weighs In
Former Massachusetts Gov. Charlie Baker assumed his duties as NCAA president on March 1, 2023. In a release announcing Baker’s presidency, the NCAA noted that Baker arrived at “a moment of significant transformation” due to “legal shifts in the environment surrounding college sports [that] have challenged the NCAA’s ability to serve as an effective national regulator for college athletics, resulting in an untenable patchwork of individual state laws.” The release also announced its plan to “partner[ ] with federal policymakers to develop a consistent, sustainable legal framework to address issues common to student-athletes and athletic departments across the country.”
Shortly after taking office, Baker praised the congressional subcommittee for holding its hearing to discuss NIL rights for student-athletes and reflecting his views on the NIL legal landscape. He later described to several media outlets his view that a potential federal NIL law would amount to “consumer protections” for “families and student athletes.”
Conclusion
NIL is a complicated, uncertain and quickly developing area of law. NCAA member institutions should closely monitor state law and NCAA developments on NIL and pay particular attention to how the institution is interfacing with collectives in order to avoid running afoul of NCAA bylaws and/or state or national laws (including Title IX of the Education Amendments of 1972).
McGuireWoods is closely tracking developments related to NIL and other complicated issues in college athletics. Please contact the authors of this article with questions.