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College Athletes Officially Allowed to Profit from Name, Image and Likeness Rights

July 02 2021

As of Thursday, July 1, 2021, just in time for Independence Day, all NCAA student athletes are free to capitalize on their name, image and likeness (NIL) rights.  With over a dozen states already enacting laws providing rights to do so, the NCAA followed suit on June 30, 2021, and temporarily suspended its restrictions on student athletes profiting from their NIL rights.

 

NIL Rights – What Are They

Just like it sounds, Name, Image, and Likeness (NIL) Rights cover the right of an individual to commercialize and profit from their publicity, most commonly in the form of endorsements, marketing deals and sponsorships from companies.  NIL Rights are the three main elements that make up the legal concept of an individual’s “Right of Publicity.”  Many states have laws that protect an individual’s right of publicity and provide for the individual to have the ability to control the commercialization of such rights.

Previously, NCAA rules restricted student-athletes from promoting or endorsing commercial products or services, even if the student-athlete is not paid to participate in the activity.  The NCAA has interpreted these rules broadly to include restrictions on everything from selling autographed pictures, to endorsing athletic camps where the student-athlete would be acting as a mentor or trainer for younger athletes.

Now that the NCAA restrictions have been lifted, student athletes can capitalize on any number of avenues for profiting from their NIL rights.  This includes accepting endorsement deals, making sponsored posts on social media, accepting appearance fees for events, selling sports memorabilia and signed merchandise, and even starting their own businesses (previously prohibited under NCAA rules).

 

Pathways Opened for Professional Representation

In conjunction with allowance of student athletes to capitalize on their NIL rights, student athletes are also now permitted to hire a variety of professionals to represent them in these endeavors, including attorneys, accountants, and agents.  Certain rules and regulations will apply, depending on state, so it is important to identify the laws that apply in the state the student athlete is going to be attending university in.  One of the most important things to consider is whether the professional attempting to represent the student athlete has experience in representing other athletes (e.g., professional athletes), and their success in doing so.  All the skills and experience of representing professional athletes will be directly transferrable to student athletes, including tax, legal and promotional advice and counsel.

 

Things are Going to Happen Quickly

Given the massive nature of the change, things are going to happen quickly.  In fact, overnight.  As of July 1st, a number of student athletes have already signed endorsement deals and posted paid advertisements.  According to an article in Forbes and another on Slate.com:

This is a brief look, and I imagine by the time we get back from the holiday weekend, this list will be too long to put in a single consumable article.  I imagine the sports press is going to have their hands full keeping up with all the action.

 

Pitfalls for the Unwary

Student athletes need be sure to understand what rules still do apply, as there is little harmony among the laws currently enacted or pending in the various states. For instance, some states permit schools to arrange deals for student athletes, while others expressly prohibit this.  One thing that does seem to be universal is the restriction on schools from paying student athletes directly for licenses to their NIL rights, whether exclusive or non-exclusive.

Other common restrictions include student athletes being restricted from taking endorsement deals from companies that would conflict with those of the university they already attend.  For instance, if the university has an endorsement/sponsorship deal with Nike, the student athletes may be prevented from making deals with Adidas.  But even this is not harmonized, as some laws would still allow for student athletes to take deals that only require them to endorse or advertise the competitor’s products off the court/field.

It is also important for student athletes to be wary of the same traps that professional athletes fall into.  With this new influx of money into these kids, the regular predators will be out there looking to either make them sign unfavorable deals, or get involved in investments or other schemes that could end up damaging the student athlete, financially, reputationally, or both.  Making sure all of the professionals that the student athlete engages are above the board, have experience in successfully representing athletes, and obtaining positive outcomes for those athletes, is crucial.  A track record is not hard to show, if the professional has one.

 

Conclusion

This is the largest single change in sports history in memory.  For the longest time, student athletes were literally one of the only classes of individuals that were prevented from making money due to their choice to pursue an otherwise unpaid activity.   Opening the floodgates to a whole new arena of money making, for both the athletes and the companies that are rushing to throw money and products at them, is going to be a game changer, and a lot is going to happen in the coming months.

From the legal side of things, the important things for these student athletes to understand early on are: i) do not feel pressured to sign anything (anything real can wait to be reviewed by your representatives); ii) if it sounds too good to be true, it is; and iii) before getting involved with any deal, make sure it is permissible under the applicable laws and know the rules associated with completing all aspects of the deal (e.g., rules applicable to posts on social media, advertising requirements related to sponsored posts/transmissions).  There are several other things to consider as well, but more than can be provided in a single blog post.  Speak with a legal representative before engaging in any deal, particularly if there are questions about what laws would apply and whether a particular engagement is permissible.  Counsel experienced in dealing with professional athletes should be one of the first things a student athlete should consider engaging.