Name, Image and Likeness (NIL) – NCAA Passes Guidelines for NIL Collectives Print PDF
The initial year under the new Name, Image and Likeness (NIL) landscape has seen a flood of wide-ranging NIL deals for student athletes, from social media endorsements to autograph signing to motivational speaking engagements to appearances at clinics and camps. However, most of the recent focus has been on the large number of “collectives” that have been established by school alumni, boosters and donors (we refer to all of these as “boosters” in this article). Under these collectives, boosters pool their funds to create or offer NIL deals to their school’s student athletes.
While many of the collectives are created to have the student athletes exclusively provide charitable work, many have no such limitation. Some of these collectives have already pledged huge amounts of funds to support NIL deals for their student athletes, including a collective associated with the University of Texas, which has claimed it has already pledged over $10 million, as well as a University of Miami collective funded by billionaire John H. Ruiz, which reportedly entered into an $800,000 agreement with a transfer that caused an existing student athlete to threaten a transfer if his NIL compensation was not significantly increased.
Some view these collectives as a great opportunity for the student athletes to make money off of their NIL while also contributing to the community, while others point out that they will act as incentives to potential student athletes and significantly enhance the recruiting abilities of schools with deeper pocketed alumni/donors. Further, a number of high-profile figures, including Alabama’s Nick Saban, have commented on the need for further NIL guidance and restrictions. The NCAA has now taken a stance regarding these collectives, and its position likely has many of them very nervous.
On May 9, 2022, the NCAA Division I Board of Directors issued guidance to schools “regarding the intersection between recruiting activities and the name, image and likeness environment.” Irrespective that many feel the status of the current NIL landscape is due to NCAA’s “hands-off” policy to date, the NCAA has clearly become concerned that boosters are abusing the existing NIL rules (or improperly taking advantage of the lack of specific NIL rules) and essentially using NIL transactions as prohibited “pay-for-play” arrangements.
The guidance defines a “booster” as “any third-party entity that promotes an athletics program, assists with recruiting or assists with providing benefits to recruits, enrolled student athletes or their family members.” It also acknowledges that this definition could include collectives that are set up to “funnel name, image and likeness deals to prospective student-athletes or enrolled student athletes who might be considering transferring.”
The guidance also reiterates some of the guidelines previously issued by the NCAA, including that boosters cannot directly communicate with prospective student athletes or anyone the prospective student athlete is affiliated with, and that the value of the NIL deal must be commensurate with the market value of the student athlete’s name, image or likeness. The guidance appears to place a greater focus on limiting collectives to paying athletes already enrolled in the school rather than any recruits or potential transfers.
The guidance is effective immediately, but interestingly the board also states that it may apply the guidance retroactively for “those actions that are clearly contrary to the published interim policy, including the most severe violations of recruiting rules or payment for athletics performance.” Violations of the guidance may not only subject the boosters/collectives to enforcement actions, but also could lead to sanctions on the related schools.
While the NCAA seems poised to begin bringing such enforcement actions, it may continue to be unwilling to enforce NIL violations because of concerns that it will prompt additional antitrust and other legal challenges from boosters with deep pockets.
The board acknowledged that more work is needed to better ensure NIL opportunities “align with NCAA values and protect the well-being of student-athletes.” What the results of that work will be is yet to be seen, but we believe that any NCAA crackdown on these collectives will trigger a highly public and costly battle.