NIL and How it Changes the Landscape of College Athletics

By Guerino Tondreau

July 16, 2021

Abstract:

The NCAA has had a long-standing history of not allowing their student athletes to pursue endorsements. The United States Congress reached a resolution that has ended this practice. With this move, college sports have been shaken to its core. New deals have already been made and old scandals have been brought back to light. NIL has already given many student athletes the opportunity to earn an income and provide for themselves before they even make it to the professional level in their respective sports.

Introduction (What is NIL in the NCAA, and how did it come about?):

The acronym NIL stands for name, image, and likeness. It has an important significance to college athletes. It is a game changer for many college athletes in terms of their ability to earn income while playing sports in college. On July 2^nd the United States Congress passed a law that now allows student athletes of the NCAA to pursue and secure monetary gain from NIL deals. NIL does not include pay to play. In other words, schools are still not allowed to give athletes money in return for their attendance with the college’s athletic program. There is still no form of revenue sharing regarding both jersey sales and ticket sales. This is still a momentous occasion considering the NCAA history of having a staunch, zero tolerance policy against such arrangements. Historically, the NCAA prohibited college athletes to engage in any financial transaction during their college years. These young men and women were in fact severely punished for accepting any forms of financial compensation for their athletic activities.

California was the first state to challenge the NCAA in this respect.  It argues for students to be financially compensated for their athletic activities.  The NCAA fought against this proposition. However, in September of 2019 California legislators passed a historic law that made it possible for college athletes to get paid through endorsements. The law made it illegal for schools to try and discipline or punish college athletes that accept money from endorsement deals. However, it would not become effective until the year 2023.  The NCAA’s governing body was totally against this legislation. Ultimately, the NCAA succumbed to the pressure. They decided to make some changes and amend their rules as well. A month after the ruling of California, the NCAA announced that it was legal for college athletes to receive endorsements and derive some financially profit off their name, image, and likeness with the understanding that they must maintain the “collegiate model”.  This new measure or rule would take effect in January 2021.

Following the NCAA’s ruling, Florida also passed a law like that of California. However, it stipulated that instead of starting in 2023, the rule would become effective in July 2021. Several months later, two senators, Emmanuel Cleaver and Anthony Gonzalez, created a federal bill that allows student athletes to pursue NIL deals if they stay within certain stipulations. This bill was introduced in September 2020. They also added restrictions to the bill in an effort to keep the recruiting process as fair as possible. On December 10^th of 2020 Sen. Roger Wicker introduced a new bill to allow NIL deals, but also created an antitrust exemption. This exemption was meant to give the NCAA some form of protection from possible future lawsuits. A week later, senators Corey Booker and Richard Blumenthal called for a more extreme rule change across the NCAA. The senators’ bill stated that NCAA should have to share its revenue with the amateur athletes, cover the medical costs for current and former athletes, and even offer lifetime scholarships to student athletes who are in good academic standing. There were many more demands in the bill that we will not mention in this article. However, one can clearly argue that it was by far the most demanding of all the bills with regards to this issue.

As of January 11, 2021, the NCAA still had not decided on the NIL deals. Instead, they decided to postpone a vote. They were concerned that if they changed their rule, they run the risk of dealing with antitrust implications. In June, following months of turmoil, six of the NCAA’s division 1 conference met to propose a new plan to address the NIL situation. This plan would allow schools to create their own individual rules for NIL deals. However, as stated above, Congress intervened and crafted an important legislation that effectively resolved this issue. The law requires that student athletes be allowed to make money from their names, images, and likeness.

How have college athletes been supported historically?

Prior to the NIL bill, college athletes usually were given scholarships. These scholarships were given to student athletes to entice them and give them the opportunity to play sports at their college of choice. The NCAA, in fact, has historically deemed scholarships as a form of compensation. Along with scholarships, they are also given complimentary meal plans and targeted tutoring services from their colleges. However, not all student athletes receive a scholarship and associated benefits. There are also things called stipends. The cost of attendance stipends are a relatively new phenomena in college sports, having been introduced in 2016. They provide athletes with a fixed amount of money based that can be used widely and freely. It is not a large sum, the dollar amounts range from $2000 – $4000 in total. They are given out yearly.

History of illegal payments in college sports:

Throughout the tumultuous history of the NCAA there have been many cases of corruption. Student athletes have notoriously had a tricky past where payment is involved. One of the most high-profile instances occurred with USC star running back Reggie Bush. Reggie Bush’s case perfectly exemplifies how NIL could have helped a young college athlete. An investigation by the NCAA found out that during his time at USC, Bush’s parents were compensated with free rent by agents. His family was also reportedly given gifts estimated to be worth hundreds of thousands of dollars. This was done in the hopes that once he made the decision to go pro, they would be chosen as his representative. Because of his involvement, he was asked to return his Heisman trophy and banned from his alma mater’s campus.

Jeremy Bloom is another example of an athlete who was banned from competing in the NCAA because of his endorsements. He was a wide receiver at the university of Colorado. However, he also doubled as a professional skier. He received endorsements for skiing and professionally and was subsequently banned from completing his college football career. At the time, the NCAA’s rules allowed for their student athlete to be salaried in other professional sports. Bloom was not receiving a salary. Instead, he had sponsors paying him in preparation for his 2006 Olympic bid. Bloom unsuccessfully appealed his suspension and was permanently banned from competing in NCAA college football thereafter.

Rules regarding NIL:

Different schools have implemented different rules on how their athletes may profit off their names, images, and likenesses. For example, student athletes at Texas University must report the sources of their endorsement and their monetary values. Schools like BYU have already enacted rules regarding NIL deals. If players wish to pursue endorsement deals, they are allowed to do so. However, there are limits to what they may or may not receive. BYU being a college that upholds Mormon ideals expects its student athletes to behave in the same manner. Therefore, they have stated that their athletes may not receive endorsements from company that sell alcohol, coffee, tobacco, companies involved in gambling, and companies that promote adult entertainment.

The university of Florida has also publicly stated its stipulations regarding what athletes may or may not endorse. Like BYU, the university of Florida has told its athletes they may not pursue NIL deals with companies that are involved in gambling, sports betting, or performance enhancing drugs. Although schools are not yet required to all have a uniform approach as to what may or may not be deemed appropriate in their programs, it is fair to assume some endorsements will most likely be prohibited across the boards.

Why was their pushback against paying college athletes?

The NCAA has stated in the past that paying its athletes or allowing them to secure endorsements would have a negative impact on the integrity of college sports. Critics of the idea of paying athletes have come from all areas. Coaches and media personalities alike have expressed their disapproval of compensating student athletes. One of the most prominent coaches to be against NIL deals is Clemson universities’ football head-coach, Dabo Swinney. In an interview, Swinney went as far as saying if players were to be paid, he would quit coaching. However, he has not quit since Congress passed the bill forcing the NCAA to allow students to be compensated for NIL.

Many critics of the idea surrounding student athletes being paid for their name, image and likeness have stated that many student athletes are already being compensated. They receive compensation through scholarships, grants, meal plans, and other benefits like gym services. Again, it’s worth reiterating that not all college athletes receive a scholarship. In addition, athletes who are not on scholarship do not have access to the same meal plans as their counterparts. Another important issue that is being ignored by those arguing against NIL is the risk of career ending injuries that these college athletes face. At any given time, they may suffer an injury that could end their career and chance of becoming professional athletes. Therefore, it makes sense that student athletes should at least be able to be compensated at the amateur level. Lastly, student athletes work extremely hard to reach the division 1 level. The NCAA makes exorbitant amounts of money on their athletes’ likenesses. With new NIL deals, players can finally benefit from their hard work and dedication to the sports.

Conclusion:

The NIL is a landmark rule that has made it possible for college athletes to be compensated for their effort and hard work. For years, the NCAA and universities enjoyed all the benefits of college sports events. They have reaped all the rewards while the student athletes were only offered scholarship and meal plans. Although athletes will continue to be excluded from the revenue from the sale of jerseys and tickets, the NIL legislation is still monumental. The previous arrangement that the NCAA had in place was unjust and abusive. Now, college athletes can receive endorsements without penalty if they adhere to very specific rules and guidelines of their respective schools and the NCAA. This does not totally level the playing field, but it does allow more freedom and flexibility in these young peoples lives.

Sources:

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