Loyola University Chicago School of Law, JD 2023
On June 29, 2021, Illinois Governor J.B. Pritzker signed a bill into law that allows collegiate student-athletes to hire agents and sign endorsement deals effective as of July 1, 2021. This bill puts Illinois among a number of states which have begun to pass legislation allowing student-athletes to receive payment for the use of their name, image, and likeness (“NIL”). While these laws open opportunities for student-athletes, they also present several potential challenges to the NCAA, the governing body for collegiate athletics in the United States, and its member institutions barring any Congressional assistance.
Thus far, 28 states including California, Alabama, Georgia, and several others, have already passed legislation permitting student-athletes to receive compensation for use of their name, image, and likeness. Many states have cited a need for NIL legislation to provide student-athletes with a portion of the revenue that they bring in for their universities. Other states have more candidly admitted that these acts are necessary to ensure that their universities are not at a recruiting disadvantage compared to states that enacted NIL laws.
What are name, image and likeness rights?
Name, image and likeness rights fall under the “right of publicity”, a legal concept recognized by the majority of states. Generally, individuals have the right to control the commercial use of their personal identity. This concept rises to the forefront in situations where permission is needed of a person to use their name, image, or likeness. Historically, the NCAA model effectively barred student-athletes from controlling their own NIL rights.
What issues arise from this new wave of legislation?
The NCAA began voicing its concerns months ago when the states began to pass legislation permitting student-athletes to benefit from their NIL rights that were set to go into effect in the summer of 2021. Additionally, the NCAA was seeing an impending wave of lawsuits arising under antitrust laws. The biggest threat to the NCAA was National Collegiate Athletic Association v. Alston, where a group of former student-athletes were challenging the NCAA’s academic benefits cap on compensation under an antitrust theory. The Supreme Court granted certiorari to hear the case and subsequently issued its unanimous opinion on June 21, 2021. The Court held that the NCAA was violating antitrust law by placing limits on payments for education-related benefits. Prior to the decision, universities and their athletes faced punishment from the NCAA for violations relating to compensation received from NIL rights, including payments to players for playing, funding to offset training expenses, and payment for endorsement deals.
The Court held that when the student-athletes are compensated for something connected to their education, like everyone else in our free-market economy, they can benefit from their NIL rights appropriately from competition. However, there is a lack of guidance from the NCAA as to what is considered to be an educational benefit and what the limits to compensation are. If Congress does not pass any legislation carving out any sort of exception for the NCAA, they are facing numerous lawsuits at the moment any state’s legislation permitting their student-athletes to receive payment take effect from those student-athletes in states that lack any sort of name, image, and likeness legislation.
As the July 1 deadline has now passed and student-athletes cash in on their long-anticipated payday, the NCAA must deal with the large legal exposure it faces absent any antitrust exemption. One approach that the NCAA has investigated was appointing a third-party administrator that would oversee all contracts and agreements to establish market values for any deals, but the Department of Justice voiced concerns over such an approach under the antitrust laws.
Another consideration the NCAA must make is how to deal with those student-athletes who may bring claims from their inability to collect for their name, image, and likeness uses during their time in college. The NCAA considered putting a cap on claims for those bringing suit against them, but the Department of Justice raised concerns regarding that method as well.
What comes next?
The NCAA must now scramble to put some permanent rules in place that limit their legal liability while also complying with antitrust laws. Since the Court in Alston declined to address the NCAA’s business model as a whole, the NCAA is now left to either continue seeking out help from Congress for an antitrust exemption, uniform federal laws, or finding another manner to shield themselves from impending lawsuits.
After the most recent wave of NIL legislation became effective on July 1, universities were lined up ready to bring suit against the NCAA if they were to be disqualified for their students signing name, image, and likeness deals, and both current and former student-athletes stood ready to file suit as well. However, the NCAA had temporarily suspended their NIL rules to address the pending issues. Current restrictions, largely shaped by the Alston decision, remain murky in their interpretation of what is and is not permitted to student athletes. In an effort to bring clarity to the issue, Congressman Anthony Gonzales, a former Ohio State wide receiver, and Congressman Emanuel Cleaver have introduced a bipartisan bill to solidify student athletes rights to capitalize off their NIL rights. As the Supreme Court’s most recent decision regarding the NCAA’s amateur athlete model shows, restrictions have started to peel back as to how the NCAA may regulate college sports and we have begun to enter a new era in collegiate athletics.