NIL: Not [necessarily] Incorporated in Legislation. What Student-Athletes Should Know.

This four-part series will provide recommendations for the participants in the Name, Image, and Likeness Market. Please be on the look out for:

• Part (II) – Best Practice Suggestions for Athletic Departments Navigating the NIL Market;
• Part (III) – Suggestions for Prospective Student-Athletes on Balancing NIL Opportunities while Being Recruited
• Part (IV) – Evaluating How NIL Legislation Applies to International Student-Athletes

Primary Purpose

By now, many have heard that a new market has been introduced to the American economy. Specifically, the student-athlete Name, Image, and Likeness market (“NIL”).  This article was written with the intention of providing thought-provoking suggestions to assist in navigating this market safely. The suggestions below apply to current student-athletes who compete under the NCAA (Division I, II, and III). Furthermore, each suggestion has been written with two underlying goals: Student-athlete safety and eligibility.

A Little Background to Set the Stage

As the sole entity governing collegiate athletics, the National Collegiate Athletic Association (“NCAA”) has consistently provided the governing structure for all things related to college athletics, including student-athlete compensation. Since its development in 1906, 1,268 schools and institutions across all 50 states have joined the NCAA to compete in collegiate athletics. By agreeing to become members of the NCAA, these schools and institutions agree to be governed by the bylaws set forth by the NCAA. More specifically, Bylaw 12 has governed the status of student-athletes participating in the NCAA by assuring that each student-athlete remain an “amateur” athlete. To remain an “amateur” athlete under Bylaw 12, student-athletes could not use their athletic-related skills, including NIL, to earn any type of financial compensation. Those student-athletes who did not abide by Bylaw 12 were stripped of their “amateur” status and thus not eligible to compete in collegiate athletics for their respective institutions. 

However, following the unanimous decision from the Supreme Court of the United States in NCAA v. Alston, the NCAA changed its stance on disallowing compensation for student-athletes’ NIL. More specifically, on June 21, 2021, the Supreme Court upheld a ruling from the U.S. Court of Appeals for the Ninth Circuit that struck down NCAA limits on student-athlete academic benefits on antitrust grounds. After the Alston decision, the NCAA could no longer rely on an anti-trust exemption, and thus could no longer prohibit student-athletes from receiving compensation from their NIL. The NCAA then subsequently eliminated any language in Bylaw 12 that prohibited student-athletes from earning compensation for academic benefits, including NIL. Therefore, a market for student-athletes’ NIL has been introduced.

An economy is best understood through the laws that govern it. Unfortunately, there are no consistent laws governing the student-athlete NIL market. Any regulations governing student-athletes traditionally would come from the NCAA. However, following the Alston v. NCAA, the NCAA has taken a hands-off approach to govern the student-athletes NIL market. After eliminating Bylaw 12 restrictions, the NCAA implemented only an interim policy for student-athlete NIL. Under this interim policy, to remain eligible to participate in college athletics, student-athletes are now required to follow state law or school policy. More specifically, student-athletes must abide by state law if the state where they attend school has enacted legislation. By contrast, if their school’s state has not enacted any NIL legislation, then student-athletes must abide by their school’s specific NIL policy.

To complicate matters more, not all states have enacted NIL legislation. Currently, 23 states have passed such legislation, 17 states have pending legislation, and 10 states have remained silent on the issue. Furthermore, Congress has not enacted any federal law to govern the NIL market. Therefore, to remain eligible to participate in college athletics, student-athletes are subject to properly interpreting various state laws and school policies while entering their NIL agreements.

Ultimately, student-athletes are at risk with so much unknown and inconsistency amongst the states. Below is a list of thought-provoking suggestions intended to help current student-athletes navigate the NIL market. Remember, the most important concerns in the unstable NIL market are student-athletes’ safety and eligibility.

5 Recommendations for Current Student-Athletes

1. Identify the state(s) that are relevant to you.
   • To be safe, identify the policies for (i) the state you live in and (ii) the state in which you attend school.
     • With no single governing body, and varying state legislation, it is important to understand what state legislation (or school policy) applies to you. *Please see chart below with up-to-date legislation*
       • States and schools may differ on specifics, for example, certification for legal representation, or required communication for NIL agreements, etc.
   • Identify whether your state, or school, requires your legal representation be licensed to practice law in a specific state.
2. Pursue legal representation.
   • Legal representation can help with the following:
     • Assist in interpreting the spider web that is the various NIL legislations and school policies and WHAT APPLIES TO YOU.
     • Assist in negotiations with your NIL agreements.
       • NIL agreements are legal contracts and therefore you are bound to abide by its terms. An individual who is experienced in reviewing contracts can help you understand:
         • Your responsibilities
           • Including location and time expectations of your responsibilities
         • The other party’s responsibilities
         • Basic Terms
           • Compensation, length, and any applicable termination clause
         • Pay-for-Play Limitations
           • NIL agreements cannot have compensation that is contingent upon enrollment at a specific college or university
         • Intellectual Property
           • Assist trademarks, copyrights, and rights to publicity
             • Student-athletes should be as proactive as possible when registering for protection for intellectual property because registrations take time and you do not want to start handing your brands away.
         • Exclusivity Rights
           • Businesses will seek exclusivity
             • This may limit your ability to sign other NIL deals and
             • May conflict with your school’s exclusive partnerships
         • Usage Rights
           • Assist in setting terms that specifically define the length and limitations a company may have with your NIL rights
     • Sadly, there are such things as bad contracts.
       • Lawyers and agents can help identify bad contracts. For example:
         • Perpetual terms
         • Terms extending beyond eligibility of student-athlete
         • Terms that greatly compensate the non-student-athlete side
         • Agreements with prohibited entities
           • i.e.: drugs, alcohol, sex, gambling (this will vary by state)
3. Identify the chain of communication and expectations of your school.
   • Some state legislations and school policies require communication between the student-athlete and their respective school.
     • Reporting timeline (must report before or after signing NIL deal)
     • Identify the brands pursuing you to assure no conflict with your institution
     • Identify the brands pursuing you to assure no conflict with prohibited brands (i.e. drugs, alcohol, sex, gambling etc.)
4. Be in control of the communication between yourself and perspective NIL companies.
   • Companies seeking to use student-athletes’ brands have been initiating contact in various ways. Be excited about these opportunities, but take a step back before communicating anything with them. Do not freely provide:
     • Personal information (name, date of birth, address, photos, etc.)
     • Financial information (checking account, credit-cards, etc.)
     • School information (transcripts, addresses, etc.)
     • Personal brand (videos, photos, etc.)
5. Some of your money from these NIL deals will go elsewhere.
   • Taxes
     • Once you receive money or anything in return for your NIL (i.e., merchandise), you are required to provide that information as you file your taxes.
       • If you receive compensation in multiple states, you are required to file taxes for those states
     • You potentially may also have to file estimated taxes as self-employed individual.
     • If you are selling anything on your own (example: t-shirts), you will probably need to pay sales tax on those sales in the appropriate jurisdictions.
   • Agents and Lawyers
     • Agents and lawyers will require a fee for their work.
       • Understand that fee and how much you are required to pay

Applicable Legislation

State	Official Bill Name (LINK)	Current Legislation Status	Effective Date
Alabama	HB 404	Signed into Law	7/1/2021
Arizona	SB 1296	Signed into Law	7/23/2021
Arkansas	HB 1671	Signed into Law	1/1/2022
California	SB 206 and SB 26	Signed into Law	9/1/2021 (moved up from 1/1/2023)
Colorado	SB 20-123	Signed into law	7/1/2021 (moved up from 1/1/2023)
Connecticut	HB 6402	Now recognized as a Public Act since 15 days have passed since the Senate approved it	9/1/2021
Florida	SB 646	Signed into law	7/1/2021
Georgia	HB 617	Signed into law	7/1/2021
Hawai’i	SB 2673	Bill introduced	Upon approval
Illinois	SB 2338	Signed into law	7/1/2021
Iowa	SF 245	Bill introduced	7/1/2021
Kansas	HB 2264	Passed House	1/2/2022
Kentucky	EXECUTIVE ORDER	Governor issued executive order 6/24/21	7/1/2021
Louisiana	SB 60	Signed into law	7/1/2021
Maryland	HB 125	Signed into law	7/1/2023
Massachusetts	S 2454	Bill introduced	1/1/2022
Michigan	HB 5217	Signed into law	12/31/2022
Minnesota	HB 3329	Bill introduced	1/1/2023
Mississippi	SB2313	Signed into law	7/1/2021
Missouri	HB 297	Signed into law	8/28/2021
Montana	SB 248	Signed into law	6/1/2023
Nebraska	LB 962	Signed into law	Immediately, but no later than 7/1/2023
Nevada	AB 254	Signed into law	1/1/2022
New Hampshire	HB 1505	Bill introduced	N/A
New Jersey	S 971	Signed into law	5th academic year after passage
New Mexico	SB 94	Signed into law	7/1/2021
New York	SB 5891-C	Bill introduced	1/1/2023
North Carolina	SB 324	Bill introduced	1/1/2023
Ohio	SB 187	Governor signed an executive order 6/28/21; also included in state budget (House Bill 110)	7/1/2021
Oklahoma	HB 1994	Signed into law	Immediately, but no later than July 1, 2023
Oregon	SB 5	Signed into law	7/1/2021
Pennslyvania	HB 1909	NIL language included in state budget proposal	Immediately
Rhode Island	HB 7806	Bill introduced	1/1/2021
South Carolina	SB 935	Signed into law; Attorney General moved up start date from 7/1/22 to 7/1/21	7/1/2021
Tennessee	HB 1351	Signed into law	1/1/2022
Texas	SB 1385	Signed into law	7/1/2021
Vermont	S.328	Bill introduced	1/1/2023
Virginia	HB 7001	Governor added NIL provision in budget proposal as of 8/3/21	Immediately
Washington	HB 1084	Bill introduced	1/1/2023
West Virginia	HB 2583	Bill introduced	N/A
Wisconsin	N/A	No bill proposed, but politicians say they are considering and drafting a bill	N/A

States without Legislation (Pending or Enacted)

Alaska

Delaware

Idaho

Indiana

Iowa

Maine

North Dakota

South Dakota

Utah

Helpful Websites to Track NIL Legislation and Policies

To track applicable legislation follow: https://businessofcollegesports.com/tracker-name-image-and-likeness-legislation-by-state/

To track NIL policies by Institutions:  https://businessofcollegesports.com/tracker-nil-policies-by-institution/