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NCAA’s Move on Athlete Image Rights Raises Enforcement Questions

July 2, 2021, 9:00 AM

A policy change forced upon the NCAA to let student athletes profit from their own images sets up enforcement headaches as the association tries to preserve its core goal of athletic amateurism.

The interim policy lifting a ban on athletes from profiting from their name, image and likeness applied nationwide starting Thursday, the same day the first batch of state laws protecting student athlete rights become effective.

In announcing the policy, the NCAA stressed it would preserve its ban on payment to induce athletes to pick a school or to reward specific performances.

That forces the association to draw a line to separate legitimate endorsement deals from prohibited compensation arrangements designed to look legitimate, attorneys said. But complex rights deals can hinge on several variables, and athletic success that’s not supposed to be directly rewarded is tied directly to the value of an athlete’s image.

The challenges could result in either lax or uneven enforcement of a potentially vast gray area.

“You will have name-image-likeness deals that are actually pay-to-play in disguise,” sports and entertainment attorney Matthew Reece of Manatt Phelps & Phillips LLP said, adding that there “will be a learning curve” for all parties in adapting to the fundamental shift.

The NCAA already had a hard time enforcing its straightforward amateurism rules, said attorney Calli Jo Padilla of Cozen O’Connor PC, who has advised athletes and coaches on NCAA eligibility matters. She suggested it could open the door to changing pay-for-pay bylaws as well, but struggles to imagine the NCAA would actually do it.

“They recognized they weren’t doing much on that front and that it was difficult to do, and turned a blind eye towards most of it” until a case made headlines, Padilla said. “It’s going to be really hard to separate pay-for-play from pay for endorsement, name, image, and likeness. I think they’ve put themselves in a tough spot.”

Endorsement or Inducement?

It will be difficult to distinguish image rights deals from enticement or reward-for-performance if local businesses in a college market offer relatively numerous or generous endorsement deals to local top athletes, intellectual property attorney Jonathan D. Reichman of Hunton Andrews Kurth LLP said.

“I can’t think of any magical way to prevent it that doesn’t interfere directly with the goal of the policy to begin with,” Reichman said. “The idea is to give the players the freedom to exploit.”

Some states require student athlete image deals to be market value, Reece said. Attorneys said there’s plenty of data to assess market rates, but acknowledge evaluating several variables make drawing the right comparison as much art as science. And setting the threshold for when a market deal is improper will be difficult, attorneys said.

Student athletes will be allowed to hire professionals to manage publicity and endorsement rights, but still can’t sign with agents to represent them in sports-related capacities.

While traditional advertising will provide substantial opportunities for top athletes, the burgeoning social media influencer market will also play a huge role, Reece and his Manatt colleague Ned Sherman said.

Sherman, who works on such deals, said they vary, but people with a large enough following can earn six figures to endorse a brand in just a few TikTok videos.

“This is opening the door to a massive new influencer market. That’s probably an under-emphasized story here,” Sherman said. “Yes you’re going to see endorsement deals with shoe companies. But we’re also opening the market to tens of thousands of student athletes who have social media followings.”

Sherman said the deals and federal disclosure rules can be complex, so it will be important for the NCAA and schools to provide some baseline education to help student athletes understand them.

Looking to Congress

The NCAA has long clung to strict amateurism rules as a critical, defining feature despite top-end college sports evolving into a multibillion-dollar industry. But a series of state laws and court losses forced its hand.

A June 21 U.S. Supreme Court ruling against the NCAA over caps on education-related reimbursement to athletes drove home that its rules can be scrutinized under antitrust law, Michael Rueda, the head of U.S. sports and entertainment practice at Withers, said. So they’re leaving policy details to state law, schools and conferences, he said.

“It’s tough for the NCAA. Any rule they see themselves throwing forward could lead to litigation,” Rueda said. “So essentially, they’ve punted.”

The NCAA didn’t respond to requests for comment. In a June 30 press release, NCAA Division II Presidents Council chair Sandra Jordan said “the new policy preserves the fact college sports are not pay-for-play” and “reinforces key principles of fairness and integrity across the NCAA and maintains rules prohibiting improper recruiting inducements.”

The NCAA said it intends to continue working with Congress to adopt federal legislation to override the emerging patchwork of state laws that allow student athletes to be paid. Several bills have been introduced in recent years, but haven’t advanced.

In the meantime, the new policy and the state laws that drove it take effect immediately.

“I think it’s going to be intriguing what student athletes do and how schools respond to this over the summer,” Rueda said. “It’s new, it’s a process. But it’s here, and it’s here to stay.”

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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