The National Collegiate Athletic Association (NCAA) historically had an unbalanced relationship with its student athletes. The NCAA made billions of dollars in revenue from the student athletes’ labor, while the athletes received no compensation. However, recent public backlash and pressure from lawsuits forced the NCAA to shift to a new policy that allows student athletes to receive compensation for their name, image, and likeness (NIL), while maintaining their amateur collegiate status under the NCAA policies and rules.
According to the NCAA, NIL is “an activity that involves the use of an individual’s name, image and likeness for commercial or promotional purposes.” The NCAA adopted an interim policy that took effect on July 1, 2021. Now that a year has passed since the implementation of this policy, the NIL situation has become more complicated than just receiving compensation. This article will examine the history of the NCAA compensating its athletes, the intellectual property of NIL, the political ramifications of NIL, and NIL’s impact on high school athletes.
History of NCAA, NIL, and Compensating their Athletes
Early student athletes were compensated for their work. Collegiate athletics in the United States started with boat races between Harvard and Yale at Lake Winnipesaukee in 1852. As sporting events gained more attention, college football began to take the spotlight and become one of the most popular sports in collegiate athletics. Even in the early days, college football produced thousands of dollars in revenue and attracted thousands of spectators. Over time, football became a deadly sport, so universities sought to create new rules. President Theodore Roosevelt held a meeting with the participating universities. They created an organization that became responsible for establishing regulations for collegiate sports (now known as the NCAA), and the new organization changed the rules of football to a safer alternative.
Because of the growing popularity of college football, recruiting athletes became crucial. Universities offered talented athletes many forms of payment. Over time, conflicts arose due to the surge in athletic recruitment compensation. Conflicts ranging from compensation disparities within the team to compensation dependency. In the 1940s, the NCAA established the “Sanity Code,” which limited pay for the student athletes. However, it did allow the students’ tuition to be paid. This code was the driving force behind the idea of amateurism in collegiate athletics. Since then, there have been many additions to the rules regarding compensation and education-based payments for student athletes.
Over the years, the NCAA has faced a lot of litigation regarding compensation of student athletes. One example was the O’Bannon v. NCAA and EA Sports case. At the time, an EA Sports video game used NCAA teams and athletes. However, EA Sports and the NCAA did not ask for permission and did not compensate the athletes for the use of their NIL in the game. This case ruled in favor of O’Bannon and forced the NCAA to address its ability to profit off the student athletes’ NIL without the players receiving anything in return.
Although that case was important, Alston v. NCAA changed the trajectory of NIL in collegiate athletics. Alston v. NCAA was an antitrust disagreement that involved student athletes receiving “in-kind educational payments.” According to the case, the NCAA found these payments problematic and claimed that the collegiate athletic experience was all about “amateurism” and that not receiving compensation is what makes the student athlete experience unique. This did not resonate with the Supreme Court, which in a unanimous ruling found that the NCAA violated antitrust laws. In his concurring opinion, Supreme Court Justice Kavanaugh explicitly recommended that the NCAA reevaluate its compensation laws, or else there could be more issues regarding this subject in the future. Shortly after this ruling, the NCAA announced a new interim NIL policy.
In July 2021, the NCAA began allowing athletes to earn compensation based on NIL. Athletes, businesses, and universities immediately began to partake in this opportunity. Companies like Opendorse and INFLCR have already made strides in helping student athletes land NIL deals. Also, student athletes have begun to use their social media status to attract more sponsorships and NIL deals. In fact, according to a survey of 1,100 Division I athletes, 72% of NIL matters come from social media. This includes content creation and brand promotion. Overall, there is a new world of opportunity for student athletes to make personal brand decisions and earn compensation.
According to Opendorse, Division I athletes in the NCAA made an average of $3,711 per athlete from July 1, 2021, to May 23, 2022. This shows that college athletes can make some serious money from NIL deals. However, how does this affect their scholarship eligibility?
Most student athletes are not on full-ride scholarships. In fact, Opendorse states that only about 57% of Division I athletes earn any financial aid for their education. For many athletes, this money can help pay for their expenses and support themselves without having to take part-time jobs. It also can help them spend less time outside of school and sports for compensation purposes.
This comes at a cost. Those who are on Pell Grants and other need-based aid could be putting themselves at risk of losing their eligibility. Also, the money they are earning is taxable, so this can make personal finance more complicated. This money from NIL has benefits and detriments. The best thing for athletes to do is to stay educated on these matters and truly understand the impact of NIL profits and their eligibility.
NIL from an IP Perspective
It is highly recommended that students begin to incorporate intellectual property (IP) into their NIL ventures just as a professional athlete would. In order for student athletes to gain control over their NIL, they must protect their name, slogans, and logos. This starts with registering for trademarks. In the age of social media, it is important that these student athletes have a say in how their NIL is used, and registering trademarks is a way to help them defend themselves if any troubles arise.
There are potential issues that arise with the introduction of NIL into the world of student athletes, but the main issue involves universities and their IP. Universities must decide whether they will allow students to use the university’s intellectual property. Some universities allow the students to use the university’s intellectual property, but generally, there is some sort of restriction.
Political Perspective of NIL
The NCAA does not have much authority over NIL, so the responsibility is mostly in the hands of the government. In the United States, a lot of the guidelines and rules surrounding NIL are at the state level. When the NIL policy took effect, states began to work toward implementing NIL laws into state legislation. Now, a majority of states have laws that provide guidelines for NIL deals for collegiate athletes. However, there is no federal law that addresses NIL.
In Missouri, college athletes can earn compensation for NIL purposes. However, Missouri took the NIL initiative a step further. Now universities can assist athletes in their NIL activities. Missouri Gov. Mike Parson signed SB718, which allows universities to assist their athletes with NIL matters. Students can consult with an employee at the university to help them with NIL matters, as long as the person is not involved with their compensation negotiations, serving as their agent, or receiving compensation from the student, alongside other rules. These rules add balance to confront potential issues that arise when schools are involved with NIL deals.
There are pros and cons to this new law. The pros are that the colleges can assist their student athletes with personal business ventures and educate them on topics related to NIL. For example, the University of Missouri-Columbia (Mizzou) has created an NIL program that works to assist students with NIL matters. This program includes things like “a Tigers-specific Opendorse marketplace, enhanced educational programming, and the creation of an in-house team to work directly in the NIL space.” It gives students the ability to receive assistance from someone familiar and allows them to use university resources to maximize NIL-related deals. The main con with this new law is that universities may not have the students’ best interest in mind. Saint Louis University and Mizzou were two driving forces behind this law’s passage due to their lobbying efforts. The effort toward passing this law may seem strange, and it may look like the universities were pushing for this law for their own gain. If the universities did lobby for this law for increasing commercial and athletic success, it could put student athletes at risk of being taken advantage of. The real results will reveal themselves when the law takes effect and more data is collected.
Impact of NIL on High School Student-Athletes
High school athletes are in an awkward position in relation to the new NIL policies. Immediately after the NCAA announced the interim NIL policy, people began to raise questions about NIL matters at the high school level. From a political standpoint, this falls directly in the hands of state government, the federal high school athletic governing body, and state high school athletic governing bodies. Some states, such as Texas, do not permit high school student athletes to earn compensation from NIL, while others do. For example, in California, the law allows high school student athletes to earn compensation from NIL matters. Not all states have solidified guidelines on NIL at the high school level, and it is unclear why certain states have banned NIL at the high school level. Overall, high school NIL rules have led to a change in how high school student athletes handle these matters.
High school students can make decisions on what they will do post-graduation and when. Student athletes can choose to attend college, go pro, or pursue other post-graduation opportunities. Because of NIL laws in certain states, it is impossible for the public high school student athletes to sign NIL deals without being a college student or forfeiting their amateur status. In fact, some students forego their high school athletic careers to go to college and partake in NIL matter. For example, Quinn Ewers committed to The Ohio State University as a quarterback. He skipped his senior year and graduated early in order to sign an NIL deal worth over $1 million. Like other student athletes across the nation, he seized the opportunity to grow his personal brand and start his collegiate career early. On the other hand, high school students in states that permit NIL deals plan on going to college while still pursuing NIL deals in high school. For example, sisters Alyssa and Gisele Thompson have signed an NIL deal with Nike due to their success on the youth national soccer teams and social media. These NIL decisions will occur more often as more states decide whether to allow high school students to partake in NIL deals.
There are many potential outcomes of allowing high school students to have authority over their NIL deals. This could be anything ranging from an increasing trend in student athletes transferring to private schools to compensation disparity conflicts within the team. NIL is so new that there is not a lot of public information at the high school level. However, as the idea of high school students engaging in NIL matters becomes more public and more information becomes available, states will be able to move forward with knowledge of the ramifications.
NIL has only become available to student athletes in recent years, yet its impact has been substantial. Many previous student athletes have fought hard to make NIL an option for future student athletes. There has been so much litigation against the NCAA to make NIL as a collegiate athlete possible. State legislatures, high school athletic governing bodies, and universities have the responsibility of finding optimal ways to progress and make the best decisions on how to move forward with NIL matters at the high school and collegiate level.
This generation of student athletes has a new power. They have the opportunity to explore their entrepreneurial skills and grow their personal brand while still being a student. There are many resources available on the legal and corporate ramifications of NIL deals. Now is the time for these athletes to expand on their entrepreneurship skills, and they can do it without having to sacrifice their eligibility in the NCAA. Overall, it is unimaginable how profitable this new industry of NIL deals could be, but a lot of work remains.