The Student Athlete Level Playing Field Act includes a federal preemption provision that would override any existing state laws addressing NIL rights
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A New Student-Athlete NIL Congressional Bill Introduced
Bill is entitled “Student Athlete Level Playing Field Act “
Bill has bipartisan sponsorship including representatives from four of the Power 5 conferences’ footprints
Congressman who played Division I and NFL football is one of the co-sponsors
NIL rights for student-athletes is a “civil rights issue” according to one of the sponsors
Bill includes a federal preemption provision that would override any existing state laws addressing NIL rights
Sponsors also indicate bill’s intent is to avoid creating employment status for student-athletes and address recruiting improprieties through NIL opportunities
Overview
Last week, a bipartisan bill was introduced which aims to expand student-athlete name, image and likeness (NIL) rights and opportunities while preserving aspects of the existing collegiate sport model. U.S. Congressman and former NFL and Ohio State wide receiver Anthony Gonzalez (R-OH) and Congressman Emanuel Cleaver (D-MO) introduced the bipartisan Student Athlete Level Playing Field Act alongside Representatives Colin Allred (D-TX), Rodney Davis (R-IL), Josh Gottheimer (D-NJ), Jeff Duncan (R-SC), Marcia Fudge (D-OH), and Steve Stivers (R-OH).
According to the press release, the bill grants student-athletes the right to capitalize off their own NIL while including important guardrails for the recruiting process and leveling the national playing field by preempting the patchwork of state laws that have been signed into law or are pending in state legislatures.
The sponsors noted that college sports is big business (especially for men’s basketball and football) and everyone is capitalizing except the players. BIll sponsors asserted college athletes should be able to capitalize off their NIL just like every other American. The bill sponsors also intend to “preserve the college athletic system that Americans across the country love, while also delivering meaningful reforms for student athletes.” These athletes deserve the same privilege all other Americans have -- the ability to fulfill their American Dream by capitalizing on what they’re good at.
This bill isn’t the first congressional legislation put forward to address NIL rights for student-athletes in recent months. U.S. Senator Marco Rubio (R-FL) earlier this year sponsored a bill which received support from Division I institutions in Florida as well as the SEC and ACC. U.S. Congressman Mark Walker (R-NC) also sponsored an NIL bill last year which attempted to address the issue through a simple amendment to the federal tax code.
Federal Preemption
One key issue addressed in the legislation from Gonazalez, Cleaver, et al. (as well as by the Rubio bill) is the question of a federal preemption that overrides any patchwork of state-specific NIL laws which will invariably differ by state.
In Fall 2019, the NCAA announced it would work to provide student-athletes with guidance on how to capitalize from their NIL under league rules and proposed to create new rules no later than January 2021. However, according Gonzlez, Cleaver, et al., the action taken by the NCAA will likely be incomplete in its efforts to provide full NIL rights and will be in conflict with other state laws that have already passed -- again, all with differing standards. There must be federal legislation to set a uniform standard, level the playing field, and protect the spirit of college athletics for future generations of student-athletes.
Permitting Student-Athletes to Obtain Agency Representation
In addition to granting student-athletes the right to capitalize off their own NIL, this bill allows student-athletes to obtain agency representation for purposes of pursuing NIL opportunities. This provision creates a sea-change for the traditional NCAA restrictions regarding the use of agents. At its core, this bill would restrict a covered athletic association (e.g., NCAA) and an institution of higher education from prohibiting a student-athlete from participating in intercollegiate athletics because the student-athlete enters into an endorsement contract. NCAA Division I rules, namely Bylaw 12.3, currently restrict student-athletes’ ability to contract with, and be represented by, agents for purposes of marketing their athletics ability---such a rule would need to be red-lined if this bill passes.
NIL Categories That Could Be Restricted
The bill would allow universities, the NCAA, or conferences to restrict NIL or agent contracts if a contract falls into a category that could harm the reputation of a student-athlete, his or her school, or a covered athletic organization. The bill outlines the following categories of brands, companies, or types of contracts that could be restricted:
A tobacco company or brand, including any vaping device or e-cigarette or related product.
Any alcohol company or brand.
Any seller or dispensary of a controlled substance, including marijuana.
Any adult entertainment business.
Any casino or entities that sponsor or promote gambling activities.
Interestingly, some Division I institutions are crossing an invisible threshold by entering in to sponsorship agreements with gambling entities. Many college athletics programs have also had for years sponsorship and pouring rights deals with alcohol brands. If Division I athletics departments are able to broker sponsorship deals and relationships with alcohol or gaming enterprises, are they on firm ground to restrict student-athletes from doing the same? The premise of protectionism for college student-athletes by restricting these sponsorship categories for NIL purposes will be walking even finer lines than ever before as Division I institutions continue pursuing revenue from these same restricted categories.
Also in the brand protection realm, the bill holds that a student-athlete may be prohibited from wearing any item of clothing or gear with the insignia of any entity during any athletic competition or university-sponsored event.
Establishing an NIL Commission
One distinct component of the Gonzalez, Cleaver et al. bill is that it establishes a congressionally appointed commission of a variety of NIL stakeholders, including student-athletes. The commission is tasked with continuing to study the logistics of NIL as it is rolled out and providing legislative recommendations to Congress about ways the process could be improved while ensuring student-athletes are not considered employees of universities. The bill makes clear that universities should not compensate student-athletes for the use of their NIL or allow a student’s NIL earning ability to affect their scholarship or financial aid status. The transition from the traditional NCAA boundary lines regarding amateurism to this newly expanded allowance for NIL rights will require special attention and oversight the moment any such law passes which makes this commission a sensible add-on.
The establishment of this NIL Commission would have the following charges:
Make recommendations to Congress and to each covered athletic organization about the implementation of NIL rules
Recommend to each covered athletic organization such a process to certify or recognize credentialed athlete agents;
Make recommendations for the establishment of an independent dispute resolution process, for any dispute arising between a student athlete and a covered athletic organization or institution of higher education; and
Make recommendations for additional categories of endorsement contracts that are excepted under section 2(a)(2).
The membership of this Commission would include 13 members representative of a cross-stitch of interests including current and former student-athletes, coaches, experts in marketing, agency law, and public relations, individuals with corporate governance experience as well as athletic directors and other administrators. The appointment of these individuals would be executed by the major and minority leadership from the House of Representatives and the Senate.
The Commission would have annual reporting obligations and would have a sunset provision. Not later than one, two, and three years, respectively, after the Commission is constituted, it shall submit to the Committee on Energy and Commerce of the House of Representatives and the Committee on Commerce, Transportation, and Science of the Senate annual reports which must be made available to the public. The Commission shall terminate 60 days after submitting the final report.
NIL & Recruiting
One byproduct of NIL deregulation at the federal level that is of particular interest to the NCAA membership is how it will impact fairness and equity in recruiting, the concern being that schools with deep-pocketed boosters could buy prized recruits through promises of future NIL opportunities. For example, the local car dealership, via the coaches recruiting the prospect, promises the recruit $100,000 in NIL income over four-years of college should the prospect commit, enroll, and fulfill promotional opportunities with the car dealership like autograph signings and a commercial appearance.
To that end, the bill amends The Sports Agent Responsibility and Trust Act (SPARTA) to include a definition of “boosters,” and details actions taken by boosters in the recruiting process that would be penalized through FTC enforcement. There will inevitably be additional hand-wringing around exactly how NCAA recruiting rules will evolve to regulate this crossroad of NIL opportunities and recruiting.
Prioritizing the Enforcement of the Laws
Where the enforcement of these proposed policies would originate is also worth noting. The Federal Trade Commission (FTC) would be tasked with enforcing this provision, and student-athletes can file a complaint with the FTC if they believe their rights are infringed upon.
One criticism of state or federal laws regulating the agency world in relation to college athletes is the lack of funding or focus on enforcing the actual laws. This bill attempts to ameliorate those concerns by indicating the FTC “shall enforce this section in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act. Any person that violates this section shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act. Nothing in this Act shall be construed to limit the authority of the Federal Trade Commission under any other provision of law.”
Summary
This latest NIL bill does attempt to ensure the expanded NIL rights for student-athletes and pave a constructive path for agency representation to support those rights. The bill also attempts to maintain key tenets within the traditional NCAA college athletics constructs -- namely student-athletes remaining students first and not employees and reaffirming a level playing field when it comes to recruiting.
Another point in this bill’s favor is the cross-section of bipartisan sponsorship the bill offers -- with representatives coming from six different states including representatives from four (i.e., ACC, Big 10, Big 12, SEC) of the five Power-5 conferences’ geographic footprints.
Two other key issues (or questions) in play with these NIL rights coming to fruition is, first, the timing of Congress voting on a bill when COVID relief priorities and a national election are before us. Second, how the NCAA membership, via the NIL Working Group, can synthesize the broad strokes of a federal bill into clearly articulated and enforceable NCAA rules.
The NCAA outlined Sunday, January 31, 2021, as the estimated timeline for the NCAA membership to adopt new NIL-related policies. The key word found in the NCAA’s NIL timeline for publishing and adopting NIL legislation is “should.”
The NIL rights issue is not a simple matter with a simple solution. All three divisions of the NCAA membership should anticipate more headlines, dialogue, and focus on NIL concepts this fall.
Athletics Veritas is presented for information purposes only and should not be considered advice or counsel on NCAA compliance matters. For guidance on NCAA rules and processes, always consult your university’s athletics compliance office, conference office, and/or the NCAA.
