The NCAA announced it is starting the process to allow student-athletes to benefit off their name, image, and likeness. The move comes after multiple states introduced legislation permitting student-athletes to earn this form of compensation.

Previously, we reported California Gov. Gavin Newsom signed into law the Fair Pay to Play Act. The law will take effect January 1, 2023 and will allow student-athletes to enter into endorsement deals. Since Gov. Newsom signed the California bill, multiple states introduced legislation, including New York. The move by the states may have pressured the NCAA to act.

One pillar of the NCAA’s disagreement with California’s Fair Pay to Play Act is that the law will give specific schools an “unfair recruiting advantage.” Pac-12 Conference Commissioner Larry Scott agrees with the NCAA.

The unanimous vote by the NCAA Board of Governors will allow student-athletes “the opportunity to benefit from the use of their name, image and likeness in a manner consistent with the collegiate model.” Although the board paved the way for student-athletes to receive these benefits, any future rule changes will be guided by a set of principles and guidelines the NCAA released with the announcement. Notably, the guidelines include making clear that “compensation for athletics performance or participation is impermissible;” reaffirming that “student-athletes are students first,” and protecting “the recruiting environment [in a way that will] prohibit [student-athlete targeted] inducements to select, remain at, or transfer to a specific institution.”

The NCAA Board’s working group will continue to gather information and feedback in an effort to respond to the state and federal legislative action that has recently taken place. In addition, the NCAA will use the information to create rules and regulations regarding student-athlete benefits. In addition, the NCAA Board asked the three NCAA divisions to begin creating rules, or models, for student-athletes to benefit from the use of their name, image, and likeness in each of their respective divisions. The goal is to have rules in place by January 2021.

This move by the NCAA comes amidst a wave of states introducing or passing legislation that will allow student-athletes, in those states, to receive compensation. Currently, student-athletes are prohibited from using, or trading, their name, image, and likeness for benefits or compensation. Some view the prohibition as a violation of the Sherman Act because it is a restraint on trade. Under the Sherman Act, it is illegal to engage in “contract . . . or conspiracy, in the restraint of trade or commerce among the several States . . . .”

The NCAA’s announcement received mixed reactions from various parties, including athletes, athletic associations and politicians.

Following the NCAA’s announcement, NBA superstar and Los Angeles Laker LeBron James tweeted that it is “a beautiful day for all college athletes going forward from this day on!”

The National College Players Association (NCPA) advocacy group tweeted that the NCAA’s recent move is “[a]nother stall tactic” because the NCAA Board’s “[unanimous] vote authorizes ‘benefits’ not compensation.”

California State Sen. Nancy Skinner, who championed California’s Fair Pay to Play Act, said that while she is “encouraged by the [NCAA Board of Governors] vote today . . . the devil’s in the details.”

The NCPA and Sen. Skinner may be correct in their reactions. Take note that the NCAA announcement does not mention student-athletes will profit, but that they will “benefit” from the use of their name, image, and likeness in line with a “collegiate model.” Currently, the collegiate model does not authorize student-athletes to receive any monetary payments.

A minor, but noteworthy, issue that looms is whether student-athletes should be taxed for compensation received as a result of using their name, image, and likeness. U.S. Sen. Richard Burr believes that “athletes who choose to ‘cash in’” should have their “scholarships treated like income.” He plans to introduce legislation targeting those athletes who choose to “cash in.” However, that brings a host of issues, including whether the athletes will be considered employees of their respective institutions. If so, will they be eligible for workers’ compensation, healthcare, 401k retirement plans, etc.

Depending on the extent the final rules will allow monetary compensation, there exist a host of issues that may be subject to future litigation. This is an area of policy that we will continue to monitor.