In the months since the Supreme Court released its decision in NCAA v. Alston in June of 2021, we have seen a new market begin to form. This is, specifically, the college-athlete compensation market; more commonly known as “Name, Image, and Likeness” (“NIL”).
Traditionally, the NCAA strictly governed all college-athlete compensation opportunities. However, in tune with the new decentralized NCAA (officially coming in August 2022), the NCAA has played a more hands-off role with player compensation. This freedom allows the market to begin to mold itself without many regulations interfering with its activity.
Overall, this market has proven to be financially impactful for various college athletes. Recently, a new global sports giant has made its way to this market and announced a novel initiative that could enormously impact the college athlete compensation market.
Adidas’ Equity-Driven NIL Network
On March 23, 2022, Adidas, the global sports giant, announced an initiative to turn thousands of college athletes into paid brand ambassadors over the next two years. Specifically, Adidas intends for the industry to reach eligible athletes across 23 sports at the 109 Division I schools who are currently affiliated with Adidas. Id. Overall, it is expected to compensate around 50,000 college athletes. Id.
Adidas will begin this initiative by first extending availability to eligible college athletes at Historically Black Colleges and Universities and Power Five conference partners. Id. Further, Adidas intends to expand its initiative across the remaining Division I schools by April 2023. Id.
The initiative is intended to allow eligible athletes to opt into the program and begin earning compensation on sales that they drive to Adidas’s website and mobile app. Id. In addition, eligible athletes may also be paid for their social media posts. Id.
It does not appear that Adidas has yet released the specifics for “eligible athlete,” nor how much these college athletes can expect to earn. Adidas did, however, announce that there would be no restrictions against these ambassadors from signing with other brands for compensation opportunities. Id.
With Adidas jumping into the player compensation market, it is reasonable to expect rivals like Nike, Under Armour, Jordan, and New Balance will soon follow. It will be interesting to see the differences and subtle nuances between the different networks when the competition begins.
Further, it will be interesting to see if this type of networking will eventually be used as a tool by these companies to penetrate their competitors’ markets. The NCAA does not regulate what type of NIL activity is allowed at specific institutions. This activity has been regulated by state law or the institutions themselves for states without such laws. The standard regulation has been that institutions prohibit student-athletes from marketing competitor’s brands on their respective campuses. For example, if a college football program has an exclusive deal with Nike, then their college football players cannot market rival brands like Adidas while on campus. However, as long as college athletes are not employees of the institution, there is no regulation prohibiting college athletes from privately earning compensation from different brands than their respective colleges and programs. Therefore, this type of networking may eventually be used as a tool by these companies to penetrate their competitors’ markets. Only time will tell.
Overall, this “network concept” could extend beyond just apparel brands, if successful. For example, it would be reasonable to expect Coke, Pepsi, etc., to enter this market. Nonetheless, all types of competition in the market will benefit college athletes—a desirable outcome for all.
President of the Buffalo Sports and Entertainment Law Society. Before law school, I coached college football at the University of Rochester for five seasons. I am excited to take these experiences, along with a legal education to make an impact on the ever-evolving landscape of college athletics. Thanks for reading our posts!