Compensation and Competition after NIL 

By: Kelton McLeod

The sands of collegiate athletics have been shifting rapidly over the past eighteen months and have yet to find any stability. In 2021, the Supreme Court of the United States released its opinion in the case National Collegiate Athletic Association v. Alston. In that case, the NCAA lost in its appeal of the Ninth Circuit’s ruling related to violations of §1 of the Sherman Antitrust Act. In a unanimous ruling, the Supreme Court found that some of the “NCAA’s compensation limits [for student-athletes] ‘produce significant anticompetitive effects in the relevant market.’” In other words, the NCAA could not use its monopsony power to completely suppress or limit the amount of education related payments that a student-athlete could receive. 

The Supreme Court’s holding was a formal rebuke of how the NCAA, the largest proprietor of amateur collegiate athletics, was treating the athletes on which they so desperately rely. This rebuke resulted in the institution of so-called “Alston payments,” which allow some of the largest schools to now directly pay their athletes $6,000 per academic year for education related expenses. The result of this ruling was much greater than just these payments though; the ruling also paved the way for individual student athletes to be able to monetize their own Name, Image, or Likeness (NIL).

For years, student-athletes (and former student-athletes) have complained about the NCAA’s usage of their name, image, or likeness for profit. While schools could profit off a player’s NIL, the NCAA forbade student-athletes from doing the same. By the time the Alston decision was passed down, several states were already in the process of passing laws to wrest some control of a student-athletes NIL away from the NCAA. These states were attempting to compensate these student-athletes in some form for the work that the student-athletes were doing for both their collegiate institution and the NCAA. So, when the Supreme Court ruled against the NCAA, the NCAA was forced to recognize the shifting sands beckoning changes in compensation for collegiate sports. 

The NCAA acted quickly. Within weeks of the Alston decision, the NCAA instituted an “Interim NIL Policy”—which remains in place as of October 2022—that laid out ground rules for a policy allowing student-athletes to profit off their Name, Image, or Likeness. The NIL deals made possible by the NCAA’s new Interim NIL Policy can take many different forms, as the deals are permitted to include any form of advertisement that uses the athlete’s personal brand as a selling point. However, in the past year NIL deals have traditionally come in the form of making public appearances, posting on social media, or wearing a company’s products. The NCAA’s one-page Interim NIL Policy provides little direction but has five basic tenants that student-athletes and Collegiate Institutions must follow: (1) NIL agreements must include a quid pro quo, (2) NIL compensation cannot be contingent upon enrollment at a particular school, (3) pay for play compensation is not allowed, (4) institutions may not provide compensation in exchange for the use of a student-athletes NIL, and (5) the NCAA rules were subservient to any state NIL laws present. 

There is no federal regulation or policy that offers a uniform NIL experience to student-athletes. The Uniform Law Commission (ULC), a state-supported, nonpartisan, nonprofit organization drafted the “Uniform College Athlete Name, Image, or Likeness Act” (“NIL Act”) to provide a level of uniformity across state NIL laws. While some states acted quickly, instituting policies supporting student-athlete rights to NIL, no state has directly adopted the ULC’s NIL Act. Among the fifty states, twenty-eight currently have passed NIL legislation or have a some guidance in place, leaving the remaining twenty-two as the “wild west,” with athletes and colleges only beholden to the NCAA Interim Policy and whatever level of self-governance institutions have chosen to place on themselves. These differing state laws, or lack thereof, have posed a unique challenge for the institutions and athletes that are now obliged by them. Much like the athletic programs that they now have influence over, not all NIL rules are created equal. 

While similar to the NCAA’s policy, Oklahoma’s NIL law is noticeably stricter. In Oklahoma, a “student-athlete shall not enter into a contract with a third party that provides compensation to the student-athlete for use of his or her name, image or likeness or athletic reputation if . . . [t]he contract allows for the use or consents to the use of any institutional marks during the student-athlete’s third-party contract activities.” This wording restricts the student athlete to profiting off of only his or her NIL, while the institution may profit off its own brand combined with the NIL of such a student athlete. While Oklahoma’s bill attempts to even the playing field of NIL deals for athletes across the many Oklahoma institutions, the bill does so in a way where unequal standing is given to the University relative to the student-athletes. 

Compare Oklahoma’s approach to the state of Washington’s approach, where there are more expansive opportunities to the athletes that attend one of Washington’s several fine institutions. With no NIL law in place, the direction of NIL is largely left up to the institution. A key example of Washington’s openness to NIL opportunities relates to the usage of intellectual property and trademarks owned by its state schools. Student-athletes at the University of Washington—while forbidden by NCAA rules to secure NIL deals based upon attending the UW—can wear their uniforms or wear any of the University’s several trademarked logos while endorsing a product or making a post on social media. 

Still, the University of Washington does not want its student-athletes wearing or posting its trademarks or intellectual property for any and every NIL deal, certainly not ones the administration has deemed unbefitting of the University. As a state school, the University of Washington is operated like a government agency and is regulated by the ethics rules related to sharing of state property for gain. In Washington, “[n]o state officer or state employee may employ or use any . . . property under the officer’s or employee’s official control or direction, or in his or her official custody, for the private benefit or gain of the officer, employee, or another.” Intellectual property, such as the University of Washington’s trademarks, falls directly under this ethics statute. So, the University of Washington has used its inter-collegiate athletics compliance office and its trademark office to monitor NIL contract requests to ensure that any request that includes usage of UW trademarks does not hurt the brand. To further this goal, the University has instituted rules regarding products with which student-athletes may not utilize the school’s trademarks while endorsing. These products include alcohol, marijuana, tobacco, gaming, sports wagering, pornography or adult entertainment, or weapons/weapons manufacturers. Overall, the products that the University seeks to keep at arm’s length account for only a small portion of the products a student-athlete could advocate for, ultimately allowing broad use of the institution’s trademark in NIL dealings. 
With the sands of student-athlete compensation still shifting, these different NIL systems may only be in place for the next few months, or even weeks. A proposed Washington’s House Bill 1084 still has the possibility of becoming law and changing the standards in Washington. While Oklahoma already has its law in place, it remains new enough where modifications could be instituted with reasonable ease. Even within the NCAA, change is still likely; its NIL committee is rumored to be soon instituting further clarifications to the Interim NIL Policy for the first time since July of 2021 when it was placed into effect. These changes are not expected to be expansive but could have an outsized impact on the schools in states without NIL laws, like Washington currently. Only time will tell where NIL will be a year from now, but at least compensations for athletes are continuing to trend in a more equitable direction for student-athletes.

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