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College Athletes Set to Profit from Commercialization of Name, Image, and Likeness (NIL) Rights Under New NCAA Rules and State Laws

June 14 2021

July 1st is set to become what many believe will be a pivotal moment in college athletics.  The battlefield over the ability for college athletes to capitalize on the rights to commercialize their Name, Image and Likeness (NIL) is set to dramatically change on multiple fronts. Several states have already approved laws that protect the ability of student-athletes to profit from their NIL rights, many of which go into effect on July 1st.  The NCAA is “expected to act” on the issue during a meeting that begins on June 22.  In addition, there is even a case pending before the Supreme Court of the United States on whether collegiate athletes should be allowed to receive compensation for their performance as student-athletes. With all of this activity, July looks to be a very hot month for student-athletes.

While not every state has weighed in on the matter, and even for those that have passed laws, not all go into effect on July 1st, a total of 19 states have already passed laws permitting student-athletes to begin capitalizing on these NIL rights.  Additionally, there are multiple bills currently working their way through Congress on this matter as well. Given the dramatic impact that these state law changes will have on the future of collegiate sports, the student athletes, and the amount of money involved, it is almost assured that either Congress will pass a bill, or those states that have not already advanced bills addressing NIL rights will act quickly or remain in a competitive disadvantage when attempting to attract star collegiate athletes which could both significantly reduce revenue streams at state run universities as well as precluding the individual athletes from making significant amounts of money.

 

NIL Rights – What Are They

Just like it sounds, NI L  Rights cover the right of an individual to commercialize and profit from their own 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.

In context of the NCAA, the limitation on the commercialization of a student-athlete’s NIL Rights is controlled not by the states, so much as it is the rules of the NCAA.  NCAA rules restrict 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.

The current push for change is intended to allow for these student-athletes to capitalize on their NIL rights through a variety of means, including sponsorships, endorsements, appearances, social media marketing and more.  There are still questions being answered, and restrictions being considered, particularly with respect to whether a student-athlete could accept endorsements or sponsorships from companies that may be competitors to those companies that have existing agreements with the universities for which a student-athlete plays.  For instance, a university with a deal with Nike may not be happy if a player were to accept an endorsement deal from Adidas.  However, these issues could be handled in a variety of ways without unduly restricting a student-athlete’s ability to commercialize their NIL rights via other channels.

 

NIL Rights – How Valuable Are They

For top student-athletes, incredibly valuable.  NIL rights are unquestionably lucrative and pairing them with giving the ability for student-athletes to retain professional agents to assist in identifying, making and negotiating deals for them only increases the overall potential for profit.  It has been reported that, “Expert analysis from ESPN estimates that individual student-athletes could earn anywhere from $1,000 to $1 million off of [NIL rights], depending on their sport and college market size.”  However, it seems that this analysis was primarily focused on corporate sponsorships and appearance fees and potentially overlooked other areas in which student-athletes can monetize their positions.

For instance, even though both Clemson’s Trevor Lawrence and Ohio State’s Justin Fields both went pro in the 2021 NFL draft, and might have received lucrative sponsorship and endorsement deals if they were allowed to do so before going pro, if they had simply been allowed the ability to commoditize posts made to their 800,000 Instagram followers (each), that alone could have resulted in millions of dollars in revenue over the course of their college career. In fact, influencer marketing can be an easy way student-athletes can capitalize on changes to rules governing NIL rights.   Top influencers can get paid tens of thousands of dollars for a single post.

Moreover, while the most valuable sports to the NCAA are men’s basketball and football, it is the female student-athletes that garner the most attention on social media networks.  For instance, “8 of the top 10 most followed NCAA Elite 8 basketball players are women.”  And beyond that, many of the student-athletes with the largest followings come from sports other than basketball and football, like Louisiana State University gymnast, Olivia Dunne, who has amassed over 5 million followers across TikTok and Instagram alone.   This gives those student-athletes outside of men’s football and basketball the ability to profit greatly off commercializing their social media platforms, even without all the eyes and ears that broadly televised games in other sports garner.

Opening up the ability for student-athletes to commoditize their NIL rights will not only allow the top athletes in major sports to benefit from sponsorships, endorsements and appearances, it will also give those athletes that have been able to leverage their social media skills the ability to make earn money off of their followings.  In all cases, it is the student-athletes that benefit, and it seems society is poised to open the floodgates and allow this to finally happen.

On top of allowing for all student-athletes to prosper under the new rules, there is a secondary benefit of permitting these young adults to benefit from being represented by those who are best positioned to protect them.  Whether it is a top rated collegiate football star with a likely future in the NFL, or a women’s volleyball star that has garnered a substantial social media following, like Lexi Sun, one of the greatest changes coming is the ability for these student-athletes to hire professional agents and attorneys that can not only find the best fit for commercializing and protecting their NIL rights, but also help protect them from predatory or unscrupulous deals that may impact future potential.  Having access to good counsel is going to be critical for these young athletes to understand their NIL rights, understand the laws and potentially evolving regulations related to such NIL rights, and to protect them now and into the future.

 

NIL – Other Considerations

There is still a lot of questions as to what will actually occur by July 1st, 2021, and how the ultimate rules and changes will be laid down.  One thing is for certain, if the NCAA does make changes allowing for student-athletes to capitalize on their NIL rights, the five states that have currently implemented laws allowing for the same by July 1st will have an immediate advantage in recruiting top talent, followed by those states that have not too distant implementation dates.  States with later implementation dates, like California’s current implementation date of January 1, 2023, are likely to have a harder time convincing top talent that they should forego potentially millions of dollars in NIL right revenues to attend a school in the state.  However, with so much money riding on it and with more and more states quickly jumping in and even Congress getting involved, it is likely that if the NCAA does make the changes it appears they intend to make, that the rest of the country will follow quickly behind.

At this time, it is important to know what each state allows and provides for under its current and proposed laws.  While in the long run the system will likely harmonize, it may take time for some of the states or even the federal government to get there.  In the interim, if commercializing of NIL rights is of importance to a student-athlete, knowing what rules apply and when they go into effect is extremely important, as it will ultimately impact their decision on what university to attend.

Finally, preparing for appropriate representation for these student-athletes is paramount.  Whether it is ensuring the proper professional agents who will find and advise on their options for commercializing their NIL rights are engaged, or the attorneys who ensure that the deals and agreements the student-athlete is agreeing to are appropriate and customary are retained, given the unsettled nature of the rules, it is important to identify these resources early.