Franchises Have NIL Questions . . . We Have (Some) Answers

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Starting on July 1, 2021. the NCAA permitted student-athletes throughout the country to profit from their name, image, and likeness (“NIL”). This decision marks a major shift from the NCAA’s longstanding amateurism model.  Twenty-eight states have also enacted their own NIL laws, and sixteen of those—including Alabama, Florida, Georgia, Mississippi, New Mexico, Texas, Kentucky, Ohio, Oregon, Pennsylvania and Illinois—have signed NIL legislation to take effect in 2021 alone.

Neither the NCAA nor the federal government have addressed NIL laws, which has made for a fragmented model that varies from state to state.  For example, Georgia’s NIL law allows for team pooling arrangements whereby student athletes who receive compensation for the use of their name, image, or likeness agree to contribute a portion of the compensation they receive to a fund for the benefit of other student-athletes.  Mississippi’s NIL law even authorizes student-athletes to hire agents to negotiate marketing opportunities.

Some student-athletes have already started taking advantage of this seismic shift in college sports.  University of Wisconsin quarterback Graham Mertz recently tweeted a video of his new trademark, and University of Iowa basketball player Jordan Bohannon has a deal with a local fireworks company Boomin Iowa Fireworks. And, when you get to college football royalty like Alabama? Well, Alabama QB Bryce Young has already obtained about $1 million in endorsement deals, according to his coach Nick Saban.

Meanwhile, boosters want a piece of the action as well. Dan Lambert, the owner of prominent MMA training facilities and a huge University of Miami football fan, has offered to pay every athlete on the ‘Canes roster $500 per month this year to promote his chain of gyms on social media. Lambert has also reportedly founded a company that will raise money from local Miami-area businesses to pay athletes who endorse them.

It will be interesting to see how NIL laws change the college landscape.  Recruiting is one of many areas where NIL laws may have an effect.  For example, a highly touted prospect with endorsements deals on the horizon might be swayed from School A to School B if School B is in a state with a less restrictive NIL law.  It will also be interesting to see how colleges and universities respond to their student-athletes’ outside endorsements.  What if a student-athlete signs a contract that conflicts with the school’s pre-existing sponsors or university codes of conduct? For example, BYU has already adopted a rule that bans athletes from endorsing a product that violates its honor code which, in the case of BYU, means not just alcohol but coffee is off limits.

Still interesting in having your franchise system or franchisees get a piece of the action, so-to-speak? Compliance with myriad NCAA and state rules respecting NIL should be carefully considered, as certain moves retain the risk of disqualifying athletes and teams–something no booster who bleeds blue (or red, or green or . . . well, you get the idea) wants to cause.  That said, navigating NIL rules laws may present some obstacles, but has the potential to be a high-reward endeavor.  And it might very well add a unique layer of intrigue and drama to college sports this season.

(Parts of this post previously appeared on the Fox Rothschild Above the Fold blog.)

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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