Dissecting the “College Athletes Bill of Rights” Senate Bill
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A March to a New Madness -- Dissecting the “College Athletes Bill of Rights” Senate Bill
AV conducts multi-part series revealing key takeaways from the 'College Athletes Bill of Rights' Senate bill.
Expansive bill not only creates protections for student-athlete NIL rights, it would create revenue sharing model with student-athletes
Bill also expands federal government's involvement in policy making, monitoring, and enforcement in a variety of areas affecting college sports
Bill co-sponsored by Senator Booker (D-NJ), Senator Blumenthal (D-CT), Senator Gillibrand (D-NY) and Senator Schatz (D-HI)
Bill would establish a Commission on College Athletics
Revenue sharing model funded from NCAA, conference, and university-based NIL revenue
Universities would be tasked with establishing and funding a medical trust fund for current and former college athletes
The bill, if enacted, would dilute the NCAA’s exclusive authority over college sports
The opening to this 63-page federal bill plainly states its objective is to “protect the rights of college athletes and to establish the Commission on College Athletics, and for other purposes.”
In this four-part series that will coincide with the on-the-court March Madness (buzzer-beaters, upsets) and off-the-court March Madness (pandemic-influenced postponements), Athletics Veritas takes a deep dive into one of the most talked about bills introduced by Congress and one that, if enacted as scripted, could change the landscape of college sports forever.
The “College Athletes’ Bill of Rights” transcends the matter of student-athlete NIL rights and delves into health, safety, academics, college athlete life skills, unionizing athletes, enforcement, penalties and a variety of other policy impacts on college sports.
AV will answer several pressing questions about this bill, including its potential for usurping the NCAA’s current role as the preeminent authority for college athletics in America. In a variety of places, how current NCAA rules or other policies compare to the bill’s proposed actions is also explained.
Our analysis of the bill is crafted through the lens of NCAA Division I athletics even though the bill, if enacted, would apply to the other two NCAA divisions as well as other institutions of higher education that sponsor athletic programs, such as universities in the NAIA.
In Part I of our series, we focus on the bill’s proposed plan of action for creating a permissible NIL landscape for college athletes.
Part I: “It’s Gotta Be the Shoes” -- Student-Athlete NIL Rights
Under the bill, would NCAA Division I members still be able to sell jerseys with only the number (but not the name) of current popular student-athletes without any NIL concerns?
Current NCAA rules allow for institutions to sell jerseys with any number on it provided there is no student-athlete name on the back. For example, Clemson could have been selling #16 football jerseys in its campus bookstore the past few years and collecting the revenue provided there was no reference to Trevor Lawrence, by name, on the jersey.
Under this bill, that all could change.
In the bill’s definition section, the term ‘‘likeness’’ includes, for college athletes that have a jersey number, “...the jersey number associated with the college athlete and the sport in which the college athlete participates at a particular institution of higher education during the period of the participation of the college athlete in the sport at the institution of higher education, if the jersey number is accompanied by a logo or color scheme that is clearly associated with the institution of higher education; or some other means by which the jersey number is clearly associated with the particular college athlete.” This means a Clemson jersey with its trademark paw and purple, orange, and white colors along with the #16, and nothing more, would have been considered Trevor Lawrence’s likeness.
The bill further notes that with respect to any college athlete or former college athlete the uniquely identifiable voice, catchphrase, or nickname of the college athlete; or any other trademark that identifies or distinguishes the college athlete is also protected.
Is the bill conducive to the possible creation of group licensing at the college level?
Yes, the bill implies the creation of group licensing. The bill states that a person may not use the NIL or athletic reputation of any member of a group described in the bill to sell or promote any product unless the person obtains a license from the group for that purpose.
Does the bill provide latitude for universities to enforce a “morality clause” by which the university could prohibit student-athletes from endorsing certain types of products or services?
Sort of. The bill would allow for a state to prohibit college athletes who reside in that state from entering into endorsement contracts with entities in a particular industry if the state also prohibits institutions of higher education located in the state from entering into agreements with such entities.
Interestingly, the bill also calls for universities to provide to each college athlete enrolled at the institution of higher education “a list of entities with which institutions of higher education and college athletes are prohibited from entering into endorsement contracts.”
Institutions providing a prescribed list of prohibited businesses from which a student-athlete could enter is unwieldy and would lead to more red tape when a new business pops up not on the list given to the athlete. A more reasonable approach in the bill would have been to require notice to student-athletes through a list of restricted categories, such as gambling or adult entertainment, instead of a prescribed list of casinos and strip clubs.
Under the bill, if a student-athlete has an NIL endorsement agreement with a third-party entity, can the Division I school (or its media rights holder on its behalf) approach that same entity to court a sponsorship agreement with the institution?
No. The bill recognizes the possibility of concurrent sponsorship agreements so that, for example, an entity already endorsed by a student-athlete could also contract with the student-athlete’s university so the entity could use the university’s marks, logos, or colors in the advertisement with the student-athlete.
The bill specifies that an agreement between the institution of higher education and the third party “cannot be initiated or coordinated” by the institution. On its face, this would restrict a university’s media rights holder, say, market-leader Learfield IMG College, from picking up the phone and calling the marketing director of a business already receiving an endorsement from one of its student-athletes.
There does not appear to be a parallel restriction on student-athletes seeking endorsement deals with a current corporate partner of the student-athlete’s university.
Would the bill allow a college athlete to wear Adidas shoes while representing a university with a Nike athletic apparel deal during the school’s games?
Yes. To quote Mars Blackmon, “it’s gotta be the shoes.” NCAA member schools and Nike, Adidas, Under Armour and their apparel-producing cohorts should be paying close attention to this provision in the bill.
The bill does permit a university to “require a college athlete to use, during a competition or practice sponsored by the school, apparel selected by the institution of higher education”; however, that exclusivity provision over what apparel a college athlete may wear has a big exception: an NCAA member school “may not prohibit or discourage a college athlete from wearing footwear of his or her choice during mandatory team activities, unless the footwear has lights, reflective fabric, or poses a health risk to the college athlete.”
That’s right, a student-athlete at a “Nike school” could choose to wear Adidas shoes in competition while representing the university. Putting this into perspective, Zion Williamson could have worn Adidas shoes while representing Duke (a Nike school) during his one-and-done year and Duke and Nike could not stand in his way.
This provision speaks to “mandatory team activities” being the space in which an NCAA member school could govern which apparel their student-athletes may wear -- except the shoes.
Universities also may not prohibit and may not enter into a contract that prohibits a college athlete from carrying out activities pursuant to an endorsement contract during a period in which the college athlete is not engaged in a mandatory team activity.
From a financial aid perspective, does this bill address whether NIL compensation could be considered financial aid?
The bill states that covered compensation or commercial sports revenue royalties shall not be considered financial aid by any institution of higher education, intercollegiate athletic association, conference, or third party.
NCAA rules have long excluded a student-athlete's outside employment income from financial aid calculations. It will be interesting to see if the Department of Education, under the FAFSA analysis for college students, would treat NIL income like work-study aid or, more broadly, "protected income" not impacting a student's need analysis.
Would the bill enable university athletic boosters to exploit, under the banner of NIL transactions, the current NCAA recruiting guardrails and financially support college athletes in a myriad of ways without causing eligibility repercussions for the athlete?
Yes. This section of the bill would have many leaders in college sports sweating. The bill states that an NCAA member school, its conference, and the NCAA national office “may not restrict the ability of a college athlete to receive payment from any source for transportation, room, or board for one or more friends or family members of the college athlete during any period in which the college athlete is addressing a physical or mental health concern or participating in intercollegiate athletics competition; necessities, including food, shelter, medical coverage, and medical expenses; or tuition, fees, books, transportation, or any other incidental expense that is not otherwise provided by an institution of higher education.”
This section says a lot. The most critical component in this provision is three words: “from any source."
The concerns orbiting NIL conversations as expressed by college athletics leaders is the potential for recruiting inducements and exploitation of the amateurism and recruiting rules to run amok yet be disguised as legitimate NIL activities.
However, in this bill, there’s no veil or pretense. Anyone, booster or not, could provide a college athlete (and, in some instances, their family and friends) everything from transportation and car repairs to free groceries to payments for rent or tuition and a slew of other expenses.
Does the bill create a protective fence around NCAA student-athletes’ eligibility and scholarships in the context of NIL activities?
Yes. The bill states that “receipt of covered compensation pursuant to an endorsement contract shall not adversely affect a college athlete’s eligibility or opportunity to apply for a grant-in-aid or the amount, duration, or renewal of a college athlete’s grant-in-aid.”
Further, an NCAA member school “could not revoke or reduce a college athlete’s grant-in-aid based on the college athlete having entered into an endorsement contract.” As with many aspects of this bill, the devil will be in the application details as it correlates to current NCAA and institutional rules that provide a permissible basis for NCAA Division I schools to reduce or cancel a student-athlete’s scholarship.
Does the bill allow for college athletes to be represented by agents in NIL transactions?
Yes. College athletes would be allowed to retain anyone from agents to marketing firms to financial advisors to attorneys for purposes of navigating NIL endorsement opportunities and contracts. This includes representation for group licensing.
The bill goes as far to say that universities, conferences, the NCAA, and even a state “may not maintain or enforce any rule, requirement, standard, condition, or other limitation that would restrict a college athlete’s ability to retain an agent,” let alone enter into an NIL endorsement agreement.
Could NCAA schools represent their student-athletes in NIL transactions?
No, for conflict-of-interest reasons, an NCAA school, its conference, the NCAA national office, or a corporate partner of any of these entities may not represent college athletes in endorsement contracts; regulate the representation of college athletes with respect to endorsement contracts; or engage in the certification of individuals for such representation. This presents an interesting overlay, especially for businesses that may have contractual relationships with universities that might also be in the market to serve or represent student-athletes in NIL matters.
For example, universities certainly have local and national law firms on retainer to handle a myriad of legal issues affecting their respective campuses. Those firms would need to run their conflict-of-interest and client-screening protocols if one side of the firm handles university representation while another side takes on college athlete agency work.
One adjacent issue tied to the permissive agent representation clause in this bill is how the NCAA or its member schools can monitor whether an agent or marketing firm is taking its representation in directions beyond the scope of NIL transactions. For example, how could a school reasonably monitor whether an agent of a Division I basketball student-athlete hasn’t called overseas pro basketball teams to shop his or her client for potential contract signing with a pro team? If those distinctions are to be maintained, the monitoring of so many third parties will become a high hurdle if not outright untenable.
How does the bill address the debate on whether fair market value of NIL transactions can be determined or even part of NIL policy?
The bill states that NCAA member schools, their conferences, or the NCAA national office “may not coordinate or cooperate with any other institution of higher education, intercollegiate athletic association, or conference to limit or determine the amount of payment offered to a college athlete under an endorsement contract.” Translation, the bill calls for excluding any fair-market value variable or consideration in the permissibility of the NIL transaction---the open market will dictate the compensation.
Does the bill speak to NIL’s potential impact on universities’ athletics revenue and expenses, including coaches’ salaries and, as we have seen during the pandemic, the cutting of sports as a cost-saving measure?
Yes. The bill states that an NCAA member school, conference, or the NCAA national office “may not eliminate the funding of an athletic program unless all other options for reducing the expenses of the athletic program, including reducing coach salaries and administrative and facility expenses, are not feasible.”
This provision is aspirational and provides no specific metrics to determine what “feasible” means or how a university could meet this nebulous standard. The realities of employment contracts with coaches could mean, at least in theory, that this provision spurs on universities to include language in coaches’ contracts that permit base salary reductions of their highest paid coaches in the event a university is on the brink of dropping one or more of its sports due to financial austerity. That is a subjective, amoebic scenario -- determining when cutting a sport is a real possibility.
This particular clause in the bill is also overly inclusive in the sense that a conference and the NCAA national office would not have the authority to drop a sport from a school’s sport sponsorship portfolio -- that’s the purview of the university sponsoring the sport.
That concludes Part I of looking under the hood of the College Athletes Bill of Rights. In Part II for next week, we will delve into the College Athlete Bill of Rights’ provisions protecting college athletes' ability to transfer, addressing recruiting tampering during the transfer process, and compelling NCAA member schools, conferences, and the NCAA national office into a revenue sharing model with college athletes.
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.
