College athletes may see an expansion of their rights to be compensated for commercial use of their names, images and likeness if any of a variety of bills likely to be considered in Congress are enacted into law. However, the bills might face headwinds if the U.S. Supreme Court rules in a pending case that NCAA rules are generally consistent with antitrust laws.
Sen. Chris Murphy, D-Conn., and Rep. Lori Trahan, D-Mass., introduced the proposed College Athlete Economic Freedom Act on Feb. 4 to codify student athlete names, image and likeness rights, referred to as NIL, into federal law. Other bills previously introduced during the 116th Congress, which ended on Jan. 3, might also be considered during the new Congress. They include the College Athletes Bill of Rights, the Collegiate Athlete and Compensation Rights Act, the Fairness in Collegiate Athletics Act and the Student Athlete Level Playing Field Act.
The prospects for any of the NIL bills is difficult to gauge. “There’s not a whole lot of sports-specific legislation that Congress has ever enacted,” said Matt Mitten, a professor of law and executive director of the National Sports Law Institute at Marquette University.
He said he hopes any federal legislation would eliminate the prospect of multiple state laws and allow the NCAA to protect its business model. Others argue that, while there’s much at stake for college athletes, the NCAA should not fear the economic consequences of NIL legislation. “If these athletes have their name, image and likeness rights post-college life, why can’t they have them while they’re collegiate athletes?” said Robert Hacker, a sports lawyer in Los Angeles who represents participants in the sports broadcasting industry. “I think it’s fair to say that the NCAA not-for-profit entity, which has billions in revenue as we all know, is playing the role of Chicken Little [saying] ‘the sky is falling.’ The sky is not falling.”
O’BANNON SETS STAGE FOR DEBATE
Whether and to what extent college athletes should be able to be paid for the use of photographs, illustrations and other media containing their image or their name has been a pressing issue for the NCAA since 2014. That year, a federal judge in Oakland ruled that the NCAA could not use imagery of former UCLA basketball star Ed O’Bannon in promotional materials without paying him, finding that rules forbidding that compensation amounted to price fixing under the antitrust laws. Judge Claudia Wilken ordered the NCAA to share some of the revenue obtained from use of athletes’ names, images and likenesses with those athletes and also held that the NCAA could prevent athletes from entering into commercial endorsement deals.
The 9th U.S. Circuit Court of Appeals in 2015 upheld that decision, with two judges on the court ruling in a majority opinion that student athletes would have to be paid for use of their names, images, and likeness but that the compensation could be limited to that related to education. “The NCAA’s rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market,” said Judge Jay Bybee of Las Vegas.
In 2016, the Supreme Court declined to review the appellate court’s ruling.
ANOTHER CHANCE TO CONVINCE COURTS
The Supreme Court has another chance this term to consider the reach of the NCAA’s discretion to limit a college athlete’s capacity to profit from her or his own image, likeness or name. In NCAA v. Alston, due to be argued in March, the justices will consider whether limits on education-related payments imposed by NCAA rules are consistent with the Sherman Antitrust Act. The court is likely to apply a “rule of reason” analysis, which is a way of balancing the impacts of a price-fixing policy on a market. “You look at the anticompetitive effects of the rule versus what the pro-competitive justification is,” said University of Colorado Law School instructor John Francis, an antitrust law specialist, during a January interview. The nearly 115-year old organization insists that its goal of assuring amateur competition effectively insulates its authority from antitrust invalidation. If the court agrees, then it is possible that the NCAA will be able to write rules to sharply limit college athletes’ NIL compensation.
“For those who believe O’Bannon was the right approach, it’s a dangerous set of circumstances to have this case before the Supreme Court,” said Alan Milstein, a sports lawyer and partner at Sherman & Silverstein, a New Jersey firm, during a January interview. “My concern and the concern of others is they’re going to use this opportunity to say that you can’t sue the NCAA … for violations of the antitrust laws as it relates to monies that go to the student athletes.”
NCAA RULES PROCESS ON HOLD
In October 2019, the organizations’ board of governors ordered all three NCAA divisions to begin working on NIL rules, stressing the importance of allowing college athletes “the opportunity to benefit from the use of their name, image and/or likeness in a manner consistent with the values and beliefs of intercollegiate athletics.”
In 2020, the organization released proposed rules that would allow colleges and universities to forbid athlete NIL payment deals if they are perceived to conflict with the institution’s relationships with commercial sponsors of athletic programs.
Those proposed rules would force both current and prospective college athletes to inform an “independent third-party administrator” of their NIL deals; allow athletic program boosters to pay for NIL use; permit athletes to make money from autographs, coaching, crowdfunding and the sale of memorabilia; and authorize athletes to use their name, image and likeness in “athletically and non-athletically related business activities,” including those in which their name, image or likeness is used to “advertise or promote the sale or use of a commercial product or service, provided there is no institutional involvement in the arrangement,” except for apparel and shoe companies different from those that sponsor their colleges’ athletic programs, and hire agents.
In January, the Trump administration’s assistant attorney general for antitrust, Makan Delrahim, warned the NCAA that the proposed rules may be a restraint of trade and an example of price fixing.
Mitten was skeptical of that claim. “You’ve got to have uniform eligibility rules,” Mitten said. “You’re going to have schools in various states that would have unfair recruiting advantages if they could say ‘come here, not only for our great athletics and academics, but you could make potentially twice as much money on name, image and likeness rights revenue in our state than if you were somewhere else.’”
He said that, while the NCAA’s draft NIL rules would “let the free market determine what’s going to be the actual amount of income,” there would be restrictions about where the fees come from to avoid “an indirect form of pay for play.” Hacker, on the other hand, said that NIL rules really would not significantly affect competition in college sports and so rules should not be overly restrictive. “You’re going to have a few athletes that are going to take big dollars,” Hacker said. “It legitimizes the secret envelopes and all that other nonsense that has existed in college sports forever.”
Mitten said that, in his view, “the law has upheld the right of the NCAA to say student athletes can’t make any money from their name, image and likeness rights.” He said the O’Bannon decision does not give student athletes the right to receive “compensation untethered to educational benefits.” “Clearly, when one’s taking advantage of name [and] image licensing rights, that has no necessary relationship to education.”
Whatever the merits of the Department of Justice’s antitrust concerns, the delay in consideration means that there is no timeline for adoption of the proposed NIL standards. Mitten thinks the main goal of the organization’s leadership will be to wait on continuing legal developments. “I think they are going to wait until the Supreme Court decides the Alston case,” Mitten said. “There will probably be a decision by the end of June.”
STATES ENACT NIL LAWS
Since the O’Bannon case was decided, state legislatures have begun moving to establish a framework for college athletes to profit from their personal brands. California was first to write a law in September 2019 when it enacted the Fair Pay to Play Act, which will allow college athletes to be paid for offering coaching services, benefit from endorsement deals and sponsorship agreements and hire agents once it goes into effect on Jan. 1, 2023.
Colorado was next. In March 2020, Gov. Jared Polis signed SB 20-123, which also goes into effect Jan. 1, 2023. The Colorado NIL law, though somewhat ambiguous about whether the NCAA would retain any authority to regulate payments to athletes for NIL rights, provides that neither the NCAA nor any other college athletic association can prevent a student athlete from being paid for the use of their name, image or likeness or ban a college or university from athletic competition because a student athlete earns that compensation.
Michigan enacted its version of NIL legislation in December, while Mississippi’s House of Representatives and Senate have passed similar bills this year, which, if reconciled into one measure and signed into law, would join Florida’s law in taking effect July 1.Florida’s legislation has the NCAA most concerned. It would allow college athletes to hire an agent and allow competitors to be paid the undefined “market value” of their name, image or likeness. The Sunshine State’s law does attempt to address NCAA concerns by allowing NIL payments to be made only by an entity unaffiliated with a college athlete’s institution, forbidding universities or athletic booster groups from paying for NIL rights and prohibiting NIL deals that interfere with college athletic programs’ commercial sponsorship arrangements or institutional values. That last provision distinguishes the Florida law from those enacted in California and Colorado as well as other NIL statutes now on the books in Nebraska and New Jersey.
The pressure on Congress to act on the issue may not only come from concern about the differences in these state laws and others that may yet be enacted around the nation. Mitten said he anticipates the NCAA may ask a federal court to invalidate those laws on grounds that they violate the Constitution’s grant of regulatory power over economic activity that crosses state lines to the national legislature. “Congress has the authority to regulate interstate commerce,” he said. “That’s why they would clearly have jurisdiction to say there’s going to be a national uniform NIL rights law for college athletes.
The other side of the coin is that [the Constitution] precludes individual states from regulating in this area because it would have interstate effects and make it virtually impossible for the NCAA to say we’ve got to have a uniform rule that will apply across the board.”
The congressional bills range in their provisions and their enforceability, with the strictest being the College Athletes Bill of Rights, introduced by Sens. Cory Booker, D-N.J., and Richard Blumenthal, D-Conn., and Reps. Jan Schakowski, D-Ill., and Steve Cohen, D-Tenn.
The bill would allow athletes to be paid for NIL rights, impose requirements for profit-sharing, require a swath of “health, safety and wellness standards,” mandate that athletic scholarships be available to athletes until they complete their degree, forbid retaliation against athletes on the basis of the academic major or program they choose, create a medical trust fund, ban rules that limit transfers of student athletes between universities and establish a new commission to regulate college sports.
None of the proposed bills have yet been scheduled for committee hearings or markups.
— Hank Lacey