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Understanding the Federal NIL Bills

by michelle
Understand the differences between the six federal Name, Image, and Likeness (NIL) legislation that has been proposed.

Federal Name, Image, and Likeness Proposals

The NCAA NIL proposal was tabled due to potential antitrust violations so various Senators and Representatives have developed Name, Image, and Likeness legislation to help guide this new space. It is unlikely that any of these will be passed as is, but potentially one will be revised and/or a new bill will be proposed that incorporates aspects of each. 

Student-Athlete Equity Act

What I Like: This is by far the shortest and simplest bill – essentially adding 34 words to the IRS Code of 1986 on the definition of a qualified amateur sports organization. This would force the NCAA and the institutions to allow athletes to monetize their NIL or risk losing their tax-exempt status. I like that it doesn’t set a precedent for the federal government determining how non-profits run their businesses while still giving new opportunities to the athletes.

What I Don’t Like: While the NCAA would have to act, it leaves the changes 100% in their hands. When the NCAA released their first NIL proposal, it included restrictions that flagged some potential antitrust violations. Also, the verbiage used is a bit vague: “substantially” and “reasonably” leave a lot of room for interpretation by the NCAA.

The Unknowns: How would this change affect amateur sports organizations outside of collegiate athletics?

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Fairness in Collegiate Athletics Act

What I Like: Rubio’s time frame requires the NCAA to change their NIL rules by June 30, 2021 putting it in advance of Florida’s state bill becoming law on July 1. This would ease the complications of institutions in different states having different rules for their athletes.
What I Don’t Like: This bill gives a lot of power to the NCAA and the institutions to control what types of deals an athlete can do and on top of that, gives the NCAA immunity from future lawsuits surrounding their legislative changes. This leaves the door open for the NCAA to continue to take advantage of student athletes without risk of repercussions.
The Unknowns: Who is responsible for determining Fair Value Contracts? This bill states that collegiate athletes must report their contracts to their school and the NCAA to ensure that they are appropriate, but doesn’t specify how “fair value” would be interpreted and by whom. 

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Student-Athlete Level Playing Field Act

What I Like: This bill includes the most discussion around boosters and keeping them out of NIL deals, even going so far as to make it unlawful, with the booster subjected to civil penalties. The issue of boosters using NIL deals as a recruiting enticement is one of the biggest issues that the NCAA is worried about.
What I Don’t Like: While I like the outline of the “Covered Athletic Organization Commission”, I think it needs to be a permanent commission, with potential to amend or renew their responsibilities after every year. Additionally, I think it would be beneficial to require the universities to report their athletes’ NIL deals to this commission so that they can fully understand the space and how it develops.
The Unknowns: Although this bill clearly prohibits boosters from paying collegiate athletes for their NIL, it’s lacking a requirement for reporting of endorsements. How would “Fair Value Contracts” and no booster activity be enforced?

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College Athlete Bill of Rights

What I Like: Booker’s bill includes a plethora of additional benefits to student-athletes outside of their NIL rights. My favorite pieces are guaranteeing a scholarship for a student-athlete until they finish their undergraduate degree, requiring academic course offerings that relate to financial literacy, and setting up a medical trust fund for athletes to access up to five years after they exhaust their eligibility. Also, specifically allowing “group licensing” means EA Sports NCAA Football may return with collegiate football athletes finally getting compensated for the use of their NIL!

What I Don’t Like: While I support everything in this bill, it will cause a major disruption in the NCAA and potentially have dozens of unintended consequences. I think that this will also put a huge strain on athletic departments, and compliance specifically, to adhere to the new rules in the first years. Would a “rolling out” of these rules help alleviate that strain? 

The Unknowns: If the revenue share aspect of the bill passes, how will this affect athletic departments who are using their profits to support other sports in the school? Will we see non-revenue generating sports being cut because of lack of funding? Although the bill specifies that a school can’t cut a team “unless all other options for reducing the expenses of the athletic program, including reducing coach salaries and administrative and facility expenses, are not feasible”, I’m worried.

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Collegiate Athlete and Compensatory Rights Act

What I Like: Wicker’s bill says that institutions “shall provide educational resources to student-athletes with respect to earning covered compensation for the use of the name, image, or likeness of the student-athlete.” While “shall” doesn’t necessarily mean “require”, I think that educating athletes is going to be crucial to a smooth roll-out of NIL law changes.
What I Don’t Like: This bill restricts athletes from monetizing their NIL until they’ve completed 12% of the credits required for graduation. This seems like an unnecessary stipulation and delay to an athlete being able to monetize their NIL. Also, it permits an institution to put limits on how much time athletes spend on NIL deals. Again, this seems unnecessary – if an athlete is attending all athletic and academic requirements, why should a university care how they spend their free time? 

The Unknowns: While the bill prohibits schools from “unduly restricting” athlete’s deals, it also permits schools to nix NIL deals with brands that are “inconsistent with the values of the institution.” Would the school have to publicly declare these “values” or would they be taken on a case by case basis? Requiring public transparency around this may be important in the recruiting process for an athlete.

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College Athlete Economic Freedom Act

What I Like: This is the most athlete-friendly bill and doesn’t put restrictions around how an athlete goes about monetizing their NIL, including group representation and licensing. I also like that it requires that any institutional support to learn how to market their NIL be provided for all athletes, regardless of race, gender, or sport. We’ve already seen some universities only providing NIL education for their profit-generating sports, which, while economical, is not equitable to all athletes.
What I Don’t Like: While I agree that high school athletes should be able to monetize their NIL just as other high school students can, I think including them in an initial bill before fully understanding the landscape and unintended consequences might be a bad idea. I would support including high school students in time after research has been done at the collegiate level.
The Unknowns: This is the only bill that includes Prospective Student-Athletes (PSAs) in their proposal. At what age would a PSA start getting approached by brands? How will junior athletes be protected from boosters and/or “super” fans from incentivizing recruits to attend their college?

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Which bill is your favorite? Do you think more federal NIL bills will be proposed? What other criteria do you wish were addressed in a NIL bill? Comment below!

Disclaimer: I am not a lawyer and all posted blog articles are my opinions and do not provide legal advice.

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