Money Grab: All You Need to Know About the NCAA, Student-Athletes and Their NIL Rights

Late last month, the U.S. Supreme Court made news that echoed through the halls of athletic departments of colleges and universities nationwide. While perhaps not as attention-grabbing as a trip to the Final Four or Bowl Championship Series, the high court’s ruling in NCAA v. Alston is sure to have lasting repercussions, especially to the extent it means that the National Collegiate Athletic Association (NCAA) can no longer impose strict limits on education-related benefits (read: scholarships and laptops) given to student-athletes.

In a unanimous decision, not only did the justices determine that the NCAA could not place a cap on the amount schools can pay student-athletes for these benefits, but it also held more broadly that the NCAA is not immune from federal antitrust law. That finding is particularly interesting given the commentary of Justice Brett Kavanaugh, who noted in his concurring opinion that the NCAA’s "current compensation regime raises serious questions under the antitrust laws."

For those without a law degree, the takeaway is simply this: college athletes—at least some of them—may be in line for a payday. Given the activity of state legislatures and, more recently, the NCAA, this is particularly true when it comes to the ability of these students to earn compensation for their names, images, and likeness (NIL). And with that, amateur sports as we know them here in the U.S. is sure to be upended.

Show Me the Money

College athletics generate billions of dollars in annual revenue, yet players on the field, court, diamond, and pitch—the ones fans are lining up and tuning in to see—have been unable to share in the wealth. That is now changing, as laws have been passed (or are being passed) that allow student-athletes to make money from endorsements, work as brand ambassadors, social media promotion, appearances, sponsorships, autographs, private training, camps, and the like.

It all started in California. In September 2019, that state became the first to legislate the right of college athletes to be compensated for their NIL when Governor Gavin Newsom signed SB 206 into law. SB206 specifically prohibits California public colleges, athletic associations, conferences, or any other intercollegiate athletic organization like the NCAA from affecting student-athletes’ scholarships or athletic eligibility just because they have been paid for their NIL.

On the heels of that law, several other states jumped on the NIL bandwagon. Indeed, July 1 was a big day, with Alabama, Florida, Georgia, Mississippi, New Mexico, and Texas all having had NIL legislation go into effect that day. Similar laws are also pending in Illinois, Iowa, Ohio, Nebraska, and Oregon.

The problem is that with separate states enacting their unique versions of NIL laws, there is no uniform legislative scheme, which can cause unfair disparity between athletic programs depending upon their location. Consequently, the NCAA has turned to Congress seeking enactment of a federal law—one that it has some control over. Yet even though a proposed bill is in the works, passage of a federal legislation appears unlikely by virtue of the current ideological divide and competing agendas in the U.S. Senate. And that leaves college athletes and coaches, school administrators, salivating agents and managers, and eager corporations in something of a free-for-all, each hoping to be first movers in position to take advantage of a burgeoning marketplace.

The NCAA’s Response

For their part, all three divisions of the NCAA have adopted rules suspending guidelines prohibiting NIL benefits—all with an eye toward avoiding further litigation in the shadow of the outcome of the Alston case. The net effect of this move by the NCAA is that student-athletes (at least those in states with NIL regulations) are now shielded from any penalties associated with the exercise of their NIL rights. Translation: college standouts can look forward to endorsement deals and other money-making opportunities. What remains a question, however, is how and when a uniform NIL system can be set in place.

It is the absence of uniformity that has the NCAA in a panic. The worry is that well-heeled boosters at big conference schools will go hog wild to entice athletes to come to their programs, thus upsetting the recruitment efforts of coaches and athletic directors from coast-to-coast. Suffice to say, while the door may be opening for athletes to profit through NIL deals, the future of college sports may be hanging in the balance.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.