The school begins. That means new textbooks, new clothes — and maybe a few new name, image, and likeness deals for college and high school athletes looking to earn some money.
Whether it’s social media posts, in-person appearances, running sports camps (or even fishing tournaments), the ability to cash out is still relatively new to athletes. Here’s what you need to know as the era of athlete compensation enters its second full sports season.
WHAT WAS THE IMPACT ON COLLEGE SPORT?
To hear the coaches tell it, the NIL deals either helped get them the players they were looking for, or it’s just another level of competition to land the most elite athletes. Recall the fight in may between Nick Saban, the coach of perennial national title contender Alabama, and rival Jimbo Fisher at Texas A&M – with Saban’s team foraying into criticism of Jackson State and its famous trainer, Deion Sanders.
Many athletes have become entrepreneurs and some have agents. NIL has also allowed athletes to enter the transfer portal looking not only for a different team, but also for a better chance of getting more money from companies, brands or the many collectives that are pushing everywhere since the July 2021 launch of the NIL era.
WHY DID IT TAKE SO LONG?
NIL’s flourishing began with a seed: a 2009 class action lawsuit filed by former UCLA basketball player Ed O’Bannon who argued that the NCAA should not be allowed to use the likeness of football players and men’s basketball – past and present – to make money. O’Bannon won on the antitrust aspect.
In June 2021, the United States Supreme Court ruled that schools cannot limit educational benefits for athletes, effectively overruling NCAA rules which prevented students from being compensated or obtaining financial support beyond full scholarships.
In anticipation of the ruling, California led the United States to pass a NIL bill in 2019, forcing the NCAA to pave the way on July 1, 2021, for athletes to earn endorsement money and pitch a rush to other states.
WHAT ARE VOID OFFERS?
Social media posts are the top activity athletes get paid for, followed by license fees, autographs/appearances, and camps or running lessons. The money comes from brands, fans and donors. In many states, athletes are not allowed to endorse alcohol, tobacco, or sports betting.
WHO REGULATES VOID BUSINESS?
This is a state-by-state situation, and while the laws are largely the same, there are variations.
Many states allow a third party to connect companies with athletes for NIL offers.
In Georgia, schools can ask athletes to pool up to 75% of their NIL money to share with other athletes, but it is not a requirement. In Connecticut, athletes can use their school’s logo if the school agrees. And the NIL contracts that Louisiana athletes bring back to their universities are considered confidential.
A few states, including Indiana, Kansas, Minnesota, New Hampshire, North Dakota, and South Dakota, do not have NIL laws for college athletes. In these cases, varsity athletes must respect NCAA guidelines and interim policy. The NCAA says schools can’t engage in “pay-for-play” or violate recruiting laws, which means athletes can’t get NIL money to play for a school or for their athletic performance.
The NCAA does not oversee compliance for reporting NIL transactions or compliance with state laws. It either depends on the school or the athlete, depending on the rules of that state. But the NCAA recently requested that member schools assist in any investigation of potential violations.
WHY IS THERE NO NATIONAL NIL LAW?
It’s not for lack of trying. The NCAA and some Power Five conference leaders called for federal legislation. Two members of the United States Senate – Republican Tommy Tuberville, the former Auburn coach, and Democrat Joe Manchin – prepare a bill and want to hear from the SEC commissioner and others about how to change the NIL laws. But there has been no real movement in Washington.
Some states have right of publicity which allow an individual to decide whether their name or likeness can be used for commercial purposes. Such a federal law does not exist.
The NCAA itself could establish a national NIL policy for its three divisions, though the organization has pushed for federal legislation instead.
WHO BENEFITS FROM NIL?
Male athletes lead in NIL activities – 62.7% compared to 37.3% for women, according to the NIL Opendorse platform. Male football players and basketball players received the highest percentage of offers when looking at the full list of college sports (from data reported by Opendorse and other NIL platforms INFLCR and Athletics).
A few women’s sports tend to follow these two, especially basketball, volleyball, softball, and gymnastics.
The money is largely concentrated in Division I athletics, although DII, DIII and NAIA players have been able to get deals.
The more niche the sport, the less likely it is to strike successful deals; think tennis, field hockey, ice hockey and rowing. But there are exceptions, as Water Ski and Rifle see average bids of around $1,400 and $6,000, respectively.
CAN HIGH SCHOOL ATHLETES JOIN THE GOLD RUSH?
It depends on where they live. More than a dozen states are fine with high school students entering into NUL agreements, and more have considered it.
WHAT’S NEXT FOR NIL?
More money and maybe more regulation.
Opendorse forecasts $1.14 billion in NIL contracts in 2022-23, with Power Five conference schools holding the largest share and, by region, the Southeast. Collectives will play an important role in the growth of NIL as they seek to organize and fundraise for specific athletes at the school. Look for states without NIL laws to add laws — and states with laws to keep tinkering.
The NCAA also faces another trialwhich is currently before the 3rd US Circuit Court of Appeals, which argues that athletes should be recognized as employees of their schools.
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