Sports Law: Name, Image and Likeness (NIL) Rights: Recent Changes in Collegiate Athletics
By Justin M. Jacobson, Esq.
The recent changes in college athletic administrative policies have caused a monumental shift in the sports business and legal profession with emergence of a new potential “$100 million” market. As a result of a series of lawsuits and the passage of “at least 10” state laws, including in Alabama, Colorado, Florida, Georgia, Mississippi, New Jersey, New Mexico and Texas, the governing body for collegiate athletics, the National Collegiate Athletic Association (NCAA) officially changed its long-standing policy regarding “amateurism” and the ability for student athletes to earn income and be compensated while participating in college athletics. Specifically, the NCAA issued “interim” guidelines that provides NCAA college athletes within its “1,100 member schools” with “the opportunity to benefit from their name, image and likeness.” This policy shift means that current as well as prospective and aspiring college student-athletes are now permitted to earn income for the usage of their “name, image, and likeness” while they are actively participating in college sports. Additionally, since no federal NIL law currently exists, the new NCAA guidance specifically allow students to engage in NIL-related commercial activities so long as the talent’s actions are “consistent with the law of the state where the school is located” as well as enables students “who attend a school in a state without an [existing or enacted] NIL law [to also] engage in this type of [commercial] activity without violating NCAA rules.” In practice, these guidelines mean that college student-athletes within all 50 states have ability to derive revenue in a variety of commercial avenues previously unavailable to them while also competing in athletics at a university level.
What is Name, Image, and Likeness Rights? What does this mean for College Student Athletes?
To start, Name, Image, and Likeness (NIL) Rights are part of a person’s “right of publicity,” which is an intellectual property right recognized by many states. NIL rights provide a person with the ability to personally or with the assistance of another entity commercialize and publicly profit from their “name, image, voice, signature, and likeness.” (Justin M. Jacobson, Esq., The Essential Guide to the Business & Law of Esports & Professional Video Gaming, 130 (CRC Press 2021)) As a result of the NCAA’s new policy and the newly enacted state NIL laws, current and aspiring college athletes can now engage in a variety of previously prohibited commercial and promotional activities. This means a student athlete can compete while pursuing a degree and obtaining a formal college education and at the same time also explore their other passions and potential business opportunities.
What do the NCAA’s Rules for Name, Image and Likeness for A College Athlete Allow?
Previously, the NCAA rules restricted student-athletes from promoting or endorsing any commercial products or services, even if the student-athlete is not paid for their participation. However, these types of restrictions have been removed in light of the athletic governing body’s newest guidelines. This change now permits student athletes to capitalize on an array of potential avenues, including profiting from exploitation and licensing of their NIL rights. For instance, under previous NCAA rules, a collegiate athlete was prohibited from starting or operating their own business or entrepreneurial venture. Now, under the new NCAA guidelines, a student athlete can operate and form their own company and act as an independent businessperson. This action could be accomplished through opening any business such as a restaurant or nightclub as well as operating as a creative entrepreneur or talent, such as a music producer, a rapper, a DJ, a fashion designer, an actor, a model, a painter, a photographer, a professional gamer or content streamer, or in any other profession in any entertainment, creative or commercial field that the individual desires.
The shift in approach to the commercialization of NIL rights by student athletes now permits college athletes who also are Olympians to compete at both a collegiate level as well as in the Olympics while also being sponsored and receiving paid endorsement opportunities without the risk of losing their eligibility (or having to stop playing like in Jeremy Bloom’s case). The policy change also enables an undergraduate athlete to also act an independent entertainer such as a musician, actor, DJ, or competitive gamer so they can financially benefit from a movie or television role or be signed as professional gamer or content creator while also playing their sport in college.
How Can Student Athletes Earn Revenue from Name, Image, and Likeness (NIL) Rights?
One of the most lucrative revenue opportunities currently available for a college athlete is through the licensing of their NIL rights to a brand or company, including entering into endorsements, sponsorship, and marketing deals. These sponsorship and brand partnership agreements could be entered into with a variety of local, national, and potentially international companies and brands. While this area is still developing, there are reported sponsorship deals ranging from “annual contracts worth large sums of money to in-kind deals” (currently about only 65% of deals are paid in cash) such as “free cellphones and services plans in exchange for social media promotion.” In fact, some top players at large universities are reportedly earning up to “almost seven figures” in total NIL earnings, especially those college athletes competing in popular sports such as basketball and football, including quarterback Bryce Young who is supposedly “nearing the $1 million mark in [total] sponsorships.”
Interestingly, each brand is taking a different approach to NIL deals, especially as it relates to college athlete sponsorship and endorsement deals. For instance, Adidas launched “a nationwide NIL program” that provides a deal to any Division I student athlete at an Adidas-partnered school. As compensation, the college athlete receives a “percentage of sales they drive through an affiliate program” as well as the talent receiving the additional opportunity to “earn money based on crafting social posts” for the brand. In contrast, other major companies, such as Nike, are approaching NIL deals differently and are “targeting specific athletes” rather than providing paid opportunities for any competitor at a currently sponsored university. One example is the endorsement deal that Miami Hurricanes’ quarterback Deriq King signed a deal with professional NHL team, Florida Panthers, where King will “work with the Panthers to develop a merchandise collection, co-branded art and his own exclusive concession menu item [that will…] be available at all Panthers home games.” Similarly, two Michigan Wolverine football players received a “paid” partnership with video game company Yoke Gaming. Additionally, Oregon Ducks basketball player and Tik Tok star Sedona Prince has entered into “deals with [companies such as] Taco Bell, Champs Sports and Eastbay brands.” Another prominent NIL deal involved North Carolina Tar Heels’ quarterback Sam Howell and Clemson Tigers’ quarterback D.J. Uiagalelei both signing on as “endorsers” for “fast-food chain,” Bojangles. Finally, it was reported that a “class of 2023 five-star football recruit” signed a NIL “deal with a school’s collective that could be worth more than $8 million by the end of [his] junior year of college.” In fact, the player would reportedly be paid “$350,000 ‘almost immediately’” and then he would begin receiving “monthly payments that would increase to more than $2 million a year” by the time the player was “on campus.” There are currently and should continue to be an array of brand endorsement and sponsorship opportunities available for student athletes, especially as more athletes understand how to better leverage and build their own personal “brand,” including through the expanded use and management of their various social media platforms such as Instagram, Twitch, Tik Tok and YouTube
In addition to acting as a paid spokesperson for a brand as in an marketing or promotional campaign, student athletes are now also permitted to make sponsored posts on their own personal social media accounts. This policy shift allows a collegiate athlete to utilize their own social media accounts to monetize their followers through sponsored posts, content, and streams and to be compensated in a similar fashion that any other celebrity influencer would be. In fact, some college athletes are already earning several thousand dollars per social media post. For instance, University of Connecticut’s basketball player Paige Bueckers reportedly costs “$62,900” for “one social media post” and Louisville Cardinals’ basketball athlete Hailey Van Litch reportedly charges “$44,200 per social media post.” While having a large social media following is beneficial for larger and more lucrative deals, there are existing studies suggesting that “that [college] athletes outside the revenue sports of football and men’s basketball could still earn about $5,000 per year with just 10,000 followers on various social media platforms” if they have a high level of follower “engagement.” This is because these types of deal’s depend “more on [the posted] content and [the engagement rate and] frequency of new posts than [the player’s] actual on-field accomplishments.” With the growing potential for social media paid opportunities, a current or prospective college athlete should be aware of how to negotiate these endorsement agreements as well as how to properly and legally create a “sponsored” post or other content piece, including the inclusion of the required “social media disclosures.”
Related to this new NIL income stream is the amounts that can be earned through digital video and streaming platforms, such as Cameo and Twitch. For example, Cameo permits an individual, including a student athlete, to create a custom video message for a paying user in exchange for a fixed amount, which the talent themselves decides on. Considering the NCAA’s new policy, college athletes have begun utilizing Cameo and other similar platforms with some student athletes “asking for $100” or more per video. For example, Oklahoma Sooners’ football player Spencer Rattler charged “$177” per Cameo video and Texas Longhorns’ running back Bijan Robinson provides custom Cameo videos for “$160” each. In fact, one of the top Cameo earnersm Alabama Crimson Tides’ softball pitcher Montana Fouts charges individuals “$55 for [each of] her Cameo messages.” With the emergence and growth of digital platforms such as YouTube, Twitch and Facebook Gaming, college athletes have even more opportunities to generate revenue, including by hosting their own livestreams of their video- game play, cooking, working out, or any other look into their daily lives or any other content they want
Furthermore, the new policies permit student athletes to hire and “use a professional service provider for NIL activities.” This guideline means that a college athlete can retain a talent agent, manager or any other independent professional or representative to source, obtain as well as review and negotiate any endorsement, sponsorship, or other NIL related agreements on behalf of the college athlete. As a result of this policy shift, many sports and entertainment talent representatives, agents and marketing agencies as well as law firms have begun working and advising college athletes in these business areas.In practice, the NCAA now allows any collegiate athlete to hire a marketing agent or attorney to pursue and negotiate endorsements deals with brands, secure personal appearances, such as “autograph signings,” fan meet-and-greets and speaking engagements as well as engage in the creation of physical and digital licensed merchandise, including licensed “NFTs” and “digital cards” featuring the college athlete’s name and likeness. In fact, it is reported that some collegiate athletic talent could potentially attend a “meet-and-greet at a local restaurant” in their college town and earn about “$10,000” or more for an hour or two of their time. For instance Louisville Cardinals’ quarterback Malik Cunningham reportedly charged “$300 per hour [as an] appearance fee.”
Finally, a college athlete could earn additional revenue through selling their own player-brand merchandise as well as any sports memorabilia such as game worn items, and signed merchandise and autographed photographs. In fact, Oklahoma Sooners‘ quarterback Spencer Rattler notably signed autographs and took pictures “for compensation,” including charging “$150 per autograph, $50 per inscription and $150 to take a photo with him.” This income is in addition to a college athlete endorsing or hosting their own athletic or other instructional youth camps where the college player acts as a coach or trainer for young athletes, such as high school and middle school prospects.
In response to the NCAA’s guidelines, some universities have begun issuing their own “guidance” and policies for their students, such as University of Florida and Ohio State University. Some colleges are also enacting their own additional regulations governing what products a student athlete can endorse and which companies they can work with, including prohibiting certain categories that are a violation of the school’s rules or “honor code.” For example Brigham Young University issued a policy prohibiting its student athletes from working with or endorsing brands involved in the “alcohol, tobacco, gambling, adult entertainment, [and] coffee” industries. Similarly, Ohio State University prohibits its college players from promoting and working with “distilled spirits, tobacco products, casinos, […or] marijuana” products and companies. However, in response to these school imposed restrictions, some lawsuits as well as proposed new legislation were proposed to prohibit a university’s ability to enact such parameters on its students.
In addition to the guidance that some colleges have provided, there are some other legal and business considerations that current and potential college athletes should be aware of when entering these types of deals and contracts, especially those related to the commercialization and use of their name, image, and likeness. One important fact to be aware of is what the college athlete is wearing in the content as well as how they are publicly “billed” in paid advertisements and promotional materials. This factor is important because the student athlete might not have the rights to use a college team’s name, logo, jersey design or any other identifiable or protected university IP. In these situations, it is advisable for the student athlete to try to create any paid content in “plain” clothes without any school or other brand logos on as well as publicly referring to themselves as a “college basketball player” or “star baseball player” and not as University of Kentucky basketball player in any promotional or other paid advertising and marketing materials.
Furthermore, some student athletes might be contractually restricted by their university from entering into endorsement and other NIL right deals with a specific company or product category. This fact may be true in cases where a college player attempts to enter a deal with a company that conflicts with or is a competitor of the university’s existing sponsor. For example, Ohio State University (OSU) prohibits its students from entering into a NIL deal that requires the athlete to “wear products competitive to Nike during team activities” including at prohibiting them from wearing a competitor’s brand during all “practices, competitions, media, team travel, community service, photo sessions, [and] team-building activities” as well as preventing the athlete from endorsing or promoting any “beverage [that is] competitive to Coca-Cola on-campus.” This regulation means that an OSU player is unable to promote Adidas or any other competitor to Nike during all team activities, including “team travel” as well as being prohibited from endorsing Pepsi or any other Coca-Cola competitor while “on-campus.”
A student athlete entering these paid arrangements may benefit from the support of competent outside business professionals and assistance. This counsel could be in the form of retaining a licensed attorney or legal representative for proper contract review, drafting, and negotiation of deals with a sponsoring brand as well as for assistance with reviewing any talent agents or marketing agencies that an athlete may encounter and enter into. Since some players may be earning substantial sums from third-party brands and companies, it is important that the athlete understands the tax consequences of this new NIL deal income, including filing the necessary federal and/or state taxes (and potentially international) to ensure the college athlete is compliant with their tax obligations. It may also be prudent to consult with a qualified tax professional in these instances such as an accountant, CPA, or a business manager.
While the terms of every endorsement and NIL deal is different, there are some important contractual considerations that a college competitor should be aware of. One is the “term” or length of the agreement, including whether the deal is a one-off campaign or if it is a year or multi-year deal. The endorser should also understand whether the agreement provides exclusivity in a category as well as which category the exclusivity applies to. It is also important for an athlete to understand the existence and scope of a “non-compete” clause, including how it operates during the term as well as after the expiration of the deal. In addition, it is crucial for a college athlete to be aware of how the company may use their NIL rights during the agreement as well as how these rights can or cannot be used after the deal expires. Furthermore, it is prudent for a college athlete to understand and agree on which territories and countries the deal applies to. This fact is especially important for a bilingual talent, who could potentially earn revenue in a variety of countries and jurisdictions. Finally, when building a collegiate athlete’s personal “brand,” an athlete should be aware of the usage and how to obtain proper trademark and copyright protection of their intellectual property assets such as a trademark in name and logos as well as in any business ventures that they create. This is in addition to any potential copyright protections for the athlete’s logo or other eligible company assets. There are many other legal considerations that should be considered when entering into any written contract.
May 2022: Recent Evolution of NCAA NIL Rights Guidelines and New NCAA “Guidance”
As the NIL landscape changes and evolves, the NCAA has continued to provide further support, including announcing additional “guidance” reiterating an existing prohibition on colleges. In particular, the NCAA restated their policy which prevents a university’s from using their created NIL rights “collectives” as a method “to funnel name, image and likeness deals to prospective student-athletes” to influence a potential recruit to attend a university. This would be done to ensure that these university-operated NIL collectives do not act as “boosters” for the college’s academic programs. In light of these changes, new companies have been created to assist a student’s compliance with any state and other applicable NIL guidelines, such as Spry. In fact, Spry has partnered with several universities to advise and assist their college athletes by “manag[ing] the[ir] opportunities and [the] risks associated with Name, Image, and Likeness (NIL) implementation.” Some of these academic institutions included the University of Pennsylvania, Penn State University, Wake Forest University, and Oral Roberts University. In addition, the growth of NIL for student athletes has created additional potential risk for NCAA compliance violations by universities who still must abide by and be aware of their association’s bylaws as they relate to recruiting players and payment for performance, which are strictly not permitted.
In conclusion, while the current “average deal size [for college athletes] is $650,” it is crucial that all current and aspiring college athletes are aware of their new NIL rights as well as how to properly monetize and protect themselves as they pursue the various lucrative income opportunities that are now available to them. This fact is especially true as these areas seem ripe to continue to grow and expand over time as more companies and brands leverage athletes who are also college influencers. Consequently, the existence and recognition of NIL rights for collegiate athletes may make the prospect of staying on a college campus longer than required more enticing than the desire to immediately jump to a professional sport league when reaching professional league eligibility. This is because the student athlete can now earn substantial and consistent income while being in college as opposed to previously being unable to monetize and profit from their likeness for fear of losing their NCAA student-athlete eligibility. It will also be interesting to see how Courts rule on whether student athletes are considered “employees” entitled to pay and other worker benefits, such as those explored in NCAA v. Johnson. Overall, a proper plan and team of competent advisors could be beneficial to a college athlete’s financially success.
This article is not intended as legal advice, as an attorney specializing in the field should be consulted.
© 2022 Justin Jacobson Law, P.C.