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.
Key Questions And Takeaways From The NCAA’s Recent NIL Guidance - Part I
Executive Summary:
Campus personnel begin to digest the NCAA’s recent NIL guidance.
The NCAA’s recent NIL guidance focused on activities surrounding current student-athlete NIL activities.
The guidance reflects a spectrum of scenarios, questions and gray areas NCAA member schools are navigating with NIL.
New NIL terms of art are emerging from the NCAA’s NIL guidelines that may necessitate eventual prescribed definitions and codification in the NCAA Manual.
Third-party rights holders and NIL vendors and their evolving, malleable services on behalf of NCAA member schools receive further scrutiny from the NCAA’s recent guidance.
Lines in the sand have been drawn on the extent athletics marketing staff could provide support and resources to current student-athletes in their NIL pursuits.
Conferences are referenced in the recent NIL guidance in terms of sample impermissible NIL activities at a league-wide level.
Coaches and staff members’ student-athlete friendly behaviors (e.g., donating tickets or suite access to third-parties to incentivize the third-party to commit to NIL deals) would seemingly need to be reined in.
Gradations of what constitutes ‘pay-for-play’—direct or indirect— are also surfacing in the NIL environment
Conflicts of law— NCAA bylaws vs more permissive state laws— remain a bellwether issue reflecting the broader complications.
[Editor’s Note: AV offers a two-part series analyzing the recent NCAA NIL guidelines. The full script of the recent NCAA guidelines is at the bottom of this article.]
Last week the NCAA released a new round of guidance regarding NIL activities, and, in this case, what is permissible and impermissible regarding involvement with current student-athlete NIL activities.
The NCAA’s guidance focused on various current NCAA rules touching personnel (Division I Bylaw 11.1.3, athletics department staff members are prohibited from representing a prospective student-athlete or enrolled student-athlete in marketing their athletics ability or reputation); pay for play (Division I Bylaw 12.1.2-(a), a student-athlete may not use athletics skill (directly or indirectly) for pay in any form; institutions causing NIL compensation under promotional activity legislation (Bylaw 12.5.1.1-(f), institutions may not compensate a student-athlete in exchange for the use of their NIL); and extra benefit rule (Bylaw 16.02.3 generally prohibits an institutional staff member or booster from providing a student-athlete with a special arrangement or benefit, Bylaw 16.3 permits institutions to finance and assist student-athletes with personal development services.
The NCAA guidance also included a disclaimer which stated: “This document addresses the application of NCAA Division I Bylaws and the NCAA Interim Policy to institutional involvement in a currently enrolled student-athlete’s NIL Activities. The guidance in this document is subject to state laws or executive actions with the force of law in effect. Further, institutions should consult legal counsel regarding other issues that may stem from institutional involvement in NIL activities, such as the potential for contractual nonperformance, Title IX and employment related matters.”
This week’s AV highlights key takeaways and questions delving in to the nuance and campus-level realities that may be top of mind for NCAA member institutions’ staff members across the country.
MMR Partners & NIL Services Companies in Focus
To begin, the recent guidance noted that “[a]ny individual or entity acting on behalf of the athletics department (e.g., third party rights holders, third party agents) representing enrolled student-athletes for NIL deals, including securing and negotiating deals on behalf of the student-athlete…” is contrary to NCAA rules and impermissible.
This directive may be catching the attention of a variety of NIL vendors and multi-media rights entities in the college athletics space. NCAA member schools would be inclined to more closely review what services and activities its multi-media rights partner and any third-party NIL services vendors are offering.
For example, an NIL services vendor partnered with an NCAA school that places a "general manager" on campus to advance the NIL opportunities of current student-athletes for that NCAA school would prompt the question— "does that general manager’s service include securing NIL deals for current student-athletes contrary to NCAA guidance?" In more linear examples, there have been reports of Division I member institutions aligning or creating partnerships with agencies that would be positioned to generate NIL deals for current student-athletes.
For the permissible activity which would allow coaches or staff to “…purchase items related to a student-athletes NIL deal that are de minimis in value and for the same rate available for the general public…” – the next question is “whether a coach could purchase 500 products being sold by one of their student-athletes and then give those products away to fans for free?” The inkling is that such an activity would not be permissible in the sense that the coach’s purchase of 500 products was not for personal use and was intended to create compensation for the student-athlete which goes beyond the ‘de minimis in value’ premise.
"NIL Entity" is New NCAA Term of Art
The continued maturation of NIL in the NCAA landscape is also starting to hatch new NCAA terminology. One term that comes to mind immediately is the term “NIL entity.” NIL collectives would seemingly come to mind when referencing “NIL entity” but that term could also encompass other parties such as an individual donor, an agency, or NIL vendor depending on the scope of activities those parties perform. The language in the NCAA’s recent NIL guidance specifically linked “booster” to “NIL entity” as well as linking “collective” to the NIL entity term.
NCAA guidance also referenced "NIL entity" as those involved with NIL marketplaces (informally, companies that operate NIL matching-making in an online environment) and framed NIL entity as “others seeking to engage student-athletes…” in NIL activities. The point here is that a variety of parties seem to be tied to the new NCAA term of art “NIL entity” and the correlating guidance applicable to an NIL entity.
“Representing a student-athlete” is also an interesting turn of phrase used in the NCAA’s recent NIL guidance. What’s interesting about that clause is that individuals or companies who may be performing activities to help secure NIL deals for student-athletes may not consider themselves “representing” a student-athlete in a formal sense like an agent might who has a formal written agreement for such representation. In other words, there could be some plausible deniability via semantics— “we’re not an agency that represents student-athletes for NIL... we’re a marketing company.”
Reigning in Coaches & Staff Involvement with Cultivating NIL Deals
Another example of a permissible NIL activity identified in the NCAA’s recent NIL guidance overlooks NIL landscape realities. One of the recent NIL guidelines stated that its permissible for staff or coaches to “[r]equest a donor to provide funds to NIL entity (without directing funds be used for a specific sport or student-athlete).”
The challenge with this guideline is that it does not address the fact that some collectives (an example of an NIL entity for which a donor could provide funds)— are sometimes created specifically for a small group of sports, a singular sport, or even a specific position group within a sport like offensive linemen on a football team.
To look at this from a different angle, the NCAA could simply be saying that coaches and staff cannot recommend or direct a donor to donate to a collective that is any more limiting that open to all student-athletes from all sports for a particular NCAA school.
NCAA guidance might not extract institutional involvement to the degree the guidance intends, especially when the final outcomes land in the same place. For example, coaches can’t directly compensate student-athletes for their NIL; however, those same coaches can donate signed basketballs or footballs (at significant value) to NIL collectives which can then turn around and use those in its revenue generation to support its NIL marketplace (e.g., collective fan memberships) that generate NIL income for the same student-athletes on the coaches’ teams. Some observe that these slight distinctions are creating more work on-campus to arrive at the same outcome.
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.
