If NIL policies stay in the on-deck circle much longer, we may be readying for a summer of transactional and eligibility madness.
Athletics Veritas is a weekly series aimed at helping higher education executives, faculty, and other stakeholders stay tuned in on trending national issues impacting college athletics, especially NCAA Division I. Athletics Veritas is created by senior DI athletic administrators around the nation.
Summer of NIL Love: With the unofficial deadline to enact NIL policies looming, if a national NIL solution stays in the on-deck circle past July 1, we may be priming for a summer of transactional and eligibility madness.
Executive Summary
The Division I Council expressed general support for amending the effective dates of the four Division I NIL proposals from August 1, 2021, to July 1, 2021, or immediately if adopted after July 1, 2021
The NCAA and its member schools are also endeavoring to collaborate with congressional leaders for a universal federal law to preempt the buffet of diverse proposed and adopted state NIL laws, some which take effect July 1
Quality assurance efforts by the NCAA NIL Solutions Group and NCAA staff continue around the proposed NIL policies and disclosure process, including the role of a to-be-named third-party administrator
The impact of NIL rules on high school athletes is also a variable being assessed in the leadup to a vote on NIL proposals
Student-athletes and third-parties are beginning to consider NIL opportunities despite the extended delay in enacting a national solution for NIL activity
The continued buildup to an NCAA and/or federal solution being enacted by July 1 could have student-athletes increasingly relying on July 1 to begin NIL activities full-stop
If action is not taken by the NCAA and/or Congress by July 1 to legalize NIL activities, student-athletes may forge ahead with NIL transactions and could prompt a spree of NCAA waiver and eligibility reinstatement requests
The Division I Council may need to consider a temporary blanket waiver or other bridge-solution to create a permissive landing spot for NIL transactions for the near term if a national solution remains under construction
Circle July 1 on Your Calendar
Celebrating Canada might not be the only reason for celebration this July 1. All NIL policy arrows seem to be pointing to the first day of July as the date we could finally achieve real change to NIL policies on a national level.
Last week, the Division I Council considered a recommendation by the NIL Legislative Solutions Group to amend the effective date of Division I’s NIL proposals -- Proposal Nos. 2020-6, 2020-7, 2020-8 and 2020-9 -- from August 1, 2021, to July 1, 2021, or immediately if action on the four proposals is taken after July 1.
The Legislative Solutions Group’s rationale for moving up the effective date is due to some states having adopted NIL legislation that will become effective on or around July 1, 2021. If the NCAA NIL proposals are adopted, amending the effective dates to align with the effective dates of state legislation would provide greater consistency in NIL opportunities and regulations for student-athletes in states that either have not adopted legislation or have adopted legislation with effective dates after July 1, 2021.
Although the Division I Council didn’t take action last week on the recommendation to change the effective dates of the four proposals, there was indication the Council does generally support the effective date change. The Council would need to adopt the effective date change prior to July 1 -- possibly at the Council’s June 22-23, 2021, meeting or at another intervening Council session.
The NCAA Board of Governors laid out in its October 2019 press release an expectation that all three NCAA divisions adopt NIL-permissive rules as soon as that fall but not later than January 2021. Twelve-plus months have passed since that press release, January 2021 came and went, and as we saw, the anticipated votes on NIL proposals are never sure things as all three NCAA Divisions’ governance bodies last January tabled or withdrew their respective NIL proposals to allow for further deliberations and address concerns raised by national stakeholders.
When will the Council vote on these NIL proposals?
The NIL Legislative Solutions Group discussed issues related to the timing of voting on NIL Proposals 2020-6, 2020-7, 2020-8 and 2020-9. The group recommended that the Division I Council take action on the proposals prior to July 1, 2021. Voting on the NIL proposals prior to July 1, 2021, is necessary to provide clarity for student-athletes and the membership in preparation for the implementation of new NIL regulations as of July 1.
The Legislative Solutions Group noted the need for additional discussion regarding both the application and timing of implementing pre-enrollment NIL regulations. In particular, the group acknowledged concern about the impact on a prospective student-athlete’s high school eligibility and the desire for consistency with state high school amateurism regulations. As the group continues its deliberations, it recommended the Council discuss and provide feedback on Proposal No. 2020-7 (amateurism -- use of NIL -- prospective student-athletes), which the Legislative Solutions Group will consider during its meeting on June 8.
In an interview with The New York Times recently, the NCAA’s president, Mark Emmert, said he would recommend that college sports’ governing bodies approve new rules “before, or as close to, July 1,” when the new laws are scheduled to go into effect in Florida, Alabama, Georgia, Mississippi and New Mexico.
What’s the latest on the NCAA naming a national third-party administrator to manage disclosures and reporting of NIL activities?
The Legislative Solutions Group recently discussed issues related to the use of a third-party administrator for the disclosure of NIL activities. The Legislative Solutions Group recommended that the Council provide input to the NCAA staff about whether to conduct further diligence regarding the possible use of a third-party administrator, including entering into short-term agreements as appropriate. The NCAA NIL proposals include disclosure requirements around student-athlete NIL transactions and Proposal No. 2020-9, specifically, would require that such disclosure would need to be made to a national third-party entity.
A third-party administrator could serve as a central hub for collecting disclosed information, storing data and providing access consistent with applicable laws, as well as report national trends permitted by law and help monitor and evaluate NIL activities for possible malfeasance. In addition, the third-party administrator could help ease the burden on campuses by providing education to student-athletes, prospective student-athletes and key stakeholders (e.g., boosters, professional service providers). It is important to note that a third-party administrator will not be a certification entity but may be able to assist in reducing the likelihood of impermissible activities.
While NCAA staff has the authority to continue exploration and expend funds in furtherance of such exploration, the Legislative Solutions Group recommends input from the Council prior to doing so. Additional due diligence will allow for identification of benefits and challenges in a developing environment. Specifically, further investigation will include work on data collection practices and issues of confidentiality, user experience, legal considerations, appropriate education, and finances. Importantly, additional work will allow for continued collaboration with Congress as federal bills are being drafted and considered. Further research will help determine whether technology can be developed as early as July 1 and ultimately whether the membership should adopt Proposal No. 2020-9.
What are university personnel seeing on the NIL front as we await the legalization of NIL?
The tabling of the Division I NIL proposals in January has only intensified the reliance and expectation by NCAA student-athletes (and coaches and staff) that NIL-permissive policies on a national scale will be adopted once and for all this summer.
The number of third parties seeking to partner with student-athletes on a variety of endorsement and entrepreneurial opportunities is ratcheting up. Conversations among student-athletes, their parents and guardians, and third-party companies and agencies about real-time NIL opportunities are likely happening and positioned for activation the moment NIL activities become legal.
In at least one well-publicized case, NIL deals are already being agreed to which technically violates current NCAA rules that prohibit student-athletes, or persons on their behalf, from verbally agreeing to endorsement deals. It is reasonable to consider that, in reality, the number of NIL deals being brokered -- verbally, if not in writing -- could be compounding daily as we move from spring to summer.
Student-athletes are asking questions about prospective (or actual) NIL opportunities, what policies institutions may be crafting, and other NIL-specific topics that reflect tangible activity around this new marketplace.
Campuses are working behind the scenes to prepare for the operational and policy management of NIL transactions regardless of national solutions being adopted this summer. Campuses may be developing policies specific to the scope of NIL activity disclosures for campus purposes, the vetting of guest speakers wanting to get in front of student-athletes, conflict of interest scenarios, and restricting particular commercial categories that may be contrary to institutional values, among other policy themes.
Not having a national third-party administrator process established with ample runway prior to the anticipated adoption and effective date of a national NIL solution will put more pressure on NCAA member schools to create and manage their own local disclosure and transactional policies at least for the initial wave of NIL transactions waiting in the wings.
One other stark reality is that student-athletes (and their families and third-parties) may have no more patience to wait on a national NIL solution. Student-athletes may forge ahead with NIL transactions this summer even if the NCAA and/or Congress do not take action by July 1. Whether through restlessness or a perceived assumption that, the rules will, in fact, change July 1 -- college athletics should expect the NIL marketplace to become active this summer irrespective of a national policy being in place.
If that scenario comes to pass where real-world NIL activities come out of the gates before permissive NIL rules are adopted, the number of NCAA waiver and reinstatement requests could convert the usually quieter summer time into red-tape feeding frenzy.
Depending on how the next few weeks play out, it may behoove the NCAA Division I Council to consider approving a temporary blanket waiver creating a permissive landing spot for NIL transactions to be managed this summer if a more permanent NIL policy solution continues to be under construction past July 1. Finding a bridge-solution via a temporary blanket waiver could reduce student-athletes' and coaches' collective anxiety around ineligibility due to NIL activities, could provide a forum to test and prove-out the validity of the NCAA proposals on real-world NIL transactions, and could foster efficiencies by reducing the inevitable red-tape that envelops time and resources expended with traditional NCAA waiver and reinstatement filings.
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.
