GrayRobinson Higher Education E-lert: Preparing Your University for Possible Student-Athlete Compensation for Use of Name, Image, or Likeness (NIL)

Authored by Higher Education Attorney Scott Cole | June 16, 2021
 

On May 12, 2021, the Florida Board of Governors issued notice of a proposed new regulation, 6.022, Intercollegiate Athletes. On May 15, 2021, the State Board of Education issued Rule 6A-14.0582. The regulation and rule implement Section 1006.74, Florida Statutes, allowing student-athletes to promote their athletically and non-athletically business-related activities and requires a student-athlete who enters into a contract for compensation for the use of their name, image or likeness (NIL) to disclose the contract to the university in the manner designated by the college or university. Absent legal action by the National Collegiate Athletic Association (NCAA) or others seeking injunctive relief, Florida Statute Section 1006.74 will go into effect on July 1, 2021.

While both the regulation and the rule satisfy the technical requirements of the statute, they leave some gaps that will need to be addressed by the universities and colleges in their regulations, rules, or policies. Those include:

  • Define the following terms or describe the process for defining them:
    • “Fair market value” for purposes of determining if the athlete’s NIL contract is a legitimate payment for services. Consider establishing an internal or external body independent of athletics to make this determination.
    • “Affiliated entities” that are prohibited from contracting with student-athletes. Examples include booster organizations, university-related foundations, athletic donors, direct support organizations, and university employees. This should also include entities that are created or controlled by Affiliated entities.
    • “Intercollegiate athlete’s team contract” This should include sponsorship/naming rights contracts, media rights contracts, trademark licenses, and any other contract whose value derives in part from association with the university’s name and goodwill. Consider whether it might also include exclusive contracts with the university that are not directly related to athletics, such as banking, pouring rights, booksellers, and food service contracts.
  • Provide education and a clear process for athletes to follow to successfully market their NIL in accordance with university policy.
  • Consider purchasing a NIL software platform, such as Compass, Opendorse, or Nocap, to provide this service for the university.
  • Clearly state whether and under what conditions the athlete is authorized to use university trademarks or logos or represent that he or she is associated with the university. Also consider the appropriate payment for the trademark license.
  • Require that the athlete’s contract with a third party be sent to the university for review prior to signature. This will avoid having to attempt to unwind a problematic contract.
  • Require the athlete to provide proof that his agent is licensed under part IX of Chapter 468 of the Florida Statutes and, if an attorney, proof of Florida Bar licensure.
  • State clearly that the university is not a party or third party beneficiary to a NIL contract and the athletes are solely responsible for fulfilling any obligations thereunder.
  • Decide whether the institution will attempt to limit the types of businesses that athletes may endorse to avoid embarrassment to the institution. Consider whether doing so would violate F.S. 1006.74 (2)(b) prohibiting a rule or policy that “prevents or unduly restricts an athletes ability to from earning compensation from their NIL”, or for state institutions, whether it violates the athlete’s commercial free speech protections.
  • Clarify any special rules for foreign athletes to avoid issues with their visas.
  • Establish guidelines for what coaches can say about NIL during the recruitment period.
  • Confirm female athletes are given the same opportunities to monetize their NIL as male athletes to reduce exposure to Title IX issues.

There will be many other issues to address based on the particular circumstances of each college and university, but these points will be helpful as higher education institutions begin the process of developing appropriate policies.


Section 1006.74: The Breakdown

The statute can be summarized as follows:

  • Authorizes an intercollegiate athlete to earn compensation for the use of her or his name, image and likeness.
  • Prohibits a college or university (public or private) from adopting or maintaining a requirement that unduly restricts an intercollegiate athlete from earning compensation for the use of his or her NIL.
  • Prohibits a college or university, or related entity whose purpose includes benefiting a college or university (or an employee, officer, or director of such entity), from compensating a current or prospective intercollegiate athlete for the use of her or his NIL.
  • Requires a college or university to conduct a financial literacy and life skills workshop at the beginning of the athlete’s first and third academic years and specifies conditions for the workshop.
  • Prohibits a college or university from unduly restricting an athlete from obtaining professional representation by a licensed athlete agent or an attorney in good standing for the purpose of securing compensation for the use of their NIL.
  • Specifies that an athlete may not enter into a contract for compensation for the use of NIL if a term in such contract conflicts with a term in the athlete’s “team contract.”
  • Requires an athlete who enters into a contract for compensation for the use of his or her NIL to disclose the contract to their college or university in a manner designated by the institution.

The statute as it stands is inconsistent with current NCAA bylaws which state that an athlete can lose his or her amateur status by, among other things, using a recruiting agency, agent, or scouting service, or promoting or endorsing a commercial product or service. However, the NCAA’s Board of Governors directed each of its divisions to pass rules allowing intercollegiate athletes to benefit from use of their NIL. These rules are currently on hold pending resolution of a federal anti-trust case and possible legislation at the federal level.

Florida is among only a handful of states (including Alabama, Georgia, Mississippi, and New Mexico) with statutes that go into effect this year. Critics argue this gives athletic programs in these state a recruiting advantage over states without these laws.