Search

Congress places Sept. 15 deadline to assemble NIL group as complexities persist


Photo credit to rollbamaroll.com.



There is a multi-billion-dollar market and a system in place that is disproportionately impacting black college athletes. With the global pandemic reaching historical numbers and overflowing hospitals in the United States (there are now over 850,000 total cases reported between California and Florida alone),[1] it is no surprise that there are also health and safety concerns with the return of college sports.

States are enacting their own legislation to resolve the disparity in revenue generated from college sports, but how do we truly create a system that fairly distributes income while addressing the health and safety concerns and parity among the competitors? There’s no question that this is a very complicated problem that will require legal, business and health experts to work collectively in the coming months.

Updates from Wednesday’s Hearing: 9/15 Deadline

Last December the NCAA requested for a proposal from Congress regarding name, image, and likeness (“NIL”). Following continuous pressure, the NCAA’s Board of Governors voted to approve proposed rule changes in late April to allow for player compensation from their name, image and likeness.[2]

Wednesday’s Senate Judiciary Hearing gave us some insight on the developments in the proposal for federal legislation, but a thorough resolution remains to be seen. Meanwhile, Florida, Colorado and California have passed their own legislation that will come into effect as early as July of 2021. There are also 28 states who are considering their own legislation.[3] The NCAA is hoping for uniform legislation that will preempt these state laws.

The Power Five has led the charge on its request for federal legislation. At Wednesday’s Senate Judiciary Committee Hearing regarding player compensation, lawmakers made it clear that they were troubled about the restrictive nature of the NCAA’s proposal, which included:

  1. Public disclosure of endorsement deals;

  2. Prohibiting endorsements until the completion of one semester of classes;

  3. Barring NIL licenses that violate university standards or that conflict with institutional sponsorship agreements.[4]

For the schools, the worry is parity among competitors. They are concerned these deals could be used as recruiting inducements, hence they proposed the one-semester vesting period and the public disclosure of agreements as ways to combat the inducements.

However, the advocates for the athletes do not want the delay because the schools are able to generate revenue before, during and after the athletes enroll on campus. The players want to be able to maximize their earning potential without restrictions. Lawmakers are seeking a middle ground that will address these concerns about parity, while also ensuring that the players are fairly compensated. September 15, 2020, is the Judiciary Committee’s hopeful deadline to assemble a bipartisan group to address NIL rights.[5]

The Responsibilities of a Compliance Officer Will Change

Although the use of university trademarks, logos or other symbols that would make the school recognizable will not be allowed in connection with NIL licenses, there are many worries about the regulation of these deals.[6] One of the major concerns for the NCAA regarding NIL licenses is the conflict with current school endorsements and school values.[7]

When a player signs an endorsement deal that conflicts with the school’s values or the school’s endorsements, compliance officers will be tasked with resolving these issues. For instance, here’s a hypothetical to consider: What happens if a player at a Coca-Cola sponsored school is offered an endorsement from a competitor, such as Pepsi? Much of this will also require working with agents and lawyers in many situations. More resources will have to be dedicated to ensure compliance offices can handle the challenges ahead. Also, lawmakers may look to the model in professional sports where these conflicting endorsements co-exist.

Another concern for schools is the role of agents in the new line of business. California’s Fair Pay to Play Act allows for college athletes to hire agents to assist in endorsement deals.[8] With the new legislation, schools are concerned about the recruitment of players occurring prior to college. How will this impact high school sports? How would schools prevent kids as early as 15 or 16 from being approached by agents? These are questions that will need to be addressed with the new proposal.

Impact on Non-revenue Sports


Another issue that has already been exacerbated by the pandemic conditions will also be significantly impacted: non-revenue sports.

In late May, University of North Carolina’s Athletic Director, Bubba Cunningham, along with several national associations in sports such as golf, tennis, hockey, swimming and gymnastics, prepared a memo for the Uniform Law Commission, outlining their concerns with NIL compensation.[9] The colleges are concerned about reduced resources for these programs because corporate sponsors can direct their attention to individuals rather than institutions.[10]

We have already seen schools cancel their sports for the 2020-2021 season. For instance, the Ivy League cancelled all sports for the upcoming season. In making this decision, the conference was able to do so through evaluating health and safety concerns with COVID-19, and the conference also took into consideration its dependence on sports revenue.[11]

We have also seen the permanent cancellation of some sports, as Stanford dropped the number of teams from 36 to 25 sports due to an inability to sustain their budget across the sports.[12]

With non-revenue sports already having sustainability issues and NIL legislation providing a new line of business to players, what will be done to ensure non-revenue sports are adequately funded? Lawmakers will certainly be discussing this issue as they try to find a middle ground.

With a global pandemic and a presidential election in less than four months, lawmakers have their hands full with other issues. For now, we will have to wait and see how things play out in the Senate, as September 15th is the deadline for assembling a group to address NIL.

-------------------------

Andrew is a second-year law student at Elon University School of Law.

[1] Tony Pipitone, Daniela Flamini, and The Associated Press, Florida Surpasses New York in Number of Coronavirus Cases, NBC Miami (June 26, 2020), https://www.nbcmiami.com/news/local/florida-surpasses-new-york-in-number-of-coronavirus-cases/2267790/.

[2] Barrett Sallee and Adam Silverstein, NCAA takes big step toward allowing name, image and likeness compensation for athletes, CBS Sports (April 29, 2020), https://www.cbssports.com/college-football/news/ncaa-takes-big-step-toward-allowing-name-image-and-likeness-compensation-for-athletes.

[3] Gillian Brassil, Senators Say NCAA Needs Broad Reform, The New York Times (July 23, 2020), https://www.nytimes.com/2020/07/23/sports/ncaa-NIL-rights.html.

[4] Ross Dellenger, 'It’s Time for Substantive Reform’: Senators Demand More From Mark Emmert, NCAA in Hearing, Sports Illustrated (July 22, 2020), https://www.si.com/college/2020/07/22/senate-demands-more-reform-from-ncaa-mark-emmert.

[5] Board of Governors moves toward allowing student-athlete compensation for endorsements and promotions, NCAA (April 29, 2020), http://www.ncaa.org/about/resources/media-center/news/board-governors-moves-toward-allowing-student-athlete-compensation-endorsements-and-promotions#:~:text=The%20NCAA's%20highest%20governing%20body,their%20name%2C%20image%20and%20likeness.&text=The%20board%20emphasized%20that%20at,name%2C%20image%20and%20likeness%20activities.

[6] Id.

[7] Michael McCann, College Endorsement Deals Sow Landmines For NCAA Compliance, Sportico (July 24, 2020), https://www.sportico.com/2020/law/analysis/college-athletes-endorsement-deals-1234609869/.

[8] Jack Kelly, Newly Passed California Fair Pay To Play Act Will Allow Student Athletes To Receive Compensation, Forbes (October 1, 2019), https://www.forbes.com/sites/jackkelly/2019/10/01/in-a-revolutionary-change-newly-passed-california-fair-pay-to-play-act-will-allow-student-athletes-to-receive-compensation/#718cdbab57d0.

[9] Coaches of non-revenue sports fret over athlete NIL compensation, ESPN (June 1, 2020), https://www.espn.com/college-sports/story/_/id/29251627/non-revenue-sports-fret-athlete-nil-compensation.

[10] Dennis Dodd, Believing NCAA is failing members, UNC AD speaks out vociferously against name, image, likeness rights, CBS Sports (June 3, 2020), https://www.cbssports.com/college-football/news/believing-ncaa-is-failing-members-unc-ad-speaks-out-vociferously-against-name-image-likeness-rights.

[11] Jabari Young, Ivy League cancels football and other fall sports due to Covid-19, CNBC (July 8, 2020), https://www.cnbc.com/2020/07/08/ivy-league-cancels-football-and-other-fall-sports-due-to-covid-19.html#:~:text=The%20Game%20has%20been%20been,the%20decision%20%E2%80%9Cextremely%20difficult.%E2%80%9D.

[12] Billy Witz and Gillian Brassl, Stanford Permanently Cuts 11 Sports Amid Coronavirus Pandemic, The New York Times (July 8, 2020), https://www.nytimes.com/2020/07/08/sports/coronavirus-stanford-cuts.html.

6 views