NIL: FROM "TATTOOGATE" TO ENDORSEMENT DEALS

Author: Ian Strang, Associate Editor

               In 2010, the Ohio State football team found itself neck deep in allegations of players receiving improper benefits.[i] Specifically, players received tattoo discounts in exchange for individual memorabilia such as conference championship rings and “gold pants” received for the team’s recent defeat of the University of Michigan.[ii] Those allegations and their subsequent cover-up, dubbed “Tattoogate,” were leading examples of players recouping pecuniary benefits for their efforts on the field, contrary to NCAA policy.[iii] Such a “scandal” involving tattoo discounts may hardly draw a second look in today’s Name Image and Likeness (“NIL”) landscape.[iv] Since the Supreme Court’s decision in NCAA v. Alston, it is commonplace for collegiate athletes to raise money through independent foundations, sell memorabilia, and sign lucrative endorsement deals (often times before they even step foot on a college campus).[v] Modern NIL policies have allowed student athletes to profit from the marketization of their identity, often in conjunction with the student’s university. This article will look at how the NIL legislative landscape got to its current form, the current state and federal legislative landscape regarding NIL, and where it may be headed.

               The Alston case arose from claims that the NCAA’s rules limiting student athletes from receiving compensation for education-related costs violated the Sherman Antitrust Act.[vi] The Court agreed, with Justice Kavanaugh rejecting the NCAA’s “outdated” defense of amateurism, noting that the student athletes were the revenue-drivers of a “highly profitable” commercial enterprise.[vii] Following that ruling, the NCAA published an interim NIL policy allowing student to recoup the pecuniary benefits of their education-related costs and deferring heavily to local state guidelines on the matter.[viii] Many states followed with their own legislation.

               California proposed Senate Bill 206, titled the “Fair Pay to Play Act” in February of 2019, nearly two years before the Alston decision.[ix] The bill allowed student athletes to sign endorsement deals and acquire sponsorships without affecting their ability to compete as student-athletes.[x] The bill had broad support, including from former athletes. Governor Newsome signed it into law in September of 2019.[xi] 

               California was not the only state to legislate around NIL before Alston. Alabama and a handful of other states also legislated in anticipation of Alston.[xii] However, Alabama sought to enact less restrictive legislation than they thought might result from any interim NCAA policy resulting from Alston.[xiii] As it turned out, the actual interim policy was even less restrictive than Alabama’s legislation, so Alabama repealed its law and instead followed the NCAA’s interim policy resulting from Alston.[xiv] Presently, 29 states have passed legislation regarding NIL, with many modeled after California’s “Fair Pay to Play Act.”[xv] As with most state laws, there are some differences between them, but many NIL laws share some commonalities. These similarities include: restrictions on limiting compensation for NIL, allowing for representation through state licensed agents, limitation of NIL related eligibility, restriction of state or school sponsored compensation, and restriction of compensation from “vice” industries (such as alcohol or drug industries).[xvi] Along with the 29 states who have already passed NIL legislation, nearly a dozen others have only proposed such legislation.[xvii] The amount of variance between the laws of nearly 30 states has led some to call for a uniform federal law.[xviii]

               Since the Alston decision in 2019, there have been 8 federal bills proposed regarding NIL compensation for student athletes.[xix] These bills have come from both sides of the political aisle and have garnered support from some of the more notable names on Capitol Hill, including Senators Marco Rubio (Fairness in Collegiate Athletics Act), Senator Cory Booker (College Athlete Bill of Rights, and even former Ohio State Football player Representative (OH) Anthony Gonzales (Student Athlete Level Playing Field Act).[xx] While the interest appears to remain, with a bill being re-introduced as recently as April of 2021, the support for any single bill has not yet met the legislative threshold.[xxi]

               As Congress has yet to pass any uniform NIL legislation, student athletes remain at the behest of their university’s state law. The lack of national uniformity has allowed some universities to use their legislative landscape to offer NIL deals as inducements rather than as traditional compensation.[xxii] Some have argued that this leaves states with stricter NIL laws- specifically those that do not allow NIL inducement regarding recruiting - at a competitive disadvantage to schools that do allow for the proverbial “bag man” to offer pecuniary inducements.[xxiii] The resulting chaos has left the NCAA threatening a “crackdown” which has yet to arrive, leaving many schools wondering what is allowed and what will not be allowed in the near future.[xxiv] Until a regulatory force steps in (whether it be the NCAA, Congress, or the state itself), it is clear that NIL legislation looks to be expansive at its current stage, a dramatic shift from just a decade ago which has some seeking a reexamination of past scandals.[xxv] Nowadays, a tattoo discount likely wouldn’t amount to 10% of the value of the NIL packages of the  most profitable amateur athletes.[xxvi]

[i] Ohio State football players sanctioned, Espn, (Dec. 23, 2010) https://www.espn.com/college-football/news/story?id=5950873.

[ii] Id.

[iii] Id.

[iv] On3, https://www.on3.com/nil/rankings/ (last visited Oct. 16, 2022). (NIL valuations commonly exceed $1,000,000).

[v] National Collegiate Athletic Association v. Alston, 141 S.Ct. 2141 (2021); See also Scooby Axson, Report: 2023 Five-star recruit signs NIL collective that could net more than $8 million, USA Today (updated Mar. 13, 2022, 11:22 AM) https://www.usatoday.com/story/sports/ncaaf/2022/03/12/five-star-recruit-signs-8-million-nil-deal-largest/7014601001/.

[vi] Alston, 141 U.S. at 2144.

[vii] Id. at 2149.

[viii] Michelle Hosick, NCAA adopts interim name, image and likeness policy, ncaa (June 30, 4:20 PM) https://www.ncaa.org/news/2021/6/30/ncaa-adopts-interim-name-image-and-likeness-policy.aspx (outside of allowing professional agency and mandating minimum reporting requirements, the policy deferred to applicable state and local guidelines).

[ix] S.B. 206, 2019 Leg. Reg. Sess. (Ca. 2019).

[x] Id.

[xi] Id.; See also Felicia Mellows, Should college athletes profit from their prowess? NCAA says no, but California may say yes, Cal Matters (updated Oct. 28, 2019), https://calmatters.org/education/2019/07/college-athletes-profit-ncaa-california-skinner-fair-pay/.

[xii] Ezzat Nsouli and Andrew King, How US Federal and State Legislatures Have Addressed NIL, Squire Patton Boggs: Sport Shorts L. Blog, https://www.sports.legal/2022/07/how-us-federal-and-state-legislatures-have-addressed-nil/#_ftn3.

[xiii] Id.

[xiv] Id.

[xv] Id.; See also NIL Legislation Tracker, Saul Ewing Arnstein & Lehr, https://www.saul.com/nil-legislation-tracker#2 (last visited Oct. 14, 2022); Braly Keller, NIL INCOMING: COMPARING STATE LAWS AND PROPOSED LEGISLATION, Opendorse (June 23, 2022), https://biz.opendorse.com/blog/comparing-state-nil-laws-proposed-legislation/.

[xvi] Id.

[xvii] Id.

[xviii] Ralph D. Russo, Lack of detailed NIL rules challenges NCAA enforcement, AP News (Jan. 29, 2022), https://apnews.com/article/college-football-sports-business-15e776b5d115dac0a37a1563d5bfce00.

[xix] Nsouli and King, supra note xii; see also, NIL Legislation Tracker, supra note xv.

[xx] Nsouli and King, supra note xii

[xxi] Id.

[xxii] Dennis Dodd, Inducement concerns fuel fears for coaches, administrators amid $8 million name, image and likeness deal, CBS Sports (Mar. 21, 2022, 11:50 AM), https://www.cbssports.com/college-football/news/inducement-concerns-fuel-fears-for-coaches-administrators-amid-8-million-name-image-and-likeness-deal/.; See also Ross Dellinger, Big Money Donors Have Stepped Out of the Shadows to Create ‘Chaotic’ NIL Market, Sports Illustrated (May 02, 2022), https://www.si.com/college/2022/05/02/nil-name-image-likeness-experts-divided-over-boosters-laws-recruiting.

[xxiii] Dellinger, supra note xxii.

[xxiv] Amanda Christovich, As NCAA Threatens More NIL Regulation, States Back Off, Front Office Sports (May 16, 2022, 6:23 PM).

[xxv] Joey Kaufman, Ohio State football players from 'Tattoogate' scandal seek to have records reinstated, The Columbus Dispatch (updated July 13, 2021, 6:53 PM), https://www.dispatch.com/story/sports/2021/07/13/ohio-state-football-tattoogate-players-seek-records-reinstated/7949974002/.

[xxvi] Keegan Pope, Bronny James tops NIL valuation projections from On3, On3 (July 7, 2022), https://www.on3.com/nil/news/bronny-james-tops-nil-valuation-projections-from-on3/.