NCAA Issues Interim Policy Allowing Student-Athletes to Monetize Their Name, Image and Likeness

The NCAA recently announced an interim policy that allows student-athletes from all three divisions to monetize their name, image and likeness (often referred to as “NIL”). The new policy went into effect on July 1, 2021.

The NCAA’s new interim policy was enacted on the cusp of laws in a number of states, such as Alabama, Florida, Georgia, Mississippi, New Mexico and Texas, taking effect which allow NCAA athletes to monetize their NIL.

It also follows a June 21 Supreme Court ruling that NCAA restrictions on “education-related benefits,” such as tutoring or scholarships, for college athletes violate antitrust law.

In a concurring opinion in the case, Justice Brett M. Kavanaugh wrote, “Traditions alone cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student athletes who are not fairly compensated.”

The NCAA guidance allows students to engage in NIL activities so long as they are “consistent with the law of the state where the school is located” and allows students in states without NIL laws to participate without breaking NCAA rules.

Michigan’s new law allowing college athletes to earn money from their NIL goes into effect December 31, 2022, pursuant to legislation signed by Governor Whitmer in December 2020.

What is Allowed Under the NCAA Interim Policy

• Prospective student-athletes may engage in the same types of NIL opportunities available to current student-athletes under the interim NIL policy without impacting their NCAA eligibility. However, the NCAA warns prospective student-athletes to consult their state high school athletics association regarding questions pertaining to high school eligibility.
• Student-athletes may use a “professional services provider” for their NIL activities.
• A “professional services provider” includes, but is not limited to, an agent, tax advisor, marketing consultant, attorney, brand management company or anyone who is employed or associated with such persons.
• Student-athletes may enter into NIL agreements with boosters provided the activity is in accordance with state laws and school policy, is not an impermissible inducement and it does not constitute pay-for-play.
• International student-athletes may benefit from NIL activities.

What is Not Allowed Under the NCAA Interim Policy

• Making NIL compensation contingent on enrollment at a particular institution
• Allowing compensation for athletic participation or achievement
• Permitting compensation for work not performed

Higher-Education Institution Responsibilities

In issuing the interim policy, the NCAA highlighted a number of obligations imposed on, and issues to be aware of by, higher-education institutions in connection with the policy.

• Schools are obligated to apply, and report potential violations of, NCAA rules that remain applicable, including prohibitions on pay-for-play and improper inducements.
• While the NCAA does not prohibit schools from arranging NIL opportunities for student-athletes, it cautions schools not to use NIL transactions to compensate for athletic participation or achievement or as an improper inducement. The NCAA also points out that involvement in arranging NIL opportunities may also raise other issues—including potential application of state NIL laws, claims for contractual non-performance, Title IX issues, and employment issues.
• Schools are not permitted to provide compensation in exchange for the use of a student-athlete’s NIL.
• While the NCAA interim policy does not require student-athletes to report NIL activities to their schools, state laws, conference rules and institutional policies may impose reporting requirements.
• The responsibility to certify student-athlete eligibility remains with the school.

The interim policy will remain in place until federal legislation or new NCAA rules are adopted. If you have any questions about these issues and how they affect your higher-education institution, please contact Ryan Kauffman.

Ryan K. Kauffman is a Shareholder at Fraser Trebilcock with more than a decade of experience handling complex litigation matters. You can contact him at rkauffman@fraserlawfirm.com or 517.377.0881.