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ESPN staff
The NCAA’s top governing body said Wednesday that it supports a proposal to allow college athletes to sign endorsement contracts and receive payment for other work, provided that the schools they attend are not involved in any of the payments.
A working group assembled to evaluate potential ways to modernize the NCAA’s rules about athletes making money from their names, images and likenesses presented its recommendations to the board of governors during its annual April meeting Tuesday afternoon. The recommendations included significant changes to current restrictions while also leaving room for the NCAA and schools to regulate the types of deals athletes might be allowed to sign in the future and the monetary value of individual contracts.
“Allowing promotions and third-party endorsements is uncharted territory,” board chairperson Michael Drake said in a release Wednesday morning.
The NCAA’s news release said athletes will be allowed to appear in advertisements and can reference their sport and school, but they would not be able to use school logos or branding in those advertisements.
What does it all mean, and what are the key stakeholders saying? Jeff Borzello, Dan Murphy and Tom VanHaaren break it down:
Jump to: Proposal details | Video game implications
What it means for recruiting | Political fallout
What’s allowed and what’s not allowed?
Wednesday’s proposed changes open the door for athletes to sign endorsement deals with a wide variety of third-party companies. The changes would also make it possible for athletes to monetize their social media channels, profit from writing a book or making a music album, host a sports camp and start a business among other potential opportunities. Athletes would be allowed to mention their status as a college athlete and the school they attend in advertising.
The new proposed changes do not allow schools to pay athletes directly or to provide any assistance to athletes in setting up endorsements. Athletes would not be allowed to use any school branded marks in advertisements or wear clothing with school logos. The NCAA would also consider regulations that prohibit athletes from promoting products that don’t line up with the NCAA’s values — such as gambling websites or banned substances. Individual schools will also be allowed to make a list of products that don’t match their values and say athletes are not allowed to endorse them.
Can college athletes hire agents?
Athletes would be allowed to hire agents and other professionals (accountants, for example) to help them with business opportunities. The specifics about how athletes can hire these types of advisors and what the advisors will be allowed to do are still to be determined.
NFL agent Leigh Steinberg, who has been an agent for more than 40 years, believes this potential rule change will move up the calendar for when agents will begin contacting athletes. Steinberg believes the agent selection process could now begin in high school.
“You look at who the beneficiaries are, for the one-and-done basketball player, by the time those kids get any brand they’re already in the pros,” Steinberg said. “This will primarily impact quarterbacks, or a major superstar. You could think of Johnny Manziel, or Tua Tagovailoa or Jameis Winston, players who early in their careers established a brand.”
An anonymous NBA agent agreed with Steinberg when it comes to basketball players, that the increased salary for select G League players will still be more appealing to a handful of prospects in each class. He does acknowledge, however, there may be enough endorsement money that would come with the visibility of playing for a blueblood program.
“There are some kids who just don’t want to go to school anymore either,” the agent said. “So they’ll prefer the G League over any college simply for the fact that they don’t have to focus on school work. But for the ones on the fence, this could help.”
Steinberg believes it will be in the best interest of the agents to establish that relationship early on. The agent wants a marketable player and helping build a brand presence sooner would provide value to both sides.
In order to do that, Steinberg doesn’t fully believe the universities can stay completely independent from the athlete’s endorsement deals or advertising when it’s all mutually beneficial as well. One of the big sources of marketing would come from companies looking to appeal to an alumni base or demographic that fits within a specific player’s market.
“Ohio State, Texas, Notre Dame, USC, Michigan and Alabama, these schools have massive alumni following, and given the chance, had Vince Young won the national championship in an earlier year, Texas alums would’ve bought everything and anything with his name on it,” Steinberg said. “There’s a shared interest in cultivating that alumni group in the same way that golf should never be on TV this much, but because corporate executives like to play golf, they endorse lots of golfers.”
That will be a delicate relationship between player, agent and university if a player does in fact sign with an agent early on in his career to help with his marketability.
“The key would be to project who those star players are and the analysis would be who are the potential superstars, mostly in college football, or in Olympic marketing,” Steinberg said. “My assumption is that there will be a necessity to talk to parents and signing players at a much earlier age, because one would assume that the same person who performed well in the marketing process would consequently become the agent for the pros.”
How will the NCAA determine what’s fair value for an endorsement and what’s an impermissible extra benefit?
The “guardrails” surrounding any potential NIL reform will be at the heart of the discussion until the official vote. The NCAA wants to ensure this isn’t disguised as pay-for-play, which means schools and conferences can’t be involved and boosters aren’t using it for recruiting purposes. In its report released on Wednesday, the NCAA essentially asked the different divisional governance bodies to come up with guardrails by October 31.
“These rules changes will necessarily include the consideration and adoption of safeguards identified earlier, to prevent (among other abuses) NIL opportunities from being used as a recruiting inducement, or boosters using NIL opportunities as back-door pay-for-play,” the report stated.
In other words, the working group hasn’t quite determined how they will differentiate fair value and extra benefits. They may turn to the federal government to help establish some type of clearinghouse that will determine the appropriate value for different types of endorsements. They also plan to rely on compliance officers at individual schools and current NCAA enforcement staff to help make sure endorsements do not become thinly-veiled payments for recruiting purposes or direct rewards for athletic performance.
When does this go into effect, and what’s next?
This was one of the first steps into enacting significant change and allowing student athletes to gain compensation off of their name, image and likeness, but it hasn’t gone into effect just yet. The Board of Governors expressed their support for the rule changes and directed all three divisions to consider appropriate rules changes based on the recommendations from its Federal and State Legislation Working Group.
The board recommended all divisions have their proposals fully drafted by October 31, 2020, and voted on no later than January 31, 2021. There is no guarantee that the recommendations made today will remain the same. Nor is there any guarantee that NCAA leaders will vote to approve whatever is proposed in October. If the NCAA votes to accept new rules, they are scheduled to go into effect no later than the start of the 2021-2022 academic year.
Does this mean the NCAA Football video game is coming back?
Unfortunately, no. Typically, the rights that video-game makers need to create sports games are negotiated through a group licensing process where athletes organize into a collective group and split the money that the video game company pays them. At the professional level, player unions provide an easy way to organize and negotiate group licenses.
Past attempts to unionize college football players have failed. Some advocacy groups, such as the National Collegiate Players Association, have published suggestions for how athletes could organize for group licensing opportunities, but NCAA leaders have consistently said they don’t think that it would be possible.
The working group’s report says there are too many legal hurdles that deem it as an unrealistic option for implementation. They did leave a little room for hope. The working group did recommend the NCAA continue to explore whether those legal hurdles can be overcome in the future, so it can be revisited in 2021 or later.
How will this be used in recruiting? And how soon?
There are quite a few football coaches who are still uncertain about what this all means and how it can be used, not just in recruiting but in general. When asked if his school had any specific plans to utilize these new rules in recruiting, an SEC assistant said he wasn’t sure what they can or can’t do and haven’t gotten that far in the planning stages.
The working group suggested implementing “guardrails” that would include “no school or conference involvement; and no use of name, image and likeness for recruiting by schools or boosters.” The working group recommended that institutions should be prohibited from “arranging, identifying, facilitating or having any other kind of participation (including by encouraging booster participation) in endorsement deals for their student-athletes.” How the NCAA would police that is up for debate.
What teams have been moving towards even outside the name, image and likeness ruling, though, is branding and marketing for their student athletes. Whether it’s utilizing the marketing and creative staff on campus or bringing in outside agencies to help educate their student athletes. INFLCR is a company many college football programs are starting to use, or have been using, that helps programs and their athletes build a social media brand and presence through content delivery.
Leveraging those assets and positioning themselves as programs that can help student athletes develop a brand and equip them to attract their own endorsement deals, influencer deals and ad campaigns, is going to be a big part of recruiting pitches once this is all enacted. There is a good chance the marketing aspect of this becomes the new arms race in college athletics the way facility upgrades have been in the past.
“I think it’s pretty cool, you know, just knowing you have an opportunity to make even more money than you’re pretty much already getting for scholarships, stipends, etc,” said Manny Obaseki, a Texas A&M basketball commit ranked No. 57 in the Class of 2021 by ESPN. “It’s gonna be really, really important to the top 10 players in each class committed to colleges. It’s gonna help the NCAA’s case in a way; many prospects that have been called or talked to the G League may also take the NCAA a little more seriously.”
Georgia Tech football coach Geoff Collins have put a lot of effort into the branding and marketing side of their program, especially when it comes to recruiting. Collins said he and his staff will likely implement a plan to incorporate the new NIL rules into their recruiting strategy, but aren’t prepared to reveal that plan just yet.
While most coaches are unclear how this is going to impact recruiting, one SEC basketball assistant mentioned how it could induce more student-athletes to stay closer to home for college. If a player develops a name and brand for himself in the area during his high school career, it’s reasonable to think that he will be able to earn more money off his name, image and likeness in his hometown than across the country.
Recruiting is always at least a year ahead, so if this is enacted for the 2021 academic year, coaches will start to use this as a recruiting tool as soon as possible. They’re already recruiting the 2021, 2022 and 2023 classes, so it will start to be a discussion in the very near future.
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Jay Williams wonders what took the NCAA so long to start considering ways to compensate college athletes.
What does this mean for state laws related to NIL rights?
California first passed a law last September that would make it illegal for colleges in that state to follow current NCAA rules about name, image and likeness. More than two dozen other states have proposed similar laws that are in various stages of the legislative process.
The NCAA’s new proposals remain more restrictive than what these state laws would mandate when they go into effect. NCAA President Mark Emmert said they will need Congress to create a federal law that would supersede the states’ laws. Emmert’s hope is that a national law would create an less complicated, chaotic landscape and provide “guard rails” that would match the level of restrictions the NCAA wants to impose on future endorsement deals.
California’s law goes into effect in 2023. Other states have introduced legislation that could go into effect as early as next summer. If Congress doesn’t pass a nationwide law before next summer, it could lead to legal challenges between the NCAA and athletes in states such as Florida and Colorado. Emmert said it is “certainly in the realm of do-able” for Congress to pass a law in the next 12 months, the NCAA will have to compete for Capitol Hill’s attention amid an unprecedented pandmeic and a presidential election cycle.
Why is the NCAA asking Congress for an antitrust law exemption?
Part of the working group’s recommended request to Congress was to create an antitrust exemption for the NCAA, or a “safe harbor” against future potential lawsuits.
Starting with former UCLA player Ed O’Bannon’s lawsuit a decade ago, the NCAA has faced a series of lawsuits that claim the association violates antitrust laws when schools get together to set limits on what they can offer to prospective athletes. In the most recent of these cases — Alston v. NCAA — a federal judge ruled that the NCAA is, in fact, violating antitrust law. The judge ruled that the NCAA could still place some limits on what schools could offer to athletes because that was an important step in maintaining amateurism, which separates college sports from pro leagues in a way that is an essential part of the NCAA’s business model.
“Their prior position was that if they allowed one penny of NIL, it would be the end of the NCAA as we knew it,” said Jeffrey Kessler, the lead attorney in the Alston lawsuit. “They abandoned that already. We argued that this just further shows there is no justification for any kind of NCAA restrictions. It should be a conference decision and let the conferences compete with each other.”
That case is currently being appealed. If the appellate court judges decide that changes in NIL rules will blur the line between college and pro sports, the NCAA could lose its unique niche and protection from antitrust violations. The result would make it illegal for NCAA to set any kind of limits on what schools could offer athletes or any limit on what athletes could accept from third parties for endorsements.
To defend against that possibility, the NCAA wants Congress to create a law that officially recognizes college sports as a special case that should not be impacted by typical labor laws. One member of Congress told ESPN it is unlikely that the federal government will be quick to agree to this request.
What are politicians saying?
Lawmakers who have been involved in prompting the NCAA’s decision to make changes generally viewed Wednesday’s announcement as a positive step forward while remaining wary about the details left to be figured out and whether the association will follow through on its initial proposed changes.
Rep. Mark Walker from North Carolina said he wants to be “hopeful and not just go in there with a stick and beat the NCAA over the head like we’ve done in the past.” Walker, who introduced a federal bill last year to allow college athletes to seek endorsements in a free market, said he is hoping the NCAA’s proposed changes will create a way for colleges and various members of Congress to work together to create some significant change.
Former Ohio State Buckeye receiver and current Ohio Congressman Anthony Gonzalez said “it’s a good start… What they put forward while it has some unanswered questions is a great step in the right direction.” Gonzalez said he plans to introduce new legislation in the next month or two that will have a lot of similar elements as the NCAA’s proposal.
Gonzalez and Walker both said their focus has been and will remain on helping their districts get through the coronavirus pandemic in the immediate future. Gonzalez said he’s optimistic that the NIL bills could move quickly due to bipartisan support when things return to normal, but “D.C. never surprises me in its ability to move slowly and nonsensically.”
On the state level, politicians from California and Florida have adopted the same cautious optimism. Berkeley-based Nancy Skinner, who co-authored the California law that is proving to be a tipping point in the NIL discussion, urged individual states to continue pressing forward with their own laws to keep pressure on the NCAA to act.
“Pressure from states and the public will help ensure the NCAA does the right thing – and crosses the finish line to fully give college athletes the same rights that all other Americans enjoy.”
Florida Rep. Chip LaMarca helped get his state’s NIL efforts started last year. Florida Gov. Ron DeSantis is expected to sign their bill into law shortly after government operations return to normal. LaMarca said Wednesday that he thinks the NCAA proposal comes up short on several fronts, especially in terms of allowing athletes to organize for group licensing opportunities.
“The recommendations today by the NCAA are about protecting their pockets, not about student athletes,” LaMarca said.
What does this mean for Title IX?
Conference commissioners and other college sports stakeholders raised concerns during the past year that schools might find themselves in violation of federal Title IX rules if male and female athletes did not get the same amount of endorsement opportunities. Title IX law makes it illegal for schools to discriminate against any student on campus on the basis of that student’s sex. In the sports world, that has led to requirements that schools present equal opportunities for men and women to participate in sports.
The working group said in its report Wednesday that the marketplace, not schools or conferences, will dictate which athletes get endorsement deals. Because schools and conferences are not allowed to be involved in setting up marketing opportunities in any way, they would not be able to make sure there is an equal balance of endorsements between men and women. However, the opportunity to seek these types of deals is the same for all athletes and therefore does not appear to be a violation of Title IX regulations.