The Supreme Court, on June 21, 2021, issued its landmark decision in National Collegiate Athletic Association v. Alston, bringing about fundamental change for collegiate athletes seeking benefits and compensation in connection with their athletic performance. In Alston, a unanimous Court struck down the NCAA’s limitation on education-related benefits for student-athletes. Justice Kavanaugh’s concurrence in the case was particularly critical of the NCAA’s operations, noting that similar policies “would be flatly illegal in almost any other” context. Attorneys at KJK have long supported student-athletes in their quest to attain more equitable compensation, and have continued to closely follow the most recent evolution of student-athlete rights.
“Hands Off” NCAA Policies Create Nationwide Patchwork of Rules and Competition for Talent
After Alston, the NCAA’s interim policy issued July 1, 2021 initially permitted athletes to benefit from their name, image and likeness (NIL) in accordance with their contracts, relevant institutional regulations and the state laws in which their educational institution is located. The NCAA’s “hands off” policy, allowing for significant local control, had the effect of creating a nationwide patchwork of different rules shaped by geography and institutional regulations.
This year, the NCAA has established a new Constitution with 801 votes on Jan. 20, 2022, granting the three NCAA Divisions significant power to regulate their own activities. The new constitution is set to take effect Aug. 1, 2022 and ensures student-athlete voting representation in each Division’s governing body. The document further prohibits pay-for-play but fully embraces other benefits, including those for NIL. While schools may not use NIL benefits as recruiting tools under present regulations, nothing stops athletes from pursuing private sponsorships once they take to the field. Each NCAA Division is expected to adopt additional regulations to govern its operation before the August 1st effective date.
These differing rules will doubtlessly have an effect on athletic recruiting, even if NCAA regulations prohibit direct recruiting with NIL benefits. Student athletes will evaluate their options at different colleges along with their likely compensation through NIL deals before deciding to commit to a certain school and team, with many employing advisors to assist in assessing and selecting the best possible opportunity.
Ohio State Case Study: How NIL Will Change Recruiting and Retention for College Athletes
Ohio State’s head football coach, Ryan Day, recently stated to a crowd of about 100 members of the Columbus business community that Ohio State anticipates requiring $13 million in NIL agreements to maintain its current roster of athletes. This figure, as Ohio State’s Lantern student newspaper pointed out, divides to $111,111 for each player or $500,000 per each of 26 starters. Ohio State has a fraught history with NIL; in 2011, players were embroiled in a benefits scandal for selling memorabilia and profiting from NIL. This scandal resulted in the resignation of former head coach Jim Tressel.
In February, Gene Smith, Ohio State’s Athletic Director, commented that, while he is glad Ohio State athletes are benefitting from NIL under the new rules, he feels national regulation is necessary. Smith confirmed on Jan. 23, 2022 that 225 Ohio State athletes across all sports had reportedly made $2,985,559 from NIL deals in 2022, and exceed the reports of any other school. Ohio State has employed a team of administrators dubbed its “NIL Edge” team to connect athletes with brands and donors and maximize NIL compensation while maintaining compliance with legal and regulatory rules.
The Evolving Legal Landscape for Student Athletes
The NLRB General Counsel, Jennifer Abruzzo, released guidance in September of 2021, stating that college athletes should be considered employees. In Johnson, et al., v. The NCAA, et al., Division I athletes brought suit in the Eastern District of Pennsylvania against the NCAA and member schools. Plaintiffs allege that college athletes, by virtue of their participation in college sports, must be considered “employees” under the Fair Labor Standards Act, and are therefore entitled to compensation. In August of 2021, Judge John R. Padova denied the NCAA’s motion to dismiss the case, finding the schools had not dispelled the athletes’ contention that they qualify as employees. The Third Circuit appeal concerning whether the athletes must be classified as employees remains pending.
Even high school athletics cannot be excluded from the national NIL discussion. With the rise of social media and expanding opportunities for younger people to monetize online celebrity, high school students will likely find NIL opportunities available to them. A recent case in Florida, Sal Stewart v. Florida High School Athletic Association, Inc., involves the high school athletes seeking rights to monetize their NIL. Although the NCAA Interim Policy allows for this activity, most states still prohibit high school athletes from engaging in NIL contracts. Several states may now consider whether to enact legislation to permit high school athletes to enter into NIL deals.
KJK has followed the development of collegiate athletes’ rights to profit from their name, image and likeness (NIL) for several years. For more information or to discuss this topic further, please contact KJK’s Litigation & Arbitration practice group.