International Student-Athletes Lose Out in NIL Era
Ashley J. Beth
Loyola University Chicago School of Law, JD 2022
The NCAA’s interim Name, Image, and Likeness (“NIL”) policy has made it possible for student-athletes to receive compensation, however, equitable shortcomings are evident. The most significant issue is faced by international student-athletes, who are substantively barred from capitalizing on the NIL opportunities afforded to their American counterparts. Due to international student-athletes’ status as F-1 visa holders, accepting NIL-related income will likely result in a violation of federal immigration law. A violation of F-1 visa status is grounds for immediate deportation.
The state of the NCAA union and its member institutions
There is a common consensus among the college athletics community that the NIL landscape is laden with regulatory issues. Aside from the differences among applicable federal, state, and institution regulations, there are tax considerations, conflicting sponsorship agreements, and other such complexities that athletic compliance departments may be ill-equipped to handle on behalf of their students. Many institutions lack the legal literacy, resources, and infrastructure necessary to properly guide their respective students. Yet, it is imperative that students can rely on their institutions to ensure they are engaging in permissible activity.
International student’s F-1 visa income limitations
According to the NCAA, over 17,000 international student-athletes compete at its member institutions. These students must obtain F-1 non-immigrant student visas which allow foreign-born individuals to pursue academic studies in the U.S. To obtain this visa, a student must be accepted at a Student and Exchange Visitor Program (“SEVP”) certified institution. The SEVP, a department under the U.S. Department of Homeland Security, provides guidance to schools and international students regarding the requirements for maintaining their F-1 status. Students are required to abide by strictly enforced regulations, including the type of income they may receive. The SEVP utilizes broadcast messaging to educate and inform international students of their rights. On June 21, 2021, the SEVP issued a message to acknowledge it was monitoring NIL-related legislation and stated that it would provide further guidance. As of December 2021, it has yet to issue a new message.
Absent further guidance from the federal government, international students must follow the language of their visas, consult their institutions’ compliance offices, or seek advice from legal experts. The visas contain significant limitations regarding employment. There are three main types of authorized employment categories, 1) on-campus, 2) Curricular Practical Training, and 3) Optional Practical Training.
NIL opportunities will not be permitted under on-campus employment, because the job must “provide direct student services.” Under the off-campus options, the temporary employment “must be an integral part of the student’s educational program,” meaning the employment must be directly related to the student’s major area of study. There are two other less common options, approved employment due to emergent circumstances and internships with internationally recognized organizations, both of which would not be useful for NIL opportunities. Based upon the language of the visas, it appears that NIL-related income does not fit precisely into a permissible category.
Possible solutions to accept NIL related income
There are a variety of methods an international student-athlete may consider to receive income related to their NIL. The general rule is that beyond the authorized employment opportunities, if an international student-athlete is actively working in the U.S., either for a U.S. or foreign company, that will violate their F-1 visa status. This includes if the employer is paying with foreign currency or to a foreign bank account. The purpose of the rule is that the international students are coming to the U.S. for an education and not to take away jobs from Americans. That being said, the law leaves room for an argument that working for a foreign company and being paid in their currency in an abroad bank account does not take away the jobs the federal rule was enacted to protect.
There is no apparent bar on passive income. The IRS defines passive income as trade or business activities in which the individual does not materially participate in. Material participation is participation in the activity for more than 500 hours per year. Passive income implicates complex tax and immigration law considerations that most students, let alone attorneys do not have expertise in. Theoretically, an international student-athlete may sign endorsement deals abroad and earn royalties on income generated while in the U.S. if they are not actively involved in the deal.
It is unclear whether a F-1 visa holder can incorporate a business entity while they are in the U.S. However, if an entity can be created, the student cannot be an employee of this business because they would violate active employment rules. For example, generating income from a YouTube channel is impermissible self-employment since it would be active income. A student may attempt to qualify under the permitted off-campus employment if they can arrange the business or social media channel in a way that is permitted by their institution.
International students who return home for the summer months are permitted to earn income in their home countries. They can increase engagement through their social media accounts while in the U.S. to use their following as leverage for deals abroad. Considering the lack of time spent at home and the distanced target fan market, there will likely be fewer abroad opportunities.
It is apparent, that the current options carry great uncertainty and risk of deportation. International student-athletes must properly report their income on their tax returns and keep detailed records in the event their institution or immigration officers question their income producing activities.
This group of student-athletes may remain in the situation that they were prior to the NIL changes, yet this unequal treatment is incongruent with the NCAA commitment to inclusion. The NCAA came under harsh scrutiny after the 2021 March Madness women’s weight room disparity came to light, and this mission was established to provide fair opportunity for all student-athletes. Moreover, the NCAA should see international students as a unique asset in the NIL space. They open the door to new markets of future students, fans, and business partners. The U.S. benefits by being the welcoming home of the greatest athletic talent around the world.
If inclusion is truly the goal, the NCAA must lobby legislatures to modify the immigration laws to ensure the NCAA and international student athletes can maximize their potential. With these changes, the U.S. will continue to be the home of the best athletic talent.