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Considerations for Entering Into a Student-Athlete NIL Agreement

Sept. 1, 2021, 8:00 AM

College sports have long been an important facet not only of college life, but of American society in general.

Starting with the popularity of a few college football bowl games and NCAA basketball’s “March Madness” tournaments, and evolving into the weekly ratings bonanza of ESPN’s College GameDay, and networks designed solely to cover sports of the various student athletic conferences across the country, corporations, and the schools themselves, are raking in buckets of cash off the backs of the teenagers and young adults participating in sports.

Simmering below the surface of the televised grand stage has been the debate of whether student athletes should financially share in the fruits of their labor.

For years, the clear answer was no. Prominent college coaches, such as Coach K (Duke University basketball coach Mike Krzyzewski) and Dabo Sweeney (Clemson University football coach) were on record as objecting to the idea of student athletes getting paid for playing.

The NCAA has been equally obstinate to any arguments by or on behalf of students to earn any compensation from playing sports or even for using their own name, image, and likeness (NIL). A series of lawsuits filed against the NCAA litigating whether students should be entitled to financial compensation, starting with O’Bannon v. NCAA, and including several follow-up class action lawsuits, culminated in June 2021 with a Supreme Court decision in NCAA v. Alston.

The Supreme Court unanimously confirmed the lower court’s ruling that the NCAA restrictions on student compensation were in violation of antitrust law. Thus, on July 1, the NCAA implemented a new policy that allowed student athletes from all three divisions to personally benefit by being able to monetize their NIL.

Framework to Avoid Violating NCAA Policies

Before a student athlete jumps to finally capitalize financially on his or her hard work accumulated over the years, it is important to consider that there is still a framework in which to work so that NCAA policies or state law are not violated. The student athlete (or representative of such student athlete) would be wise to first contact the compliance department of his or her respective school.

Many universities have already (or are in the process of) devising clear compliance procedures applicable to student athletes that wish to enter into a NIL Agreement or an agreement with a third-party representative to assist with finding and exploiting NIL opportunities (i.e., an agent).

For example, with respect to agency representation, counsel to the student athlete would want to ensure that any agreement governing such representation is limited solely to representation in the NIL space. The term of any student athlete NIL agreement, including an agency representation agreement, should not be longer than the student athlete’s collegiate career.

Additionally, in California, the student athlete agent must have current public disclosure information on file with the Department of Industrial Relations as required by law. Furthermore, within 72 hours of signing the agency agreement—or before the next athletic event in which the student athlete is eligible to compete (whichever occurs first)—both the student athlete and the agent must inform the athletic director of the respective university that the student athlete has entered into such agency agreement. This same disclosure requirement arises each time a student athlete enters into a new NIL agreement.

The new NIL policy enacted by the NCAA is opening new exciting frontiers in collegiate sports and it will be fascinating to see how the landscape develops. New deals are being announced on a regular basis, for example an interesting deal announced by Brigham Young University in which every one of the 123 members of the football team will have the opportunity to be paid to promote products of a local company that makes protein snacks. Other universities are providing a clear pathway to enable its student athletes to utilize the university’s marks in co-branding sponsorship arrangements.

This is an intriguing and developing area of law. Practitioners should always be mindful of the various governing policy to comply with including respective state law, NCAA procedure, and any respective university regulations applicable to NIL relationships and agreements.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

David McGriff is a solo practitioner practicing sports and entertainment law in Los Angeles. He represents music production companies, musicians, songwriters, and executives. He also represents college athletes during the process of monetizing and protecting their name, image, and likeness.

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