The Name, Image, and Likeness Legal and NCAA Regulatory Landscape
October 12, 2020 | By Vela Wood
The college sports arms race has taken on many different forms over the years ranging from lavish facilities dedicated to all aspects of the athlete experience to expanded coaching and administrative staffs designed to improve athlete performance both on and off the field. However, with five states (Florida, California, Colorado, Nebraska, and New Jersey) enacting new legislation and many more going through the process, Congress taking increased notice through multiple hearings and the first three of what is likely numerous pieces of federal legislation, and the NCAA and its membership slowly succumbing to what amateurism will mean in the 21st century, the next frontier in the college sports arms race is upon us: allowing college athletes to earn (at least some) money from the use of their names, images, and likenesses.
An individual’s name, image, and likeness (NIL) rights are the unique identifiers that encompass one’s right of publicity, or the right of the individual to control the commercial use of one’s identity. While individual states define the parameters of this right in the United States, over 24 states have some form of a right of publicity statute, and others have provided similar protections via common law. However, for athletes representing NCAA member institutions, this legal right has been legislated out by declaring athletes who receive compensation for promoting or endorsing a commercial product or service ineligible. While these restrictions are about to be lifted in some capacity, the extent and the uniformity of these potential changes are unclear.
The purpose of this article is to summarize the name, image, and likeness legal landscape, and the rights athletes would have to commercialize their right of publicity depending on what is ultimately legislated. We will follow up this article with a series of articles focusing on how new legislation would legally impact various stakeholders, including NCAA member institutions, coaches and staff members, athletes, and industry businesses that may engage athletes in various commercial opportunities.
NCAA Regulatory Landscape
At the Division I level, current NCAA legislation does not permit athletes to promote or endorse a commercial product or service, even if they are not paid to participate in the activity. While the NCAA does permit several exceptions, including charitable, educational or nonprofit promotions and media activities, and has granted waivers of this rule, the general rule remains and engaging in these types of commercial activities will render the athlete ineligible. However, despite litigating various iterations of this issue over the last decade, the NCAA Board of Governors opened the door to potential allowances in October 2019 and has since introduced legislation which will be voted on at the 2021 NCAA Convention. If approved, the revised legislation will become effective for the 2021-22 academic year.
According to a press release from the NCAA, the legislation would provide athletes: the ability to receive compensation for private lessons, camps and clinics; receive compensation for product endorsements; receive compensation for autograph signing sessions as long as the session does not occur during an institutional event or athletics competition; and the ability to solicit funds through crowdfunding for non-profits or charities, personal and community hardships, and educational experiences. The caveat is that athletes may not use school marks or reference their educational institution as a part of these endeavors. Additionally, as expected, there would be guardrails on endorsing products or services that conflict with NCAA legislation (i.e., sports wagering, prohibited substances, plagiarism services, etc.), the ability for an institution to prohibit the athlete’s involvement in activities that conflict with an institutional sponsor or other institutional values; and prevention of any payments that would induce an athlete to attend a particular institution.
Athletes would be able to use agents to assist with NIL-related venture advice, contract negotiations, and marketing NIL-related opportunities. These ventures and agent involvement would require disclosure to the NCAA or a designated third-party administrator and the athlete’s institution.
In addition to association-based changes, the NCAA and Power 5 conferences (SEC, Big 10, Pac-12, Big 12, and ACC) have increased lobbying efforts at the federal level, with NCAA, conference, and institutional administrators appearing before the U.S. Senate Commerce Committee to discuss issues relating to the name, image, and likeness, rights – including a potential antitrust exemption – and proposing two separate association-friendly model bills to govern athlete compensation. The rationale behind this federal push is, absent a successful legal challenge, as noted below, NCAA legislation would be superseded by state legislation that provides enhanced rights.
The Intercollegiate Amateur Sports Act of 2020, an NCAA-led proposal, likely previews the revised legislation member institutions will vote on in January at the 2021 NCAA Convention. The proposal, which would go into effect on June 30, 2021, would provide the NCAA with the authority to deem what participation in commercial activities would be consistent with NCAA eligibility. It would also grant them the ability to make athletes ineligible for violations of those standards. Further, the NCAA would be afforded protection from litigation based on its regulation of athlete name, image, and likeness rights and the law would preempt inconsistent state laws, providing uniformity of regulation. The proposal also provides a sunset provision, repealing the legislation ten years after enactment.
The Student-Athlete Equity Act of 2020, a Power 5 conference-led proposal, provides similar protections as it relates to a safe harbor provision and federal preemption, but provides more specific guardrails. This proposal prevents athletes from signing licensing deals until they complete one semester of education, prevents athletes from signing endorsement deals that may run afoul of his or her institution’s mission or that may conflict with institutional sponsorships, and requires that any NIL-related agreements between athletes and agents/advisors and with businesses are made available to the public. The proposal also prevents any payments that would induce an athlete to attend a particular member institution.
On the other side of the aisle, organizations such as the National College Players Association and College Athletes Players Association, along with competing college sports governing bodies, such as the Professional Collegiate League, are pushing back on commercial restrictions. The NCPA has proposed model legislation of its own. The NCPA proposal prevents any postsecondary educational institution from upholding any limitations on an athlete being compensated from the use of the athlete’s name, image, or likeness rights, or athletic reputation, and also prevents educational institutions from interfering with an athlete’s right for obtaining independent representation, including athlete agents, financial advisors, or legal representation provided by attorneys. However, the NCPA model does prevent athletes from being compensated for name, image, or likeness rights during official team activities without prior approval and prevents athletes from receiving compensation as an inducement to attend a specific educational institution.
State Law
As the NCAA continues to internally debate its own legislative changes, five states have signed into law legislation that would allow college athletes to be compensated for use of their name, image, or likeness. While California was the first state to enact legislation, Florida will be the first bill to go into effect on July 1, 2021, with the remaining states following in 2023.
Florida – SB646: Intercollegiate Athlete Compensation and Rights
Effective July 1, 2021
SB646 provides athletes the right to receive compensation for the use of their name, image, or likeness along with protection from the unauthorized commercial exploitation of the athlete’s right of publicity. Limitations on this right provide the compensation must be commensurate with the market value of the authorized use, the compensation must not be based on athletic performance or attendance at a particular institution, the compensation must be provided by a third-party that is unaffiliated with the athlete’s institution, the institution may not compensate or cause compensation to be directed at a current or prospective athlete, and the institution may not adopt any regulation that unduly restricts or prevents compensation for the athlete’s name, image, and likeness rights. Additionally, if an athlete may not enter into an agreement for compensation for the use of the athlete’s name. image, and likeness rights if the terms conflict with the terms of the athlete’s program. If a conflict does occur, the institution is required to disclose the terms of the conflict to the athlete.
While these rights are similar to what has been adopted by the other states, Florida also requires that any attorney representing the athlete for purposes of securing compensation for the athlete’s name, image, and likeness rights is in good standing with the Florida Bar and the duration of any name, image, and likeness agreement does not extend beyond the athlete’s intercollegiate athletics eligibility. Also, institutions are required to conduct financial literacy and life skills workshop training for a minimum of five hours at the beginning of the athlete’s first and third academic years. This training must include training on financial aid, debt management, and budgeting.
Colorado – SB20-123: Compensation and Representation of Student-Athletes
Effective January 1, 2023
Similar to Florida, SB20-123 permits athletes enrolled in a higher education institution in Colorado to be compensated for the use of the athlete’s name, image, or likeness, and to hire representatives to represent student-athletes’ interests and prevent the athletes from losing eligibility for exercising these rights. SB120-123 also prevents any athletics association from establishing legislation that restricts the rights of a college athlete to earn compensation based on the athlete’s name, image, or likeness or preventing the athletes from obtaining professional representation. Limitations on these rights also includes preventing institutions and athletics associations from providing compensation to athletes directly. As with Florida, legal representation to an athlete must be from a licensed attorney, but unlike Florida, Colorado does not limit representation to a specific state bar.
In exercising these rights, college athletes may not enter into an agreement that conflicts with a team contract for which the athlete competes. If a conflict is present, the institution must disclose the conflict to the athlete. If a college athlete does sign an agreement providing compensation for the use of the athlete’s name, image, or likeness, the athlete must disclose this agreement to the institution within 72 hours.
California – SB206: Fair Pay to Play Act
Effective January 1, 2023
SB206 permits college athletes attending four-year universities in California the right to accept compensation for the use of the athlete’s name, image, or likeness and prevents athletics associations from preventing participation in the association for permitting college athletes to exercise these rights. As with the other bills, the bill prevents any postsecondary educational institution from upholding legislation that restricts the rights of a college athlete to earn compensation based on the athlete’s name, image, or likeness and prevents a college athlete from being declared ineligible for exercising this right.
Like Colorado, California requires the athlete to disclose any agreement providing compensation for the use of the athlete’s name, image, or likeness to the institution’s designated official. Additionally, as with other states, college athletes are able to obtain the services of an agent to represent the athlete in marketing opportunities and institutions are prevented from compensating college athletes for the use of the athlete’s name, image, or likeness. Finally, a college athlete cannot sign an agreement that conflicts with the athlete’s team contract, but the team contract does not prevent the athlete from being compensated for using his or her name, image, and likeness when not engaged in official team activities.
Nebraska – LB962: Nebraska Fair Pay to Play Act
Effective on or before July 1, 2023
LB962 permits college athletes enrolled in an institution of higher education in Nebraska to be paid for the use of their names, images, and likenesses, to hire representatives to represent college athletes’ interests, and prevents college athletes from being forced to forfeit these rights. LB962 is similar to California, Colorado, and Florida in that it prevents state postsecondary institutions from upholding legislation that prevents a college athlete from earning compensation based on the use of the athlete’s name, image, or likeness rights or athletic reputation. Further, the bill prevents any athletics association from rendering a college athlete ineligible for exercising these rights or penalizing an institution from participating in its association for allowing an athlete to exercise these rights.
In order to exercise these rights, a college athlete must disclose any related contracts to his or her institution, and may not enter into an agreement that requires advertisement during official team activities or enter into an agreement that would conflict with the athlete’s team contract. These limitations do not apply if the athlete is not participating in team activities.
As with the other states, Nebraska college athletes are permitted to obtain representation to handle any legal services associated with these agreements. However, in Nebraska, any agreements of this nature must specify the amount and method of calculating consideration paid for such services, the names of individuals compensated under the terms of the agreement, a description of expenses reimbursed by the athlete; a description of the services provided to the athlete, the duration of the agreement, the date of execution, and the following information in conspicuous boldface type in capital letters:
WARNING TO STUDENT-ATHLETE
(1) IF YOU ENTER INTO NEGOTIATIONS FOR, OR SIGN, A PROFESSIONAL SPORTS-SERVICES CONTRACT, YOU MAY LOSE YOUR ELIGIBILITY TO COMPETE AS A STUDENT-ATHLETE IN YOUR SPORT;
(2) IF YOU HAVE AN ATHLETIC DIRECTOR, WITHIN 72 HOURS AFTER ENTERING INTO THIS CONTRACT, BOTH YOU AND YOUR ATHLETE AGENT MUST NOTIFY YOUR ATHLETIC DIRECTOR; AND
(3) YOU MAY CANCEL THIS CONTRACT WITHIN 14 DAYS AFTER SIGNING IT.
The legislation also permits athletes and postsecondary institutions to bring legal action if aggrieved by a violation of this act and allows the recovery of actual damages, equitable or declaratory relief, and reasonable attorney’s fees and other litigation costs if brought within one year of accrual.
Finally, while the act provides July 1, 2023, as the final deadline for the act to go into effect, each postsecondary institution is able to choose a prior date to begin to apply the act’s regulations. At this time, no postsecondary institutions have exercised this right as it currently would impact their athlete’s eligibility by violating current NCAA legislation.
New Jersey – Bill NJ S971: New Jersey Fair Play Act
Effective Fifth Academic Year Following Date of Enactment – 2024-25 Academic Year
The most recent state to enact legislation protecting a college athlete’s right to be paid for the use of the athlete’s name, image, or likeness is New Jersey. In addition to permitting compensation, S971 permits college athletes to hire representatives to represent college athletes’ interests, prevents any four-year institution of higher education in New Jersey from upholding any rule that would prevent a college athlete from earning compensation from the athlete’s name, image, or likeness, and prevents the athlete from being declared ineligible for exercising these rights.
In turn, college athletes would be forbidden from earning compensation for their name, image, or likeness in connection with selected industries and products. This includes adult entertainment products and services; alcohol products; casinos and gambling, including sports betting, the lottery, and betting in connection with video games, online games, and mobile devices; tobacco and electronic smoking products and devices; prescription pharmaceuticals; a controlled dangerous substance; and weapons, including firearms and ammunition. Violation of this provision would cause the revocation of the athlete’s institutional scholarship. College athletes would also be prevented from using his or her name, image, and likeness that conflicts with a team contract when engaged in official team activities. Additionally, an institutional team contract would allow the institution, athletic association, conference, or other group or organization with authority over intercollegiate athletics to use the athlete’s name, image, or likeness for advertising and marketing purposes without additional compensation paid to the athlete. Athletes would be required to disclose any agreements providing compensation for the use of the athlete’s name, image, or likeness rights to the designated institutional official. If an athlete seeks legal representation, the athlete is required to use lawyers licensed in New Jersey with the lawyers being required to comply with the terms of the Sports Agent Responsibility and Trust Act.
State-by-State Approach
The potential issue with a state-by-state approach to name, image, and likeness rights from an NCAA perspective is it creates a system where it would be impossible to apply its own legislation as it relates to name, image, and likeness in a uniform manner. The concern here is that an athlete in one state may have an opportunity that an athlete in another state would not have, which creates a competitive advantage for institutions residing in states with more liberal legislation. The NCAA made this argument successfully in NCAA v. Miller, a federal case decided in 1993, where the United States Court of Appeals for the Ninth Circuit held a Nevada law unconstitutional. The NCAA challenged the law, which provided enhanced due process rights to institutions, coaches, and athletes, by arguing Nevada’s law unduly impacted commerce in other states. Here, the more dissimilar state name, image, and likeness laws become, the better equipped the NCAA is to make this argument. The NCAA would argue that athletes in some states would have opportunities other athletes would not have and that a competitive advantage would result from a patchwork approach.
Federal Legislation
While the NCAA should be concerned about the various state laws that have been implemented, the greater concern is with federal legislation. Federal legislation would prevent the NCAA from arguing that any institution would gain a competitive advantage as each state would be operating under a uniform federal system. This reality has intensified NCAA lobbying efforts and the introduction of the model language noted above to influence what federal legislation may look like. At this point, three separate federal bills have been introduced with other proposals expected over the next year.
The first federal proposal, House Resolution 1804 (“Student-Athlete Equity Act”), was introduced by Mark Walker (R) from North Carolina. HR1804 would condition the NCAA’s tax-exempt status on permitting or not substantially restricting an athlete’s ability to be compensated for the use of the athlete’s name, image, or likeness. The bill has bipartisan co-sponsors: John Ratcliffe (R) from Texas and Cedric Richmond (D) from Louisiana. The bill, which was introduced in March 2019, was referred to the House Committee on Ways and Means where it has remained.
The second federal proposal, Senate Bill 4004 (“Fairness in Collegiate Athletics Act”), was introduced by Marco Rubio (R) from Florida. S4004 is an NCAA-friendly bill in that while it grants athletes certain rights to control their own names, images, and likenesses by June 30, 2021, the bill provides the NCAA considerable leeway to determine what types of opportunities would be available to its athletes. This includes any legislation needed to preserve the amateur status of the athletes, ensure appropriate recruitment, and prevent deals with a third party offered to recruit or retain an athlete at a particular institution. The bill further prevents any cause of action against the NCAA or any of its member institutions based on the adoption or enforcement of legislation established relating to the opportunities the NCAA deems appropriate and would include federal preemption. The bill was introduced in June 2020 and was referred to the Committee on Commerce, Science, and Transportation.
The third and most recent federal proposal, “The Student-Athlete Level Playing Field Act,” was introduced in September 2020, with bipartisan sponsorship from Anthony Gonzalez (R) of Ohio and Emanuel Cleaver (D) of Missouri. The bill, which is more athlete-friendly than Rubio’s Student-Athlete Equity Act, attempts to bridge the gap between the desired outcomes of the NCAA and those who support a free market. From an NCAA perspective, the bill includes federal preemption, restricts agreements involving selected industries (i.e., involving tobacco or vaping, alcohol, controlled substances, adult entertainment, or gambling), prevents athletes from wearing items with the logo of an outside entity at any event sponsored by their institution, and revises the Sports Agency Responsibility and Trust Act to prevent institutional boosters from providing or offering to provide compensation to induce an athlete to attend a particular institution. The bill does, however, permit athletes to endorse products that may conflict with their institution, permits representation if the athlete notifies the institution of the relationship, and does not provide any antitrust protections from name, image, and likeness-related claims.
The bill also provides other unique components not addressed in the other federal bills. First, the bill allocates enforcement oversight to the Federal Trade Commission. The FTC would be charged with bringing unfair or deceptive trade practice claims should violations of the bill occur. Additionally, the bill creates a “Covered Athletic Organization Commission,” which will comprise of thirteen members tasked with recommending potential legislative changes, regulating agents, and providing a resolution process for disputes between athletes and their institutions. The members would be appointed by the Senate Majority and Minority Leaders, the Speaker of the House, and the House Minority Leader (three each) and would comprise of athletics administrators, coaches, athletes, NCAA staff members, and other sports industry professionals. The thirteenth member and the chair of the Commission would be appointed by agreement by each of those congressional members. Finally, the Act notes that it does not prompt the IRS from revisiting the tax treatment of athletics scholarships, it does not impact the employment status of athletes, and nothing in the Act impacts a party’s Title IX rights or obligations.
In addition to the three federal bills, there is the expectation additional bills will be introduced, including legislation from Jerry Moran (R) from Kansas, who is the heading the Senate Commerce subcommittee overseeing name, image, and likeness, and from Robert Wicker (R) from Mississippi, who is the Chair of the Senate Commerce Committee. Finally, a “College Athletes Bill of Rights,” led by Cory Booker (D) from New Jersey, is also in the works and is expected to allow athletes to market their name, image, and likeness, both individually and collectively with minimal restrictions.