NCAA Division I Board Clarifies NIL Rules

The Timeline

Sept. 30, 2019: California passes legislation introduced by Sen. Nancy Skinner that will, starting in 2023, prohibit schools from punishing athletes who accept endorsement money while in college.

Oct. 29, 2019: The NCAA's Board of Governors unanimously agrees that it is time to modernize its name, image, and likeness rules. The board then directs all three NCAA divisions to create rules, by January 2021, that allow athletes to earn endorsement money while maintaining “the collegiate model.”

June 21, 2021: In NCAA v. Alston, the U.S. Supreme Court unanimously ruled that the NCAA was violating antitrust law by placing limits on the education-related benefits that schools can provide to athletes. The decision allows schools to provide their athletes with unlimited compensation as long as it is in some way connected to their education.

June 30, 2021: The NCAA's Board of Directors adopts a temporary rule change that opens the door for NIL activity, instructing schools to set their own individual policies for what should be allowed, with minimal guidelines.

May 2022: The NCAA Division I Board of Directors released additional guidance related to the NIL interim policy stating that institutional coaches and staff may not organize, facilitate or arrange a meeting between a booster/NIL entity and a prospective student-athlete or communicate directly or indirectly with a prospective student-athlete on behalf of a booster/NIL entity.

October 26, 2022: The Division I Board of Directors voted unanimously to issue new clarifications on how schools can be involved in name, image and likeness opportunities.

The Policy

As of July 1, 2021, NCAA athletes across all sports are allowed to accept compensation for use of their name, image, and likeness, to promote a brand, when they make an appearance, or when they sign memorabilia. However, there are two important things to note:

1. This is an interim policy that expires upon the passage of federal legislation addressing this issue which, despite progress, doesn’t appear to be imminent.
2. The NCAA Policy provides very little in the way of actual rules and is therefore a creature of state law. In short, the rules a student-athlete must ultimately abide by as it pertains to NIL depends on the state in which their college or university is located. As of this moment, 28 states have NIL laws that have already gone into effect.

‍The Policy Clarifications

The NCAA’s recent clarifications to its interim NIL guidance address several different areas:

1. Education and Monitoring
2. Support for Student-Athlete NIL Activity
3. Support for NIL Entity/Collective
4. Negotiating, Revenue Sharing and Compensating

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Institutional Education and Monitoring

The educational and monitoring clarifications identify how colleges and universities may educate stakeholders on certain subject areas. It states that institutions may provide education for student athletes on topics including financial literacy, taxes, entrepreneurship, and social media. This guidance also allows institutions to provide education for NIL Entities (i.e., Collectives), boosters, and prospective student athletes.

Institutional Support for Student-Athlete NIL Activity

One of the greatest areas of concern and confusion with the NCAA’s interim NIL policy pertained to supporting student-athlete NIL Activity. It follows that this is the most detailed section in the update. For convenience, we broke down some of the highlights of this section by distinguishing what institutions can do in support of student-athletes (“This”) and what they cannot do (“Not That”).

This

Institutions may engage NIL service providers to create marketplaces that inform student athletes of NIL opportunities, match them with brands that offer NIL opportunities, and provide student athlete contact information to the NIL entity. Additionally, they can introduce student athletes to NIL entities and even make on-campus space available for the parties to meet.

Not That

In contrast, institutions are not allowed to assist in the development, creation, execution, or implementation of a student athlete’s NIL activity, including developing product, creating promotional materials, and ensuring student athletes perform their contractually obligated activities. Schools are also barred from communicating with collectives about specific student athletes and compensation, whether requested, demanded, or encouraged. To summarize, schools can’t launch or facilitate NIL programs on behalf of their student athletes or do anything regarding payment or compensation of specific student athletes.

This

You may notice that most NIL campaign, or brand endorsement, announcements feature student-athletes in their team gear with the logo washed out, unless the entity (NIL Collective or Brand Partner) has licensed the use of the university logo. To help, schools are now allowed to support their student athletes by providing stock photos, videos and graphics directly to them or to the NIL entity.

Not That

While schools are allowed to provide some tools to support student-athlete NIL activity, they are not allowed to provide services or access to equipment that supports student athletes’ NIL activity, such as graphic designers, tax preparation, contract review, cameras, graphics software and computers, unless the same benefit is generally available to the institution’s students.  

This

To date, institutions have been unable to leverage the individual NIL activity of student athletes. This update allows institutions to promote their student athletes’ NIL activity on social media. They may also promote their activity in paid advertising, provided the student athlete or NIL entity pays the going rate.

Not That

Student athletes are still not permitted to promote their NIL activity during athletically related activities such as practice, pre- and post-game activities, on court celebrations and press conferences. For example, if an athlete secures a NIL partnership with The Walt Disney Company and wins a championship, they will not be allowed to yell into the camera as the confetti falls, “I’m going to Disney Land!” like the pros.

Institutional Support for NIL Entity/Collective

This

Institutions are allowed to support NIL entities through fundraising, providing assets such as tickets as part of sponsorship agreements, request donors provide funds to entities and even provide donor information and facilitate meetings between donors and the NIL entity.

Not That

Institutions may not subscribe or donate to the NIL entity, provide assets to donors that incentivize NIL entity participation, or allow athletics department staff members to be employed by the entity. The NCAA is trying to curtail the prospects, or at least the appearance, of pay for play as outlawed by the NCAA’s bylaws.

Negotiating, Revenue Sharing and Compensating

This last section is very straightforward and largely “common sensical.” University athletic department staff members, or companies owned by department staff members, are in no way, shape, or form allowed to represent, or work for, student athletes in securing or negotiating NIL deals. Similarly, individuals or entities representing athletics (such as third-party rights holders and third-party agents) cannot represent enrolled athletes for NIL deals, including securing or negotiating those deals.

Furthermore, institutions are not allowed to enter into contracts with student athletes for the sale of products related to student athletes’ NIL. For example, an institution may purchase Gatorade from Gatorade (or its affiliates, distributors, assigns, etc.), but they may not buy Gatorade from a student-athlete who has a NIL partnership with Gatorade.

One detail that particularly stood out to us is the prohibition against institutions, athletic conferences and student athletes sharing in NIL or broadcast revenue. This benefit will likely need to be secured via litigation.

Hire Help. The ability to capitalize on your name, image, and likeness is a brand-new world and, in the absence of comprehensive rules from the NCAA and federal legislation, it can be complicated. Additionally, universities are limited by how and where they can help, so those with the greatest interest in helping their athletes are restricted. Our advice is to hire help: an attorney, brand manager, tax advisor, or financial planner, to help you grow and manage your brand as well as your assets.

If you need help understanding your rights and responsibilities as it relates to anything and everything NIL, the intellectual property, branding and legal experts at Diplomatic Enterprises are willing and able to assist you. The consultation is free and we’re always willing to help. Good luck!

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