On June 12, 2020, Florida Gov. Rick DeSantis signed into law the Intercollegiate Athlete Compensation and Rights Bill which will allow college athletes in the State of Florida to profit from use of their name, image, and likeness (NIL) beginning as early as July 2021. The new Florida law is not the first of its kind in regard to student athletes and NIL compensation. Around two dozen other states have similar bills in various stages of the legislative process. The Florida law is nearly identical to laws already passed in California and Colorado, with one major difference: The Florida law takes effect nearly 18 months earlier.
With an effective date of July 2021, the Florida law adds to the already mounting pressure on the NCAA to change the association’s rules regarding athletes and NIL compensation. The NCAA has already been examining the issue. On April 29, 2020, the NCAA Board of Governors supported proposed rule changes that would allow NCAA student-athletes to be compensated for the use of their NIL. Specifically, the board adopted recommendations contained in a report from the Federal and State Legislation Working Group (LWG), which the board formed in the summer of 2019 to evaluate the potential “modernization” of NCAA amateurism rules for student-athletes. While the specifics of the NCAA rule changes are not yet finalized, the changes will most likely contain several restrictions – or “guardrails” as they are referred to in the LWG report – that limit athletes’ ability to profit from the use of their NIL. Such “guardrails” are intended to preserve the amateur status of NCAA student-athletes and maintain a clear distinction between them and professional athletes. An example of one such guardrail proposed in the LWG report is that student-athletes would be allowed to identify themselves by conference and school but would not be allowed to use the conference’s or school’s logos or trademarks.
As far as the NCAA’s timeline, each of its three divisions is expected to have its own proposed NIL rule changes by October 31, 2020, and to have new NIL rules enacted by January 2021. Those rules are then expected to take effect officially at the start of the 2021-2022 academic year.
Although the Florida law does not contain specific restrictions, such as prohibiting use of a school’s trademark, the law does come with some broad restrictions. For example, any compensation a student athlete receives for the use of their NIL “must be commensurate with market value of the authorized use” of the athlete’s NIL to “preserve the integrity, quality, character, and amateur nature of intercollegiate athletics and to maintain a clear separation between amateur intercollegiate athletics and professional sports.” Compensation cannot be provided “in exchange for athletic performance or attendance at a particular institution,” and compensation may “only be provided by a third party” that is “unaffiliated” with the athlete’s school. Any athletes who enter a contract for use of their NIL must disclose the existence and terms of the contract to their school. And athletes may be prohibited from entering a contract for compensation for the use of their NIL “if a term of the contract conflicts” with any of the school’s contracts.
Additionally, the Florida law prohibits colleges within the state from establishing rules that “unduly restrict” athletes’ ability to earn compensation for the use of their NIL or obtain professional representation by an agent or attorney. It remains to be seen whether such provisions will inhibit the NCAA’s ability to establish and uniformly enforce its own rules regarding the use of NIL of student athletes.
Recognizing this issue, the NCAA is engaging with Congress to take steps toward superseding state-by-state legislation by enacting a federal law that:
- Ensures federal preemption over state NIL laws;
- Protects the NCAA from federal and state antitrust lawsuits targeting the NIL rules;
- Safeguards the nonemployment status of student-athletes;
- Maintains the distinction between college athletes and profession athletes; and
- Upholds the NCAA’s values.
Time is of the essence. The NCAA and Congress now have less than 13 months to enact such legislation if they hope to preempt the Florida law. However, it has not taken long for Congress to respond to the new Florida law.
On June 18, 2020, Sen. Marco Rubio introduced a bill in the U.S. Senate entitled the Fairness in Collegiate Athletics Act (“Fairness Act”). The Fairness Act requires the NCAA to establish policies and rules no later than June 31, 2021, that permit student athletes to earn compensation from use of their NIL. The Fairness Act also requires the NCAA to establish rules “for the administration of the policy” to “preserve the amateur status of student athletes,” to ensure “appropriate recruitment,” and to “prevent illegitimate activity.” Notably, the Fairness Act contains a provision protecting the NCAA and colleges from antitrust lawsuits regarding NIL rules. Specifically, the Fairness Act prohibits causes of action against the NCAA or colleges “for the adoption or enforcement of a policy, rule, or program” established under the act. Additionally, the Fairness Act contains a preemption clause that prohibits any state from adopting or continuing in effect any law related to “permitting or prohibiting” student athletes from receiving compensation from use of their NIL. In accordance with the Fairness Act, enforcement of the NIL rules would fall under the purview of the Federal Trade Commission. However, even with the introduction of the Fairness Act in the Senate, it remains uncertain whether the NCAA and Congress can act quickly enough to push legislation through prior to the Florida Law’s start date.
Other states are likely feeling pressure from the new Florida law as well. Given the Florida law’s start date, colleges in Florida may already be enjoying an advantage in the highly competitive college recruiting market. The prospect of profiting from the use of NIL is likely to be a key selling point in a would-be college athlete’s recruiting process. With the NCAA not set to establish rule changes until at least January 2021, other states may feel the need to act quickly to stay competitive.
Florida was not the first state to enact such legislation, and it will probably not be the last. While the exact rules and practicalities surrounding college athletes and compensation from use of their NIL remain uncertain, one thing is clear: A change is coming and fast.