The next few months is critical period for NCAA member schools, student-athletes, coaches & third-party stakeholders to provide feedback to NIL policy
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The Draft NIL Policy Modernizes The Principle of Amateurism, Pending Questions on the Proposal and Next Steps for NCAA Membership
Several long-term NCAA promotional rules tied to amateurism will be deleted in favor of new NIL draft policy
The definition of “booster” for purposes of NIL activities and the role of NCAA Enforcement staff in enforcing NIL related policies will play key roles in new NIL frontier
Student-athlete NIL transactions inevitably puts pressure on NCAA member schools’ staff and other resources
Student-athletes’ responsibility in managing their NIL affairs
Next few months is critical period for NCAA member schools' administrators, student-athletes, coaches, and third-party stakeholders to provide feedback and recommended changes to the draft NIL policy
The NIL Concept Reflects the Evolving Meaning of ‘Amateurism’; but does it carve out Amateurism altogether?
One aspect to these proposed NIL changes that remains steadfast from prior iterations of NCAA rules and principles is to keep college sports tied to the evolving-definition of amateurism and yet still distinct from the current framework of what we consider ‘professional sports.’ The NCAA holds that the new NIL concept is not intended to convert student-athletes in to employees of their respective institutions. This legislative concept is premised on keeping these economic opportunities tethered specifically to a student-athlete’s NIL and nothing broader.
The NCAA concepts are purposefully distant from any policy that could lead to an employer-employee relationship where the “student” in student-athlete withers away. That is, nothing in the NCAA’s proposed NIL concept removes enrollment requirements at the NCAA member school nor eliminate the scholarship element that is limited to the institution’s cost of attendance and other specified educational expenses (as currently being litigated in the Alston case).
The proposed NIL concept does not swap out the current academic-based, scholarship paradigm for a purely financial relationship in which an individual athlete’s only obligation in exchange for compensation is to perform athletically for a university irrespective of any enrollment, GPA, or graduation expectations.
Speaking of the financial side of NLI opportunities, student-athlete employment earnings (e.g., part-time jobs; seasonal jobs) for work actually performed at the going-rate for similar jobs has long been a permissible financial opportunity under NCAA rules. This is where the fair market value component of future permissible student-athlete NIL opportunities will share the same measuring stick employment opportunities are measured---“at the going rate.”
What does the proposed draft NCAA NIL concept do to the current myriad of NCAA amateurism rules?
There will be copious red lining through the NCAA Manual due to this new NIL concept. In conjunction with removing outdated terms and restrictions, adding new terms, definitions, and policies will construct the new, modernized 21st Century Bylaw 12.
Over two-dozen NCAA amateurism rules and exceptions in Bylaw 12 would be removed based on the draft NIL policy. Yet, there will be several new provisions effecting policies related to NIL disclosures, the role of third-party administrators, the use of professional services, and conflicts of interest, among other areas. For those hoping for the NCAA manual to shrink in the end, that may not be in the cards.
Some long-standing NIL policies within NCAA amateurism rules would continue on. The NCAA’s ability to use a student-athletes’ NILs to promote its championships, programming, and activities is preserved in this new concept as are conferences ability to use student-athletes’ NILs to promote their championships.
The proposed edits would also include amending NCAA’s “amateur status” definition so that, for example, using athletics skill for promise of pay would be restricted if the individual is receiving pay for participation in that sport, not, more broadly, for using one’s athletics skill reputation or association with a sport for financial gain in, say, an NIL opportunity.
Now that the NIL Concept is Published, What’s Next?
The NCAA membership is now tasked with reviewing and discussing this initial draft NIL proposal; identifying “real-world application” questions that the written concept leaves in doubt; spell out policy edits or additions to the current draft; and bring forth any other feedback and questions back to the Legislative Solutions Group via the NCAA national office governance staff and/or the member institution’s conference office.
It is important to note the thought leaders around the NLI conversation and the NCAA membership seem to anticipate that the initial version of the NIL proposal could likely be modified and tweaked based on membership feedback. It is a work in progress. The challenge therein is finding enough consensus around proposed edits and additions to this initial draft.
NCAA student-athletes’ input on the legislative concept is also a critical piece to this feedback period. NCAA member institutions should be consulting their respective student-athlete advisory committees and, on a broader scale, provide outreach and feedback opportunities for entire teams and the entire student-athlete population on the draft NIL proposal.
It will also be curious how third-parties with vested interests in the new NIL marketplace may be lobbying member institutions and the NCAA national office---including some third-parties with current, standing business service agreements with member institutions---on how the draft policy could be edited in alignment with the anticipated transactional realities (and economic interests) involving said third-parties.
The NIL Roadmap Remains Speckled with Questions & Uncertainties
The first iteration of the NCAA’s NIL proposal is a starting point. There is a sense from stakeholders that even the version that is anticipated to be adopted in January 2021 will inevitably see additional NCAA modifications in the next couple of years as the NCAA membership, student-athletes, prospects, and others learn from the early days of the permissive NIL world.
The regulatory scope affecting pre-enrollment NIL activities by high school and two-year college students, for example, also necessitates coordination and education to those prospects prior to their entry at an NCAA member institutions. Some see this mirroring the broader amateurism monitoring roles that member institutions and the NCAA Eligibility Center play currently to certify a student-athlete’s amateurism---a function third-party administrator(s) could fulfill.
One of the flashpoint issues for regulating NIL is how fair market value (FMV) for student-athlete NIL opportunities will be determined. Who is responsible for assessing and calculating FMV for each student-athlete NLI business opportunity? What data and contextual details factor in to FMV assessments? Perceived recruiting-advantage dynamics are closely tied to what FMV could be---a student-athlete’s NIL opportunities’ FMV at one institution could be markedly more than an identical opportunity for a student-athlete at another institution. Differences in FMV in otherwise identical transactions may reflect the variability in marketplace dynamics including student-athlete’s social media following; the population surrounding the university; the school's alumni base; the sport the student-athlete competes in; and the frequency the student-athlete’s team plays on national tv, to name a few.
Reconciling what current NCAA rules allow in terms of institutional promotions featuring student-athletes with the future commercial NIL transaction opportunities a student-athlete may pursue could lead to a collision. For example, NCAA rules permit member schools to distribute non-commercial items featuring student-athletes (e.g., schedule cards; promotional posters) at commercial establishments (e.g., restaurants; shopping malls). What happens if a student-athlete secures an NIL agreement with one restaurant near campus and, per that agreement, the student-athlete’s NIL can’t appear on any other promotional items when their team’s promotional posters are distributed to competitors of the restaurant? Does an institution’s policy need to address and resolve?
And what about the situation in which the NCAA member school’s fundraising event is held at a local restaurant and, as permitted by NCAA rules, the school has a student-athlete make an appearance at said fundraising event? NCAA rules do not permit the student-athlete to endorse the restaurant as part of the fundraising event---however, separately, the student-athlete could have an NIL agreement with the same restaurant. The new NCAA NIL world could have such situational nuances and fine-lines to reconcile one NIL boundary from another.
Student-Athlete’s NIL Activities Put Demands on Institution Resources
Another big question centers on the anticipated demand on time and attention of campus personnel to help educate, advise, and troubleshoot on behalf of student-athletes. Who are likely to receive the urgent phone-calls to help student-athletes in NIL matters---head coaches; athletic directors; athletics compliance staff; university business and law faculty; and alumni working in law, tax, and related personal service industries.
Who is helping student-athletes review NIL contracts to determine whether an offer is “fair”? Who is responsible for helping student-athletes navigate tax implications of their NIL income? What happens when a student-athlete doesn’t show up to a contractually-agreed upon NIL autograph appearance to a local car dealer and the car dealer calls your school's athletic director seeking answers?
Student-Athletes Responsibility over their NIL Affairs...and Boosters, too
What are the responsibilities of the student-athlete to manage their NIL affairs? What eligibility ramifications on the student-athlete arise for not adhering to the adopted concept or institutional NIL policies? If a student-athlete runs afoul of the NCAA’s future NIL parameters, is declared ineligible, and is found to have competed while ineligible when his or her team won games----are those games needing to be vacated by the institution?
What is NCAA enforcement department’s bandwidth to investigate singular NIL matters especially of the highest profile athletes? An extension of this question may be the Bermuda triangle of NIL relationships---the NCAA member school, its boosters, and its student-athletes---how will these subgroups engage with each other without running afoul of NCAA rules?
The NCAA’s current definition of a booster (aka “representative of the institution’s athletics interests”) is notoriously inclusive: A "representative of the institution's athletics interests" is an individual, independent agency, corporate entity (e.g., apparel or equipment manufacturer) or other organization who is known (or who should have been known) by a member of the institution's executive or athletics administration to:
Have participated in or to be a member of an agency or organization promoting the institution's intercollegiate athletics program;
Have made financial contributions to the athletics department or to an athletics booster organization of that institution;
Be assisting or to have been requested (by the athletics department staff) to assist in the recruitment of prospective student-athletes;
Be assisting or to have assisted in providing benefits to enrolled student-athletes or their family members; or
Have been involved otherwise in promoting the institution's athletics program.
A long-debated topic within NCAA circles has been how much potential strict liability is imposed on NCAA member institutions from the current, all-encompassing NCAA booster definition. That definition factors in to the proposed NIL concept which, in part, speaks to, NCAA member institutions needing to be uninvolved with significant portions of these proposed student-athlete NIL transactions including ones where boosters would be engaging student-athletes directly on NIL opportunities.
Will the NIL concept need further welding to limit institutional culpability for a booster’s misdeeds around an NIL transition (e.g., booster overpays FMV to a student-athlete for his/her NIL transaction) discovered through mandatory disclosure or otherwise when the institution is expected not to be involved? Would the institution’s culpability only be triggered if an institution’s coach or staff member was directly involved in the misdeed?
Where does the NIL proposal go from here?
Putting pen to paper in articulating the draft NIL concept is symbolically a major step for the NCAA. There remains a need for more discourse and editorial finessing on this first iteration of the proposal between now and January, when the proposal is intended to be voted on. Running parallel paths is the on-going attempts in Congress to procure a federal backstop in terms of a uniform NIL policy that eliminates inconsistencies between state NIL laws and works in concert with the proposed NCAA rule.
If and when the NIL proposal is adopted in January, a roughly six-month, pre-effective date incubation period in the front half of 2021 is anticipated. The front half of 2021 gives the NCAA, member schools and conferences, third-party administrators, and outside stakeholders time to digest the new NIL policy, sort out roles and responsibilities, and prepare for implementation before the curtain goes up.
Circle Sunday August 1, 2021, on your calendar---the day the proposed NCAA NIL policy is to take effect.
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.
