There has been a flurry of activity in the name, image, likeness (“NIL”) arena over the past several months. We previously discussed the NCAA’s about-face decision to permit student-athlete compensation, as well as related ongoing state and federal efforts, here, and the NCAA NIL Working Group’s recommendations here. Recently, the NCAA’s formal approval of its proposed rule permitting NIL compensation for certain endeavors by student-athletes was stymied by a January 8, 2021 letter from the Antitrust Division of the U.S. Department of Justice. In the letter, then Assistant Attorney General Makan Delrahim cautioned that the NCAA’s planned approach to regulate NIL “may raise concerns under the antitrust laws.” The following day, in a responsive letter obtained by the New York Times, NCAA President Emmert reportedly wrote: “We believe, as courts have regularly held, that our current amateurism and other rules are indeed fully compliant” with federal antitrust law. Notwithstanding that confidence, Emmert also reported to the Justice Department that he had “strongly recommended” that the NIL vote be postponed. As a result, the vote was tabled on Monday, January 11. But, the NCAA’s Division I Council put out a resolution stating that “it is committed to modernizing its [NIL] rules.” Summarizing the state of play, the NCAA noted in a news release that the “Board of Governors directed each division to change name, image and likeness rules by January 2021, but judicial, political and enforcement issues and a subsequent recommendation from NCAA President Mark Emmert influenced [the no-vote] decision.”
In addition to the NCAA’s decision to delay its vote on its proposed NIL rule, the United States Supreme Court recently granted certiorari in Alston v. NCAA, a case relating to student-athlete compensation, albeit in a different context than NIL. This alert addresses: (1) legislation the NCAA proposed to Congress, which is separate and apart from the NCAA’s own, and now-tabled, NIL rule; (2) certain federal and state NIL efforts to date; and (3) the collision of antitrust law and college athletics to be addressed by the United States Supreme Court in Alston.
The NCAA’s Proposed Legislation
At the end of July 2020, the NCAA presented Congress with a summary of proposed NIL legislation, titled “The Intercollegiate Amateur Sports Act of 2020.” The NCAA boldly asked Congress to step in and pass legislation that would benefit the NCAA. The proposed legislation includes: (1) antitrust protection; (2) preemption over state NIL laws; and (3) power to craft all rules on student-athlete compensation, among other things. Notably, the January 8, 2021 letter sent from then Assistant Attorney General Delrahim to NCAA President Emmert reportedly addressed the NCAA’s posturing for Congressional antitrust protection: “While the Division expresses no views on the need for any such legislation . . . should Congress deem such legislative immunity necessary we would anticipate it will be the narrowest possible immunity and one that would contemplate a collective representation of college athletes’ rights as a condition of any such immunity.”
Federal and State NIL Updates
There have been several efforts at the federal level to pass NIL legislation. The proposals run a broad spectrum: some closely track the NCAA’s proposed legislation, while others exclude certain key provisions for which the NCAA has advocated.
- First, as previously reported by the authors, Representative Mark Walker (R-NC) proposed the “Student-Athlete Equity Act,” which would amend the Internal Revenue Code to condition the NCAA’s status as a tax-exempt, non-profit organization on the NCAA permitting student-athletes to receive compensation. Support for the Act remains uncertain as there has been no activity since the bill was introduced in the House and referred to the Committee on Ways and Means on March 14, 2019, and Walker’s term concluded on January 3, 2021.
- Second, Senator Marco Rubio (R-FL) introduced an NIL bill titled the “Fairness in Collegiate Athletics Act,” on June 18, 2020, with a proposed effective date of June 30, 2021. The bill’s purpose is “[t]o ensure that college athletes, and not institutions of higher education, are able to profit from their name, image, and likeness, and for other purposes.” Senator Rubio’s bill, which includes a preemption clause, has been criticized as favoring the NCAA over student-athletes, due largely in part to (1) the deference it gives to the NCAA, rather than student-athletes, to determine the extent of NIL rights, and (2) the antitrust protection it provides to the NCAA. This bill was referred to the Committee on Commerce, Science, and Transportation the day it was introduced.
- Third, a bipartisan bill was co-introduced by Representatives Anthony Gonzalez (R-OH) and Emanuel Cleaver (D-MO) in September 2020. The bill, titled “The Student-Athlete Level Playing Field Act,” which has been characterized as more friendly to student-athletes than Senator Rubio’s bill, includes a preemption provision and certain restrictions on the endorsement of select products and services, such as drugs and alcohol, similar to the NCAA’s proposed legislation. However, the Student-Athlete Level Playing Field Act differs from the NCAA’s proposed legislation in that it does not prohibit a student-athlete’s involvement in NIL activities that conflict with existing institutional sponsorship arrangements, and, unlike Senator Rubio’s bill, it does not provide antitrust protection to the NCAA. This bill was referred to the Committee on Energy and Commerce and the Committee on Education and Labor in September of 2020.
- Fourth, on December 10, 2020, chairman of the Commerce Committee, Mississippi Senator Roger Wicker (R-Miss.), introduced the “Collegiate Athlete and Compensatory Rights Act,” styled as a means to create a uniform, national framework for NIL compensation. The bill prohibits the NCAA from having rules that unduly restrict athletes’ ability to be compensated for their NIL. However, the bill also: (1) prevents student-athletes from being compensated until completion of twelve percent of the credits required for graduation with passing grades; (2) prevents student-athletes from entering into deals that conflict with institutional agreements; and (3) provides antitrust protection to the NCAA, among other things. Moreover, the bill authorizes the Federal Trade Commission to select a private, independent, self-regulatory, and nonprofit oversight entity to be responsible for administering NIL rules. This bill was referred to the Committee on Commerce, Science, and Transportation the day it was introduced.
- Finally, on February 4, 2021, Senator Chris Murphy (D-Conn.) and Representative Lori Trahan (D-Mass.) introduced the “College Athlete Economic Freedom Act” “to establish NIL and athletic reputation rights for college athletes.” The definition of NIL compensation in the bill excludes “grant-in-aid” (i.e., financial assistance for education) and “stipend scholarship.” The bill provides that institutions of higher education and intercollegiate athletic associations may not make rules that prevent college athletes from marketing the use of their NIL or athletic reputation individually or as a group. Further, the bill provides for collective representation and group licensing protections, and establishes that aggrieved athletes have a federal private right of action to bring a civil suit in a district court of competent jurisdiction. The bill does not provide antitrust protections to the NCAA and a violation of the Act will be deemed a per se Sherman Act violation. There is however, a consolation to the NCAA, by way of a state NIL preemption clause.
In addition to these five proposals, New Jersey Senator Cory Booker (D-NJ) announced that he, along with other Democratic senators, are working on the framework for a “College Athlete Bill of Rights.” This bill, while extending beyond NIL rights, would allow athletes to market their NIL rights in individual deals and group licensing arrangements and create revenue-sharing agreements with associations, conferences, and institutions. Booker recently acknowledged his frustration with the NCAA’s decision to delay its vote on its own NIL rule, stating that “Fair compensation delayed is fair compensation denied.” However, he also expressed that he will “make sure” that Congress deals with NIL, and that with a 50/50 Senate, he feels confident that student-athlete reform will be comprehensive.
While there has been some bipartisan support for NIL bills to date, only time will tell how much support, if any, will remain following the hotly-contested 2020 presidential election. On the one hand, some view Democratic sponsored efforts as player-friendly, as demonstrated in Senator Booker’s proposal. On the other hand, Republican sponsored efforts, such as Senator Rubio’s, have been criticized as being too favorable to the NCAA, to the detriment of student-athletes. There are even some senators, including Rand Paul (R-KY) who oppose Congress’ involvement with NIL altogether.
While the federal government and the NCAA continue to spin their wheels, California, Colorado, Florida, Nebraska, New Jersey, and Michigan have signed NIL bills into law and numerous other states have legislation in the works. Florida’s NIL law is set to take effect in July 2021, while Michigan’s law has an effective date of December 2022 and the California, Colorado, Nebraska, and New Jersey laws have effective dates in 2023. Accordingly, if Congress (or the NCAA) wants to avoid inconsistent application of NIL laws based on a state-by-state approach, then it too, needs to pass legislation with an effective date of July 2021, or sooner. The state-by-state approach has been criticized for reasons beyond its inconsistency, with some commentators arguing that athletes will be incentivized to attend schools in states where they will have the opportunity for NIL compensation or to retain an agent, and that “power schools” would then enjoy an unfair recruiting advantage.
If a uniform federal law is not passed by July 2021, we may see this play out in Florida, where student-athletes will begin to be compensated for their NIL, while student-athletes in all other states will not. Many states other than those that have already passed NIL legislation are also likely to continue drafting and proposing NIL bills that will govern unless Congress solidifies a uniform plan. For example, on February 3, 2021, NIL legislation was introduced in Iowa that would go into effect July 1, 2021, to keep up with Florida’s first-in-line effective date. Iowa state Senator Nate Boulton commented, “Now that we’re seeing multiple states moving ahead, we want to make sure no Iowa athlete is left behind.”
However, commentators (but not the NCAA itself) have noted the possibility that the NCAA could file suit against states seeking to enjoin the states’ NIL bills from going into effect. Although the NCAA has not yet hinted at resorting to a legal challenge, or even less drastic measures such as precluding Florida from competing in NCAA competition, either option has the potential of halting the advancement of student-athletes’ NIL rights in Florida.
The Supreme Court’s Decision to Hear Student-Athlete Compensation Case
Given that the Supreme Court has not heard an NCAA case since 1984 (in NCAA v. Board of Regents of Univ. of Oklahoma), its decision to grant certiorari in the Alston matter is monumental, particularly in light of the ongoing, inconsistent NCAA, state, and federal efforts outlined above.
The Court’s decision to hear the case follows a May 18, 2020 opinion and order by the Ninth Circuit Court of Appeals that upheld the district court’s decision to bar the NCAA from restricting the education-related compensation and benefits its member institutions may offer student athletes who play Football Bowl Subdivision football and Division I basketball. The precise issue before the Supreme Court is: “Whether the U.S. Court of Appeals for the 9th Circuit erroneously held, in conflict with decisions of other circuits and general antitrust principles, that the National Collegiate Athletic Association eligibility rules regarding compensation of student-athletes violate federal antitrust law.”
The case was initiated by former West Virginia football player, Shawne Alston, and others, who challenged the NCAA’s compensation framework. Following a ten-day bench trial, the district court: (1) concluded that the NCAA limits on education-related benefits, such as computers, science equipment, musical instruments, post-eligibility scholarships for undergraduate, graduate, and vocational programs, tutoring, study-abroad expenses, and paid post-eligibility internships, are unreasonable restraints of trade, and as a result, enjoined those limits; and (2) declined to hold that the NCAA’s limits on compensation unrelated to education likewise violated antitrust laws. This second finding is important because it shows that the court’s decision does not directly affect student-athletes’ right to NIL compensation, which is compensation unrelated to education. Although the district court found the NCAA’s procompetitive theory “largely unpersuasive,” it still acknowledged and credited the “importance to consumer demand of maintaining a distinction between college sports and professional sports.” Ninth Circuit Opinion, at 24.
A three-member panel of Ninth Circuit judges upheld the district court’s conclusion that the NCAA’s rules limiting the education-related compensation and benefits violated antitrust law, explaining that “the district court properly concluded that NCAA limits on education-related benefits do not ‘play by the Sherman Act’s rules.’” Opinion, at 56. However, the Panel also declined Alston’s plea to expand the district court’s ruling and allow schools to compensate athletes beyond education-related benefits. Rather, the Panel concluded that the district court’s decision “struck the right balance in crafting a remedy that both prevented anticompetitive harm to student-athletes while serving the procompetitive purpose of preserving the popularity of college sports.” Opinion, at 7.
As outlined above, whether the NCAA should be provided antitrust protection has been a key factor in NIL discourse at the federal level. As a result, the Supreme Court view in Alston as to whether the NCAA’s cap on education-related compensation violates antitrust law may have broader implications, including how the NCAA can define amateurism. Thus, while the Court may not be squarely deciding student-athletes’ right to NIL compensation, its view on NCAA’s overall approach to amateurism may, by implication, influence the NCAA’s approach to NIL compensation. Oral argument is scheduled for March 31, 2021, and a decision is expected by June of 2021.
While there are numerous paths leading to uniform NIL regulation, many obstacles remain, including the clear divide between federal legislative proposals that are student-athlete friendly versus legislation that favors the NCAA by, among other things, providing antitrust protection. The Supreme Court’s decision in Alston is expected to analyze how certain NCAA prohibitions intersect with federal antitrust law, and, as a result, that decision may have broader implications in terms of the NCAA’s overarching view of and approach to amateurism rules.
- S. Berkowitz and C. Brennan, USA Today, Justice Department warns NCAA over transfer and name, image, likeness rules (Jan. 8, 2021), https://www.usatoday.com/story/sports/ncaaf/2021/01/08/justice-department-warns-ncaa-over-transfer-and-money-making-rules/6599747002/.
- A. Blinder, N.Y. Times, N.C.A.A. President Seeks Delay on Vote to Let Students Profit From Fame (Jan. 9, 2021), https://www.nytimes.com/2021/01/09/sports/ncaabasketball/ncaa-delays-vote-athlete-endorsements.html.
- Supra, note 1.
- Corey Booker, Booker & Blumenthal Statement on NCAA Delay of NIL Rule Vote (Jan. 13, 2021), https://www.booker.senate.gov/news/press/booker-and-blumenthal-statement-on-ncaa-delay-of-nil-rule-vote.
- R. Dellenger, Sports Illustrated, As Congressional Power Shifts, NCAA Reform and Athletes’ Rights Are Firmly in the Crosshairs (Jan. 20, 2021), https://www.si.com/college/2021/01/20/ncaa-athlete-rights-compensation-congress-nil.
- R. Dellenger, Sports Illustrated, Iowa Becomes Latest State to Introduce Athlete NIL Bill; Targeting July 1 Effective Date (Feb. 3, 2021), https://www.si.com/college/2021/02/03/iowa-name-image-likeness-bill-ncaa.