On June 21, 2021, the United States Supreme Court unanimously held that NCAA rules prohibiting most types of compensation for student-athletes’ name, image and likeness (NIL) violate federal antitrust laws in the landmark case National Collegiate Athletic Association v. Alston. Overnight, the long-simmering debate over fair compensation for student-athletes was flipped on its head, creating a range of new possibilities for student-athletes and a potential compliance and regulatory minefield for those athletes and their families, advisors and institutions. Below we provide an overview of the new NIL landscape in North Carolina.
What is NIL?
NIL is the common acronym for Name, Image and Likeness, a bundle of rights also frequently called an individual’s right to publicity. Ordinarily, any person may use his or her NIL for commercial or promotional purposes. Commercial purposes include accepting money in exchange for being featured in advertisements or endorsing products. Promotional purposes include promoting their own public appearances, brands or companies. Previously, the NCAA prohibited student-athletes from profiting off the use of their NIL for commercial and many promotional purposes, forfeiting their rights as a term of signing their scholarship agreements and as a requirement for eligibility for participation in intercollegiate athletics.
What has changed?
Under NCAA v. Alston, student-athletes are permitted to profit off their NIL after July 1, 2021 under the new NCAA Interim Policy on NIL. After that date, if a student-athlete elects to engage in an NIL activity, the student-athlete’s eligibility for intercollegiate athletics will not be impacted by the NCAA requirements. This policy applies to student-athletes who are enrolled (or plan to enroll) at institutions in states with effective NIL laws, and those without. In states with currently effective NIL laws, the NCAA will not advise or monitor student-athletes’ compliance with those laws or with institutional requirements. Compliance and enforcement of state and institutional rules and regulations will be left to the states and individual institutions. Institutions will be obligated to report potential violations of the NCAA interim rules or other NCAA rules, including pay-for-play and impermissible inducement rules.
Student-athletes and their advisors should remain aware of the key rules and prohibitions the NCAA continues to place on NIL activities under the interim policy. These include:
- Requirement that any compensation related to an NIL agreement be for work actually performed, or in other words, no NIL compensation without quid pro quo
- Prohibition of any NIL compensation contingent upon initial or continued enrollment at a particular institution
- Prohibition on NIL compensation contingent on specific athletic performance or achievement, such as points scored or yards run (but athletic performance may enhance overall NIL value)
- Prohibition on benefits or NIL compensation that are inconsistent with state or institutional policies
Who is eligible to profit from NIL?
Both current and prospective intercollegiate student-athletes may take part in NIL opportunities without affecting their NCAA eligibility. High school and other amateur governing bodies may still prohibit member student-athletes from profiting from their NIL as part of their eligibility requirements. It is also important to note that the NCAA will allow states or individual institutions to prohibit student-athletes enrolled at institutions in those states from profiting from their NIL. If a student-athlete is under 18 years of age, additional requirements must be met to comply with North Carolina law for contracts with minors athletes, including approval of any agency or NIL contract by a court of competent jurisdiction and the set-aside of a percentage of any profits in trust for the minor once he or she reaches majority.
What are the specific rules for North Carolina student-athletes?
North Carolina, unlike many other states, has not yet enacted a NIL law. In response to the enactment of the NCAA Interim Policy and NCAA v. Alston, North Carolina Governor Roy Cooper issued Executive Order No. 223, Postsecondary Educational Institutions’ Responsibilities Regarding Name, Image, and Likeness Compensation of Student-Athletes on July 2, 2021. The order largely mirrors the Interim Policy enacted by the NCAA, directing North Carolina institutions that student-athletes are prohibited from receiving any NIL contracts or compensation as a direct inducement to enroll or continue enrollment at a specific institution or participating in an intercollegiate sport, and prohibiting post-secondary institutions from compensating student-athletes directly for their NIL. The order also allows student-athletes to contract with an athlete agent to represent them in negotiation or solicitation of NIL contracts, subject to the North Carolina Uniform Athlete Agent Act.
Additionally, Governor Cooper specifically enabled, but did not require, individual post-secondary institutions to impose the following regulations:
- Prohibition of student-athletes from receiving compensation or entering agreements for use of NIL if the arrangements conflict with any contract of the institution
- Prohibition of student-athletes from receiving compensation for use of NIL from any supporting organizations of the institution, including those wholly or partially owned or controlled by the institution, such as booster clubs
- Imposition of reasonable limitations or exclusions on categories of products or brands a student-athlete may receive compensation for endorsing or entering into agreements for use of NIL if the institution reasonably determines the category or brand is antithetical to the values of the institution
- Limitation on compensation regarding NIL during official team activities or institution-sponsored events
- Imposition of procedures for ascertaining that a student-athlete’s NIL use is commensurate with fair market value
- Limitation on compensation for NIL from involving any of the institution’s intellectual property, facilities, equipment, or gear, including names, logos, and insignias
- Imposition of reasonable rules and regulations regarding reporting and disclosure requirements for any NIL arrangements made by a student-athlete
- Creation of financial literacy and life-skill programs for student-athletes engaged in NIL activities
North Carolina colleges and universities have taken the Governor’s recommendations and created a diverse set of policies. Below we examine the policies that UNC, NC State, and Duke have enacted as examples of those being considered by the many collegiate institutions across the state, but it is important to keep in mind that each institution’s policies may differ.
The University of North Carolina at Chapel Hill created the LAUNCH program to teach student-athletes how to build a personal brand, hired Altius Sports Partners to act in a strategic guidance role, will use COMPASS to help with compliance management and track NIL activities, and will expand its use of INFLCR, which provides software to help student-athletes cultivate their social media channels. Altius Sports Partners will provide strategic guidance to student-athletes and connect athletes with North Carolina certified agents. COMPASS is an integrated compliance app that provides education to student-athletes on compliance requirements and obligations, as well as best practices. Student-athletes will be required to report their NIL activity through COMPASS, which UNC will use as a review process to ensure NIL opportunities do not conflict with other UNC contracts or institutional values.
North Carolina State University has created the ALPHA NIL program to provide guidance and support to student-athletes exploring NIL deals. The program partners with INFLCR to help student-athletes build personal brands, manage their social media, and track NIL arrangements at an institutional level, also providing a suite of financial literacy and decision-making, and entrepreneurship educational content. NC State has not publicly released any specific rules or guidelines beyond the NCAA Interim Policy and Governor Cooper’s Executive Order.
Compared with NC State and UNC, Duke University has created a more comprehensive NIL policy, with specific rules and guidelines beyond those required by the NCAA and state law. Specifically, Duke requires compliance with any state or federal NIL laws and the NCAA Interim Policy, prohibits any NIL activity that conflicts with a term of a Duke University contract, disallows NIL activity related to gambling or performance-enhancing supplements on the NCAA’s banned drug list, prohibits NIL activity during any department or team related activities, including team meals and practices, requires specific approval for use of Duke’s name, symbols, logos, trademarks, facilities, or images, and requires all NIL activities be disclosed to Duke. Duke also allows student-athletes to be represented by an athlete-agent, attorney, or financial advisor, but the representative must follow the NC Uniform Athlete Agent Act and register with Duke University.
Are there reporting or notice requirements to schools or the NCAA?
The NCAA does not require reporting for NIL compensation but does allow states or institutions to enact reporting policies and guidelines. North Carolina, through Executive Order No. 223, has left reporting and disclosure requirements up to individual institutions. UNC will require student-athletes to report and track NIL activity through the COMPASS compliance app to ensure the school can review any agreements for conflicts with its own contracts and policies. NC State has not outlined any reporting or disclosure requirements. Duke will require student-athletes to report any agent relationships and disclose each NIL activity but has not yet detailed how athletes will report.
May athletes work with agents and attorneys?
Student-athletes are permitted by the NCAA Interim Policy and state law to work with a professional service provider, including an attorney or athlete agent. Governor Cooper’s Executive Order similarly allows student-athletes to engage professional representation in the form of an agent or attorney, but any person representing a student-athlete must follow both the North Carolina Uniform Athlete Agent Act and North Carolina law on contracts with minors, if applicable. The Uniform Athlete Agent Act requires student-athletes and athlete agents to inform an institution within seventy-two hours of entering an agency contract with any enrolled student-athlete. The Act also contains other requirements that attorneys and agents should keep in mind when undertaking representation of a student-athlete for NIL purposes.