While stakeholders agree that the lack of national standards is impacting athletic competition and recruiting between universities in states having different or no Name, Image, and Likeness (NIL) laws, there are differing opinions about how such national standards should be developed and enforced.
“It’s the Wild West,” said Peter Fitzpatrick, CEO and president at DistrictWON, which creates marketing partnerships between businesses and high schools, about the lack of cohesive nationwide NIL standards for college student-athletes.
“There is a real need to simplify the approach, ideally on a national level,” Fitzpatrick told Financial Regulation News. “At this point, there seems to be an unfair playing field, with any given university interpreting the rules and laws in their own light, and another approaching it differently. That’s not sustainable and just adds to the haves and have-nots.”
Todd Glassman, a partner at the Chicago-based law firm Allen, Glassman & Schatz LLC, agreed, saying that without national standards, many college sports outside of football and basketball are not able to benefit from the NIL rules.
“I think that some of the Power 5 schools with donors that have the money are able to put together more lucrative compensation packages that tend to make the rich even richer,” said Glassman in an interview. “Even the NIL money surrounding the transfer portal needs to be regulated and hopefully come to a national standard as that seems to be from time to time creating the Wild West with student-athletes transferring every single year, sometimes three or more times before graduating.”
On Capitol Hill, lawmakers also are sounding the same alarm since the U.S. Supreme Court blew the whistle on the NCAA in 2021 when it unanimously ruled that the national association that administers intercollegiate athletics could no longer prohibit college athletes from receiving compensation for their NIL.
“The ruling could not have been clearer. The NCAA was overly restrictive in its prohibition of athletes profiting from their NIL,” said U.S. Rep. Cathy McMorris Rodgers (R-WA). “Unfortunately, the Supreme Court’s ruling did not offer clear rules of the road. Instead, we have seen a roller coaster of state activity as states compete to have the most advantageous laws for their respective schools.”
And with the recent spread of NIL deals, clearer rules need to be established as over half of the states have proposed and passed different laws to regulate what is a new economic frontier, say stakeholders, noting that each state has varying standards for compensation, healthcare, and revenue sharing, among other policy decisions that are being wrapped into NIL policy. In turn, student-athletes, universities, and conferences are extremely confused, they say.
For example, a former Florida NIL law restricted institutional staff and supporting entities’ involvement in NIL activities, while Utah has no such law, which permitted Brigham Young University to broker a groundbreaking NIL deal for its entire team. This spurred Florida’s state legislature to repeal its NIL law in an attempt to eliminate a competitive disadvantage. Alabama took a similar approach, repealing its NIL law not even a year after it had been enacted, according to information provided during a March 29 U.S. House Energy and Commerce Subcommittee on Innovation, Data, and Commerce hearing on protecting college athletes’ NIL deal-making rights.
Subcommittee chairman U.S. Rep. Gus Bilirakis (R-FL) pointed out that since the start of March Madness, more than 40 deals had been signed with men’s and women’s basketball players, with more college athletes lined up to ink additional NIL deals.
“The main question before us… is how Congress should regulate this new economic frontier to ensure that NIL deals are transparent and fair, and that they do not compromise the integrity of college sports,” the congressman said. “We must avert the potential pitfalls that could come with NIL compensation rights, such as recruiting inducements or pay-for-play schemes.”
Bilirakis said Congress also should consider how NIL regulation would affect capital distribution in the college sports ecosystem, particularly how smaller college athletics programs would be impacted. “I worry that the financial stress of more mandates will only compound such constraints on resources,” Bilirakis said during the hearing.
Other implications of not having national NIL standards include charitable dollars being redirected to third-party NIL collectives rather than college athletic departments and conferences; the requirement at some schools to classify their athletes as employees who may not be allowed to benefit from their NIL; and the potential impact these implications could have on Olympic sports, among other concerns.
“It is critical that we establish a federal preemptive standard for NIL, to bring clarity and consistency to this rapidly evolving space,” said Bilirakis. “The lack of uniformity across different states and institutions has created confusion and uncertainty, and a federal standard is needed so all athletes are playing by the same rules.
“In short, we must strike a delicate balance between the rights of college athletes to profit from their own NIL, while keeping the amateur status for all college athletics,” he said.
Jennifer Heppel, commissioner of the Patriot League, which is one of 32 Division I conference members of the NCAA, testified during the subcommittee hearing that national challenges in the NIL space — including the determination of fair market pay, recruiting inducements, and/or offering pay-for-play opportunities — are well documented in the press and are clear violations of existing NCAA regulations.
“As a result of a myriad of state laws, as well as legal actions against the NCAA and our regulatory structure, the current environment results in little to no accountability or transparency, creating instability and undermining positive change,” Heppel said. “Finding a means toward national regulation around NIL is necessary to address these negative impacts.”
Who’s the NIL boss?
So how should such standards be set and how should they be overseen? And who should be allowed to negotiate and coordinate NIL deals on behalf of student-athletes?
“I think third parties have the expertise to do this task. Schools and student-athletes are not equipped with the necessary information,” said DistrictWON’s Fitzpatrick. “NIL deals include marketing provisions, expected deliverables by the student-athlete, a covenant and contract with a brand or sponsor, and other aspects that get complex. There is no way society can expect schools to obtain this skill set and necessary set of credentials; their clear mission is to educate students.”
Fitzpatrick said that the only way to protect all parties and to ensure compliance is through a third party that has the knowledge and ability to execute NIL deals for student-athletes. And eventually, he added, there will be a need to create an “umbrella” that ensures everyone is playing by the same rules under the same laws and regulations. “A third party seems to be the entity to do that,” he said.
Glassman, the attorney, said that at some point, for any NIL deal, there should be a licensed attorney involved in representing the student-athlete to ensure he or she is not breaking an NIL law and isn’t being set up for future failure.
“The involvement of a licensed and approved sports agent is important, too,” said Glassman. “I think student-athletes need to be protected and should not go at this alone. And, with their whole future and careers ahead of them and with a lack of federal uniformity and state laws that vary state to state, the student-athlete needs a lawyer and/or agent even more.”
That’s an idea already being used at Virginia State University (VSU), a Historically Black College and University (HBCU) located in Chesterfield County, Va., that offers numerous Division II athletic programs.
“It is paramount that we provide our athletes with the proper tools to manage the responsibilities that come with these NIL deals. Therefore, at VSU, we provide financial literacy and marketing for our student-athletes,” VSU President Makola Abdullah told lawmakers during the subcommittee hearing. “We continue to teach and educate young men and women to maximize their ability to make money from their talents and brands.”
At VSU, Abdullah said that a professional agent engages with student-athletes to help them build their brands and meaningful career skills and to create current and future opportunities.
“As universities, we need to educate because, after all, that is our mission and our business,” Abdullah said. “That education must include providing the correct information and a pathway for students to select beneficial partnerships and possess financial literacy so that they may reap the benefits of these NIL deals long after graduation.”
At the same time, he said, there must be a true partnership between the NCAA, the member institutions, and student-athletes.
“Our name, image, and likeness are all intertwined,” said Abdullah, adding that he “unequivocally supports” legislation that provides a single national standard for collegiate athletes to market their NIL.
Glassman took it a step further and suggested that both high schools and colleges should be required to educate their players on NIL, how to protect themselves, and how to handle everything safely.
“The focus of a national standard should implement as much safety and protection of the student-athlete as possible to keep them out of legal and future career trouble,” said Glassman. “Also, there needs to be more emphasis from a national standard on the educational requirements in NIL.”
Rep. McMorris Rodgers, who chairs the House Energy and Commerce Committee, said that such clear protections and education can prevent many student-athletes from being exploited.
“We must also establish clear, national rules so that amateur athletes have every chance to succeed in life and in sports,” she said.
Fitzpatrick, however, doesn’t think NIL is a congressional issue.
“I’m much more prone to think that private enterprise or an in-house entity will be able to create the necessary system,” he suggested.
The process has to start with the governing bodies, such as the NCAA at the national level or the major conferences on a smaller level, said Fitzpatrick, adding that a broad panel of university presidents also might be a consideration.
“Here’s the deal,” he said. “If those entities cannot figure it out, unfortunately, this might land in Congress’s lap. I don’t think any system works at its highest level of potential under a heavy hand from Congress. Ideally, the governing bodies can create a system that ensures fairness and equity across the system, and employ the services of a third party to manage and operate it.”
Additionally, there needs to be more uniformity in recruiting, according to Glassman, who said that currently, high schools and colleges that are able to put together the highest financial package have the advantage when it comes to recruiting.
“There should be regulations of when a college athlete should be able to receive that money while in college, and putting the money in a trust fund would be beneficial so the student-athlete can focus on school,” Glassman said. “It really makes sense to start implementing high school educational programs to student-athletes about NIL, and the sooner and the more educational resources available the better to protect the student-athletes.”
Ideally, he added, the NCAA should enforce NIL laws, but he thinks it’s going to be very difficult for it to do so until the federal government provides a federal standard.
“Without any uniformity, it’s going to be extremely difficult for the NCAA to monitor each state’s NIL laws and figure out jurisdictional issues and other state-to-state nuances,” said Glassman.