Client Alert: NCAA Issues Interim Name, Image and Likeness (NIL) Policy – All College Athletes Can Now Monetize Their NIL Print PDF
As an update to our alerts on the Supreme Court’s decision in the NCAA v. Alston case and the NCAA’s decision to issue interim waivers against sanctions to schools in connection with their students’ NIL transactions, the NCAA has formally issued an interim NIL policy with guidance for its member schools and their student athletes.
The NCAA expects the policy to remain in effect until it issues a more comprehensive policy (or more likely, until Congress passes uniform federal legislation preempting state NIL laws and school NIL policies). The policy essentially guides schools and student athletes to adhere to the NIL laws in the state where the school is located (if the state has NIL laws), and to adhere to the school’s NIL policy (if the state does not have specific NIL laws).
Accordingly, every student athlete can profit from their name, image and likeness through various types of ventures, including endorsements, developing product lines (e.g. apparel), signing autographs, and running camps and clinics.
Student athletes are obligated to adhere to applicable state laws and school policies governing NIL activities, including reporting NIL activities consistent with state laws and/or school policies. Schools are also obligated to adhere to applicable state laws, and are ultimately responsible for determining whether a student athlete’s NIL activities are consistent with applicable state laws. Further, schools should establish, maintain and distribute their institutional policies governing NIL activities (e.g. conflicts of interest, disclosure requirements, and the like).
The policy also makes clear that the NCAA’s prohibitions on institutional pay-for-play and improper recruiting inducements remain in effect. It further provides the following specific prohibitions:
- “NIL agreements without quid pro quo (e.g., compensation for work not performed).” The student athlete actually has to perform his or her obligations.
- “NIL compensation provided or offered contingent on initial or continued enrollment at a particular institution.”
- “NIL compensation contingent on specific athletic performance or achievement (e.g., financial incentives based on points scored). Athletic performance may enhance a student athlete’s NIL value but athletic performance may not be the ‘consideration’ for NIL compensation.”
- “Benefits provided to student athletes that are inconsistent with institutional policies (e.g., benefits or arrangements not available to the general student body).”
Amidst the many prohibitions set forth through the policy, however, the NCAA expressly permits the use of a professional service provider (e.g. agents, attorneys, accountants) by student athletes for activities related to use of NIL.
In a statement, NCAA president Mark Emmert said: “With the variety of state laws adopted across the country, we will continue to work with Congress to develop a solution that will provide clarity on a national level. The current environment -- both legal and legislative -- prevents us from providing a more permanent solution and the level of detail student-athletes deserve.” The board of directors of the NCAA further stated that they wanted to make sure that all athletes have an opportunity to monetize their NIL, since most states do not have NIL laws that went into effect as of July 1.
Our opinion is that while the right for student athletes to profit off of their name, image and likeness is long overdue, not enough attention is being paid to the very real risks that many of these student athletes will face in connection with these NIL transactions, namely, that they will be taken advantage of because of their limited business, financial and legal knowledge.
Many student athletes will only see the dollar signs flashed to them when considering whether to accept an NIL deal, without considering the very real associated risks and limitations that such a transaction may have on future potential NIL deals.
Student athletes should consider everything from adequately protecting their rights under agreements (such as limiting the other party’s right to use an athlete’s name, image and likeness), to limiting their liability by forming legal entities (such as LLCs or corporations), to determining their tax obligations relating to the money they earn, and the NCAA’s policy fails to address these key components to NIL policy.
The failure to pay meaningful attention to these issues can significantly damage a student athlete’s earning power. Unfortunately, to put it bluntly, too many of these student athletes are going to get hurt because not enough focus will be put on protecting and educating them.
 It is interesting to note that the policy states that its member institutions and their student athletes “should adhere to the guidance” rather than “must adhere to the guidance,” which is most likely a result of the Alston Supreme Court decision and the NCAA’s desire to avoid additional antitrust lawsuits. See our original article on that topic.