Bloomberg Law
March 14, 2019, 8:38 PM

NCAA Tax Status Tied to Athletes’ Image Rights Under New Bill

Kyle Jahner
Kyle Jahner
IP Reporter

The National Collegiate Athletic Association would lose its tax-exempt status if it continues its practice of prohibiting student athletes from controlling or profiting from their own images.

The Student-Athlete Equity Act (H.R. 1804), introduced March 14 by U.S. Rep. Mark Walker (R-N.C.) and co-sponsored by Rep. Cedric Richmond (D-La.), would amend part of the income tax code exempting “qualified amateur sports organizations” that conduct or develop talent for national and international competition. It would strip the NCAA of tax-exempt status if it “substantially restricts” an athlete’s use or profit from his own name, image or likeness.

It also could force the NCAA to fork over hundreds of millions in tax dollars if it doesn’t lift its publicity rights restrictions.

The legislation is aimed at disrupting the NCAA’s practice of forcing student athletes to surrender publicity rights in order to participate as amateurs, while the association profits, a spokesman for Walker said. The NCAA earns roughly $1 billion annually in TV rights to its men’s basketball tournament alone in a deal that runs until 2032. It has faced numerous lawsuits from former and current players along with public criticism on a variety of fronts over their amateurism rules.

“We think NCAA knows how to fix the model, and this approach can,” Walker spokesman Jack Minor told Bloomberg Law. “They just don’t have the motivation to do it.”

The change wouldn’t cost the NCAA “a single dollar,” Walker said in a March 7 statement announcing his intent to introduce the bill. The 34-word addition to the tax code intentionally gives the NCAA flexibility to decide how to implement changes to become compliant, he said.

The NCAA didn’t immediately respond to a request for comment. The association has argued in court that fans would balk at watching if players were paid, and said changing the system would create unfair competition among schools.

It’s Complicated

The bill’s chances are far from certain, though Minor said it has bipartisan support and is on track to pick up additional sponsors.

Still, he acknowledged that some ways of allowing athletes to profit—by appearing in local commercials, for example—would lead to corruption, as boosters would funnel money to athletes to reward their choice of schools. But he said a variety of recent scandals of under-the-table payments—including an FBI investigation involving college basketball—to suggest “the corruption is happening now.” He said the NCAA could still prohibit athletes from taking booster money, or put the money in escrow until their eligibility ended.

He also said giving the players rights would help them develop entrepreneurial, marketing and accounting skills, and that players other than big stars would benefit.

But Jeremy Sheff, director of the intellectual property law center at St. John’s University, said the bill’s language barring “substantially” restricting athletes’ publicity-earning power makes the NCAA’s obligations unclear. The bill doesn’t address complexities that could hinder compliance, such as the disparate state laws governing athletes’ newly conferred rights of publicity, he said.

Sheff also noted that athletes in professional sports leagues generally negotiate publicity rights for their in-game images collectively. Student athletes would either have to unionize to negotiate terms or individually accept terms, which could lead to dramatically unequal bargaining power. Distribution of such revenue, disproportionately generated by men’s sports, also could face complications in Title IX, the federal law prohibits gender discrimination in any program receiving federal funding, he added.

“It’s very complicated, and it doesn’t appear that level of complexity is contemplated by the bill,” Sheff said. “I get the impetus for this bill. It’s really a crime that these student athletes are employees prohibited for being compensated for their labor. But it’s not clear to me that saying, ‘Allow them to get endorsement deals,’ is a useful way of going about it.”

Minor said those issues would be up to the NCAA and the courts to resolve, noting recent litigation involving efforts to unionize student athletes and invalidate pay restrictions. He also said a system letting athletes collectively bargain with the NCAA is precisely the goal.

“Getting them in line with every other sports league is exactly what we want to do,” Minor said.

To contact the reporter on this story: Kyle Jahner in Washington at

To contact the editor responsible for this story: Keith Perine at