Georgia Legislation Brings New Approach to State NIL Laws

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In early May, Georgia Governor Brian Kemp signed into law House Bill 617 on name, image and likeness (NIL) law.  The Georgia law which governs compensation that student-athletes will be eligible to receive for commercialization of their NIL takes effect simultaneous to laws passed by several other states on July 1, but it contains a few unique wrinkles not yet adopted by other states.  The new Georgia law provides an option for colleges and universities to require (or permit?) their student-athletes to share up to 75% of compensation related to use of their NIL – compensation of this type would include sponsorships, endorsements, social media marketing revenues, and more.  A model of this type had been previously proposed by Senator Corey Booker and other congressional representatives on the Federal level.  An additional aspect of the Georgia law is that colleges can mandate up to 5 hours of required financial literacy and life skills during the student-athletes first and third years on campus, to educate them in areas such as budgeting, debt, financial aid and other life skills. This aspect of the bill focusing on a holistic commitment to the flourishing of student-athletes by equipping them with knowledge for today’s marketplace and for life after sports, has been celebrated by many.

It will be within the discretion of each Georgia school as to whether any sort of revenue sharing arrangement is enacted.  However, if this type of arrangement is put into place, it will be styled in the form of an escrow or monetary pool, with the school’s athletic director to be the trustee of such account.  Student-athletes would be eligible to receive amounts from the shared pool beginning one year after the student has graduated or left the school for pro-rata portions of funded contributions based upon the number of months the individual was a student-athlete at the school.

What impact could this have on the high stakes world of college football and basketball recruiting? Schools will no doubt need to consider the potential impact on recruiting that a pooling arrangement allowed for by the bill may have.  If star recruits-who would presumably be ceding revenue generated by their NIL to other athletes that were not capable of generating as much NIL revenue in a pooling arrangement- or were faced with the prospect of going to a different school where that was not the case, then  the potential economic implications and impact on the recruiting landscape could be significant for these highly touted prospects.  In such a competitive environment, the University of Georgia and Georgia Tech – the two most important teams to the college football world so far potentially implicated by this bill –  recently expressed that neither planned to enact such a revenue-sharing model, which is hardly surprising given the negative recruiting pitch that this would allow for against the schools.

Since the unique aspects of this bill are not mandatory, it will be interesting to see how things develop as Georgia schools assess how they plan incorporate the components of HB 617 into their respective NIL regimes.  Stay tuned for future blog updates in the area NIL legislation, including a forthcoming look at proposed federal legislation that would permit student-athletes to unionize.

Winstead continues to monitor legislative updates surrounding NIL.

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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