June 15

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Proposed NIL Legislation Adds More Questions Around Athlete Endorsements

Athletes, Finance, NIL

Thanks to recent changes to NCAA rules and regulations, college athletes are now allowed to profit off their "name, image, and likeness" — colloquially known as NIL. But newly proposed NIL legislation at the federal level aims to put serious restrictions on what that means. 

Many college athletes are ideal candidates for earning money from their endorsements, whether that's in the form of online content or full-blown brand deals. That's because in addition to typically having strong regional followings, a lot of them are digital natives who grew up naturally using social media. Being able to make money from it by striking up deals with brands is kind of a no-brainer. 

But the NCAA is lobbying the federal government to regulate the practice, making the process around NIL deals anything but clear.

How NIL Deals Work Now

College athletes can make money off their own name and image now thanks to decades worth of lawsuits and lobbying on college students' behalf. California became the first state to legalize college athletes making money in 2019, and in mid-2021 the NCAA essentially repealed the language in its rules forbidding the practice. 

However, NIL deals are still kind of the "Wild West" in terms of who can do what, for how much money, where, and when. The NCAA broadly states, "College athletes can engage in NIL activities that are consistent with the law of the state where the school is located." That kind of means it's up to states to determine how they approach the practice.

More than half of the U.S. states currently have laws allowing college athletes to make money from these deals. However, the NCAA has repeatedly asked the U.S. government to pass federal NIL legislation to uniformly govern these types of deals. Given how much the NCAA fought the right for college athletes to make money off themselves (despite the NCAA generating over $1 billion in annual revenue from these students), it's not far-fetched to think the NCAA would prefer to support legislation that gives the organization broad control over just what kinds of deals students can engage in.

And broad power for the NCAA is exactly what the latest draft NIL legislation from Capitol Hill grants.

Newly Proposed NIL Legislation

As uncovered by Sports Illustrated, the NIL legislation proposed by senators Tommy Tuberville (a republican from Alabama and former college football coach) and Joe Manchin (a democrat from West Virginia) would put serious restrictions on college athletes signing brand deals.

For starters, athletes must be enrolled in school and complete at least one semester of school before being able to sign an NIL deal under the legislation. They must also disclose all deals to their school and NCAA within 30 days of signing and use an NCAA-approved contract template. The draft NIL legislation also allows schools to prohibit athletes from entering into deals that involve things like sexuality, gambling, alcohol, pharmaceuticals, and more. 

And perhaps one of the most physically restrictive terms of the NIL legislation: student athletes aren't allowed to wear anything related to an NIL brand deal while also wearing school athletic gear. Which means something as silly as forbidding a player from wearing a brand-sponsored watch while traveling in team gear to and from games. 

Oddly enough, the draft NIL legislation proposed by Tuberville and Manchin also calls for creating a trust fund that covers medical costs for athletes who sustain on-field injuries and travel expenses for dependents. This trust would be paid for by 1 percent of proceeds from major college events. While seemingly admirable, the trust doesn't have much to do with the NIL regulations throughout the rest of the legislation. 

The proposed legislation would also give the NCAA broad power to investigate and enforce these rules, superseding any existing state laws. 

What Impact Will This Proposed NIL Legislation Have?

It's important to remember this proposed legislation is just that — proposed. It's expected to change as the senators "receive feedback" from interested parties. However, as the draft NIL legislation stands, it would certainly create a lot of questions.

For starters, who determines what the terms of these contracts are? And how could an NCAA template contract possibly satisfy each and every unique potential deal between college athletes and brands? 

We also don't know how the NCAA would choose to enforce these rules and what type of penalties they'd apply — or if they could possibly be uniform or fair across all disciplines and brand deals. And what's with that "no deals until one semester of school is completed" rule? Who exactly is that protecting? It seems mighty arbitrary, especially when you consider how many athletes transfer from different schools. Would they be affected too? 

As it stands now, this legislation is very NCAA-friendly — and the NCAA is the organization that fought these deals in the first place. That should be very worrisome for anybody who believes athletes have as much a right to make money off their name, image, and likeness as the schools they play for.

However, there's one other very important thing to consider: this legislation may already be dead on arrival. In the four years since the NCAA has been lobbying for the federal government to grant them power over these deals, 12 bills have been introduced and eight hearings have been held — but none of them have even reached the committee debate stage. 

That doesn't mean student athlete content creators shouldn't still stay vigilantly aware of their rights and proposed legislation making the rounds in Washington. But it does suggest that the Wild West of NIL deals is far from coming to an end.


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