Breaking Down How the NCAA, Mark Emmert Might Approach NIL Issue

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For the many students, parents and businesses interested in whether—and when—college athletes will be able to license their names, images and likenesses, next Tuesday will be an important day in the timeline.

At 12:30 p.m. ET, NCAA president Mark Emmert will participate in a one-on-one conversation at the Aspen Institute’s Future of College Sports: Government’s Role in Athlete Pay forum in Washington, D.C. Jon Solomon, a former national college football reporter for CBS Sports and the editorial director of Aspen’s Sports and Society Program, will question Emmert.

The forum will include comments by other key stakeholders, many of whom hold viewpoints that diverge from those of Emmert. Those stakeholders include:

• Congressman Mark Walker, who has introduced the Student-Athlete Equity Act.

• Congresswoman Donna Shalala, who served as president of the University of Miami in the early 2000s.

• Michigan state representative Joe Tate, who has introduced a name, image and likeness bill in Michigan.

• Ramogi Huma, the executive director of the National College Players Association.

• Donna Lopiano, the president-elect of the Drake Group and former University of Texas women’s athletic director.

Emmert’s responses in this kind of forum will shed light on whether the NCAA will voluntarily change amateurism rules or whether it will put up a legal fight that could last well into the 2020s.

California and other states embrace NIL rights for college athletes

There is clear legislative and industry momentum for college athletes to gain the right to negotiate deals with video game publishers, camps, trading card shows, clothing makers, sneaker companies and other entities that would pay for an association with athletes’ names and identities. In September, California governor Gavin Newsome signed the Fair Pay to Play Act into law. The act, which goes into effect on Jan. 1, 2023, makes it illegal for California colleges to deny their student athletes opportunities to hire agents or gain compensation for the use of their names, images and likenesses.

Lawmakers in more than a dozen other states are exploring similar legislative proposals. To date, other states’ proposals mostly resemble California’s law. Most crucially, they would require colleges to allow their athletes to hire agents and secure compensation for the commercial use of their identities. Stated differently, the proposals would compel colleges to defy NCAA rules that fall under the umbrella moniker “amateurism.” Among other things, amateurism generally prohibits college athletes from retaining an agent or signing contracts. Athletes who violate amateurism rules are subject to losing their eligibility to play sports and forfeiting their athletic scholarships. NIL proposals, like California’s law, would prevent such outcomes.

States’ NIL proposals, like California’s law, also require that an athlete’s NIL contract not conflict with a contract signed by his or her team. This is an important concession to universities that receive considerable revenue from Nike, Adidas and other major brands in sponsorship deals. Those deals would be valued less by sponsors if college athletes, particularly star athletes, wore the apparel of rival companies.

The proposals also comport with amateurism rules by forbidding colleges from paying prospective college athletes—meaning high school players—compensation for their NIL rights. They likewise do not obligate colleges to pay current college athletes for use of their NIL; the created right would be for athletes to negotiate with video game publishers, apparel companies and other third parties. The proposals are silent on whether colleges could eventually decide, on their own, to pay current college athletes for the use of their NIL.

Still, states’ frameworks for NIL rights differ from one another in certain important respects. Some would apply to community colleges whereas others would not. Other frameworks contemplate compelling colleges to set aside money for college athletes who suffer long-term injuries, a topic unaddressed in most of the proposals and concepts. The proposals also vary as to when they would go into effect, with a range between 2020 and 2023.

The problem of asymmetry with conflicting state statutes for NIL—and resulting legal vulnerabilities

The prospect that college athletes in some, but not all, states could earn compensation for the use of their names, images and likenesses would create obvious asymmetry. Imagine that a top high school recruit could sign a lucrative endorsement deal if he or she matriculated to UCLA or USC. Now imagine that he or she wouldn’t have that choice if they attended Alabama or Texas. All things being equal, the athlete would be more inclined to pick one of the California schools.

Of course, asymmetry already exists in college sports. Certain schools have built-in recruiting advantages due to superior stadiums, arenas and training facilities, not to mention track records of winning, legacy brands and prominent coaches. Even when all schools faithfully adhere to amateurism, the playing field isn’t even and, realistically, can’t be even. However, a system where athletes can be paid in only some states would prove disruptive in ways that many schools and university presidents fear.

A state-by-state “patchwork” approach to NIL rights would be sure to face legal challenge, too. The NCAA, as well as the conferences and member schools forced to breach their contractual relationships with the NCAA, would have standing to sue.

A legal challenge would focus on the following dynamic: a state NIL law that compels schools to violate their obligations to the NCAA would effectively—and perhaps unlawfully—compel the NCAA to make an unwelcomed choice between nationalizing rules to comport with those of the state or expelling member schools from that state.

The NCAA would insist that uniform rules for member schools across the 50 states are essential to a national association of college athletics. The NCAA would thus maintain that if it permits schools from one state to follow a new state law, the NCAA would need to change its rules for schools in the 49 other states, too. Alternatively, the NCAA would need to sever ties with schools in the state with the new rules. Neither option, the NCAA would insist, ought to be considered lawful.

This dynamic lends itself to a legal challenge under the so-called Dormant Commerce Clause, a constitutional interpretation that instructs that one state can’t enact laws and regulations that unduly impact the economies of other states. Congress has the exclusive authority to regulate interstate commerce under Article, I, Section 8 of the U.S. Constitution. The NCAA could insist that a state that interferes with the economic and contractual relationship between the NCAA and member schools in one state would be violating the law.

If litigation were brought in California, the NCAA would highlight favorable precedent. In 1993, the U.S. Court of Appeals for the Ninth Circuit (which governs federal district courts in California and other western states) held in NCAA v. Miller that the state of Nevada violated the Commerce Clause. The state did so by passing a statute to provide due process rights to college athletes, coaches and boosters. Such rights conflicted with NCAA policies for investigations and sanctions. The statute was passed in the wake of the UNLV basketball scandal and in response to concerns that the NCAA was railroading UNLV.

The NCAA won the case because, as detailed by Judge Ferdinand Fernandez, Nevada had effectively forced the NCAA the adopt the rules of Nevada for every state. In other words, if the NCAA allowed college athletes and coaches in Nevada to enjoy a new set of rights, the NCAA would need to change its rules to provide those same rights to college athletes, coaches and boosters in other states. This type of compulsion would be necessary in order to maintain parity of NCAA rules across the country. It would also, Judge Fernandez maintained, “run afoul of the Commerce Clause” since Nevada law would “directly control commerce occurring wholly outside the boundaries of the state.” Further, Judge Fernandez stressed if other states enacted due process rights for college sports, those laws might conflict with each other and thereby place the NCAA in an untenable position to operate with conflicting states laws.

The NCAA would also cite the California Supreme Court’s 1983 ruling in Partee v. San Diego Chargers. The case involved Dennis Partee, a kicker for the Chargers during the 1970s. Partee claimed that different NFL rules, including the NFL draft and anti-tampering rules , adversely impacted players’ wages. In doing so, Partee insisted, the Chargers and by extension the NFL violated California’s state antitrust law, known as the Cartwright Act. The California Supreme Court rejected this argument on grounds that application of a state antitrust law can’t conflict with the Commerce Clause.

In his opinion (ruling), California Supreme Justice Allen Broussard noted “the necessity of a nationwide league structure for the benefit of teams and players for effective competition is evident as is the need for a nationally uniform set of rules.” To that point, he stressed that “fragmentation of the league structure on the basis of state lines would adversely affect the success of the competitive business enterprise, and differing state antitrust decisions if applied to the enterprise would likely compel all member teams to comply with the laws of the strictest state.” The NCAA would rely on the Partee decision to assert that California creating NIL rights compels the NCAA to award those rights to all of its member schools.

None of this means the NCAA would necessarily prevail in a lawsuit over application of California’s law or other states’ NIL statutes. A state would maintain that creating a right for college athletes to negotiate with third parties is completely separate from the fiduciary and economic relationships between college athletes and their schools and between member schools and the NCAA. From that lens, the state wouldn’t interfere with a school and the NCAA or commerce between them. It would simply empower athletes at a school.

Which interpretation of the law is correct? Each side would claim the answer is clear, but the truth would lie somewhere else. Litigation involving state NIL statues would invoke complex and unsettled areas of law. States that adopt NIL legislation should be prepared for years of litigation.

Along those lines, cases involving college athletes’ identity and related rights have often taken years to play out. Ed O’Bannon’s NIL and antitrust case against the NCAA lasted seven years. Shawne Alston’s grant-in-aid case against the NCAA began in 2014 and is now up for appeal before the Ninth Circuit. The Miller and Partee cases discussed above took two and three years, respectively.

There will be no swift answers from the courts on states’ NIL statutes.

The appeal of national NIL rules tempered by other concerns

The NCAA and Emmert are no doubt repelled by the prospect of multiyear litigations involving states’ NIL statutes. The lawsuits would be unpopular and likely lead college athletes to hold increasingly unfavorable views of the NCAA. The athletes would charge that all California’s law and other NIL laws would provide is the right to negotiate deals with third parties, and nothing more.

A less litigious solution would emerge through a national set of NIL rules. To that end, in October the NCAA’s Board of Governors announced a plan that will eventually permit college athletes, in every state, “the opportunity to benefit from the use of their name, image and likeness.”

The announcement was championed as a victory for college athletes. However, the plan’s details remain undetermined and unknown. When ultimately revealed, those details might severely disappoint advocates for reform. Indeed, the board’s statement employs vague language. For instance, it mentions such words as “opportunity” and “benefit,” but noticeably omits mention of “pay” or “money.” It also stresses that core NCAA principles, as well as “the priorities of education and the collegiate experience” and the “clear distinction between collegiate and professional opportunities,” must be upheld in whatever plan is ultimately shared.

It’s thus possible that the NCAA will recommend that college athletes can’t be paid dollars for NIL contracts but can instead “benefit” by being able to use awarded funds for purposes related to their education or to their health. It’s also possible the NCAA will permit university administrators to approve or reject an athlete’s pending NIL contract so that it is purportedly compatible with a school’s values and mission statement. There are numerous ways the NCAA’s model might prove far more limiting than what would be compelled by California’s NIL law and potential laws in other states.

An alternative model would be for Congress to pass, and President Donald Trump to sign, a federal NIL law. Such a law would avert the legal challenges discussed above since no one state would be dictating the rules.

There is reason to believe such a law could happen. California’s statute passed the state’s Senate by a vote of 73-0, and thus with unanimous support from Republicans and Democrats. Last week, Emmert told a Sports Business Journal forum that it is “highly probable” that legislation will be passed.

In the House of Representatives, U.S. Congressman Walker’s Equity Act would amend the Internal Revenue Code of 1986 to condition the NCAA’s status as a non-profit to the NCAA permitting college athletes to gain NIL compensation from third parties. Meanwhile, U.S. Congressman Anthony Gonzalez has discussed the introduction of NIL legislation. In the Senate, U.S. Senators Chris Murphy and Mitt Romney have formed a working group to study the topic. NIL-related legislation is expected in the Senate in the near future. It’s clear there is bipartisan support for taking action. It’s less clear whether there is sufficient support among both parties to pass a NIL bill or how President Trump would respond to it.

The language of a federal bill that advances in the legislative process would be closely scrutinized. A bill that resembles the aspirational statement expressed by the NCAA in October would likely placate college administrators, who are nervous about significant and rapid change. However, it would fall short of reformists’ more transformative and urgent expectations. It might also lead to challenges under a separate area of law, federal antitrust law, should the bill become a law and should the NCAA and its member schools interpret their legislative discretion in ways that exceed what the law intends.

Conversely, a bill that empowers athletes to operate without significant constraint by their schools or the NCAA would be more likely to stimulate passionate debate. To illustrate, imagine a bill that calls for the creation of an independent commission to review athletes’ pending NIL contracts. Such a commission could overrule a school that worries that a particular contract would betray school principles. This kind of commission would be welcomed by athletes (and their agents) but might trigger opposition from athletic departments.

At the same time, such a commission could help to ensure that athletic departments do not unwittingly violate Title IX, a federal law which requires that schools provide gender equity in athletic opportunities for their athletes. A school that plays a supervisory role in the approval or denial of players’ NIL contracts with third parties ought to be mindful of any disparities in how they review contracts of players on the men’s teams and the women’s teams.

At the end of the day, this is a complicated topic. It will take time to play out. Emmert’s remarks could provide important clues as to where the path is headed.

Michael McCann is SI’s Legal Analyst. He is also an attorney and Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law. McCann will participate in Tuesday’s forum as a panelist.