This article was originally published by the Sports Business Journal on October 13, 2021.
In the face of several state name, image and likeness laws set to take effect on July 1, the NCAA approved an interim policy for student athletes to engage commercially in NIL endorsement activity. Still, most stakeholders in college sports — including the NCAA — agree that the current patchwork of state NIL laws is an untenable solution to regulating student-athlete commercial opportunities. This understanding has amplified calls for federal action to establish a national set of rules that preempt state NIL laws and NCAA guidelines.
In the past calendar year, both major political parties have introduced several bills in Congress aiming to create a national NIL framework. Each proposed bill would guarantee NIL rights for student athletes, but they differ significantly from one another. It is anyone’s guess when (or if) Congress might ultimately pass an NIL measure; even so, the proposed bills tell us much about the future of NIL as well as other potential reforms facing college sports. Below is a short review of those bills.
Sen. Marco Rubio (R-Fla.) introduced the Fairness in Collegiate Athletics Act (“FCA”). FCA is narrowly focused on NIL, and is silent on other hot-button college athlete issues like medical coverage and unionization. That said, its regulatory proscriptions are quite broad, as FCA includes almost no detailed formulation of a national NIL policy, but instead refers all NIL rulemaking authority to the NCAA. Specifically, FCA gives the NCAA powers to create rules “deemed necessary to preserve the amateur status of student athletes.” “Amateur status” is not defined in the bill, which would give the NCAA significant policy making latitude. FCA also gives NCAA member institutions blanket immunity from civil liability (including antitrust claims) stemming from NIL policy implementation.
Sen. Roger Wicker (R-Miss.) introduced the College Athlete and Compensation Rights Act (“CACRA”), which would require the NCAA, as well as its athletic conferences and schools, must allow student athletes to earn NIL compensation, but also includes several provisions favoring institutional control.
First, CACRA only requires the NCAA, conferences, and institutions to permit NIL compensation that is “commensurate with market value,” which might, in practice, give governing authorities the discretion to approve or disapprove NIL deals based on their cash value. Further, CACRA requires college athletes to complete 12% of the college credits required for graduation before becoming eligible for NIL compensation — ostensibly excluding freshmen from NIL. CACRA also prohibits student athletes from entering into NIL agreements that conflict with college sponsors, and — like FCA — provides the NCAA, conferences, and institutions exemption from state and federal antitrust liability. Finally, CACRA would require schools to publish reports detailing specific NIL data, (including descriptions of all student athletes’ NIL agreements) which would constitute no small task from an enforcement and compliance standpoint.
On the other end of the political spectrum is the College Athlete Bill of Rights (“CABOR”), introduced by Sen. Cory Booker (D-N.J.) and Sen. Richard Blumenthal (D-Conn.). CABOR allows state governments to restrict student athletes from endorsing certain product categories (e.g. gambling, alcohol), but only where laws equally restrict universities in those categories. CABOR also prohibits institutions from requiring student athletes to wear certain footwear brands, and allows student athletes to sign NIL deals that conflict with college sponsors. CABOR also contains revenue-sharing provisions requiring colleges to pay 50% (less scholarship expenses) of revenue earned by so-called “revenue-generating sports” into a sport-specific pool to be shared by all student athletes competing in that particular sport. This arrangement represents a radical change in the university/student athlete relationship; ostensibly imposing a “revenue sharing” system similar to those found in professional sports.
Other CABOR benefits include guaranteed athletic scholarships through graduation, a student-athlete trust fund for medical expenses occurring within five years of athletic activity and “no-penalty” transfers between universities. Although CABOR does not grant student athletes the right to unionize, it would commission a public report to investigate pathways for collective bargaining in the future.
The College Athlete Economic Freedom Act (“CAEFA”) was introduced to the Senate and House by Sen. Chris Murphy (D-Conn.) and Rep. Lori Trahan (D-Mass.) respectively. Although narrowly tailored to the NIL issue CAEFA provides student athletes with the broadest freedoms in exercising NIL rights of any bill yet introduced.
CAEFA prohibits institutions or athletic associations from enforcing rules, standards or limitations that would prevent current or prospective student athletes from selling or licensing their NIL individually or a group. It also explicitly provides student athletes collective representation rights to facilitate group licensing agreements. As written, CAEFA prohibits institutions from restricting NIL agreements that conflict with university contracts, or excluded sponsorship categories — both being common constraints in state NIL laws. Further, rather than providing liability exemptions to institutions, CAEFA gives student athletes a private cause of action that would make CAEFA violations “per se” antitrust penalties (i.e. restrictions would be presumed illegal even if found to have pro-competitive qualities).
The Amateur Athletes Protection and Compensation Act of 2021 (“AAPCA”) was introduced to the Senate by Sen. Jerry Moran (R-Kan.). AAPCA provides broad permissions for student athletes to monetize their NIL, but goes further than any other Republican-introduced bill in addressing other student-athlete concerns. For example, AAPCA guarantees post-eligibility medical coverage for injuries suffered by while enrolled, and mandates one-time transfer exemptions for all student athletes. Further, it creates a third-party enforcement agency with subpoena power which would act as a clearing house for student-athlete NIL issues, and establish enforcement rules for the FTC. In other ways AAPCA is more institutionally friendly — it explicitly indicates that student athletes are not employees, and limits any federal or state antitrust liability for the NCAA, conferences or institutions that otherwise comply with its terms.
Finally, Rep. Anthony Gonzalez (R-Ohio) and Rep. Emanuel Cleaver (D-Mo.) re-introduced an amended bipartisan bill called the Student Athlete Level Playing Field Act (“LPFA”), which appears to strike a middle ground between CACRA’s deference to the status quo and CABOR’s expansive approach. Like CACRA and CABOR, LPFA prohibits the NCAA, conferences, and universities from restricting student-athletes’ NIL relationships. Like CACRA, it allows those rulemaking bodies to impose certain restrictions on endorsements, but limits them to certain categories (e.g. tobacco, alcohol, and gambling). The bill would also impose reciprocal restrictions on institutional sponsorship activity in categories where student athletes are barred. LPFA also creates a federal antitrust exemption for any causes of action that might otherwise stem from its provisions — a narrower exemption than found in CACRA. Unlike CABOR and CACRA, LPFA contains no NIL disclosure requirement for student athletes.
If passed and signed into law, each of these bills would permit student athletes to earn NIL compensation, and create a national framework for doing so. While Democrat-led bills like CABOR go further in securing health benefits and revenue sharing opportunities for student athletes, each bill would prohibit the undue restrictions on NIL earning opportunities preempt the patchwork of state NIL laws currently in force.
It remains unclear whether a federal NIL law can be passed, but observers should keep a keen eye on other issues addressed by these bills, including blanket antitrust immunity for institutions, group licensing allowances and pathways to unionization for student-athletes. Plainly, state and NCAA-led NIL reform may not be the last word on the changing college sports landscape. It remains to be seen, however, whether there is the political will for NIL action on Capitol Hill.
Gregory Marino is a member of Foley & Lardner’s Business Litigation & Dispute Resolution Practice, and serves on the Sports & Entertainment Industry Team as special counsel.