We got a positive, historic NIL development, but college athletics just got way more complicated
Wednesday was a good day.
At a time when we don’t have live sports, the developments in the never-ending tug-of-war over the NCAA’s name, image and likeness policy (NIL) were historic.
We found out Wednesday that during a meeting this week, “the Board of Governors supported rule changes to allow student-athletes to receive compensation for third-party endorsements both related to and separate from athletics.” The NCAA is expected to adopt a new NIL policy by January 2021 that’ll go into effect at the start of the 2021-22 school year.
To be clear, that doesn’t mean Alabama is about to be like, “hey, Dylan Moses. Here’s a $10,000 check for how well you’ve been playing.” This is NOT pay for play. One would assume the NCAA still wouldn’t have signed off on Odell Beckham Jr. handing out hundreds after the College Football Playoff National Championship unless he proved LSU players were part of some product endorsement of his.
What these developments mean is that hypothetically, Ja’Marr Chase could go to his local mall, sign autographs and get paid by whatever store is hosting him.
(Somewhere, Todd Gurley and every Georgia fan just let out an expletive and asked for his junior season back.)
It’s not limited to that. Under these new guidelines, student-athletes can now make money as social media influencers. Kyle Pitts has a friend with a T-shirt business that he wants to promote on his Instagram? Cool. Get that paycheck. George Pickens wants to promote a local Athens barber who gave him a fresh fade on his Twitter? No worries. He can pay Pickens for that.
This is positive. Very positive. Student-athletes can now do things that any average college student can do. You know, if they have that kind of value (something tells me my local buffalo wing place back in college wouldn’t have dropped $1,000 on me to do an ad for them).
But here’s where it gets tricky.
College athletics just got significantly more complicated on a variety of fronts. I can imagine every compliance/marketing staff in America is sweating bullets right now because there are suddenly major hurdles to work around for the hundreds of student-athletes on campus.
For example, remember how I said that Chase could go to a mall, sign autographs and get paid by whatever store is hosting him? There are a couple of caveats associated with that.
The proposed NCAA guidelines state that there no limits for third-party endorsements, but that the use of logos are prohibited in this likeness issue:
While student-athletes would be permitted to identify themselves by sport and school, the use of conference and school logos, trademarks or other involvement would not be allowed. The board emphasized that at no point should a university or college pay student-athletes for name, image and likeness activities.
Wait a minute.
So does that mean that if Chase signs autographs, he can’t sign an LSU helmet or an LSU T-shirt? That’s what that sounds like. Or does that just mean that if Chase goes to a Dick’s Sporting Goods, he can’t sign autographs while wearing team-issued gear? Hopefully, it’s the latter. I reached out to an SEC compliance director for clarification but haven’t heard back.
If it’s not, how would schools, who aren’t allowed to be the ones facilitating these third-party revenue opportunities, sign off on every item before it’s signed? I have no idea.
The other thing we don’t know is what this market will be. While the release said that there won’t be limits to third-party revenues, student-athletes essentially have to be paid market value for their services. In other words, a $500,000 payday for Justin Fields to do an Instagram ad for a local car dealership in Columbus won’t be allowed:
Not a new concept for the NCAA. Employment opps for athletes have similar limitations. “Compensation may be paid to a student-athlete: (a) Only for work actually performed; and (b) At a rate commensurate with the going rate in that locality for similar services.” https://t.co/Zn1OayOdP6
— Gabe Feldman (@SportsLawGuy) April 29, 2020
So what is market value? That depends who you ask.
I reached out to multiple former SEC players and asked them what they were paid for appearances once they were in the NFL and returned to their college towns. For a couple of beloved, All-SEC players, they earned anywhere from $1,000-$10,000. How much could a top-tier player like Chase expect to make for signing autographs at the local Baton Rouge mall? One of them gave a rough estimate of $25,000. But what if a local restaurant were to give Lawrence $100,000? Would that be deemed “abnormal?”
Guys like Lawrence and Chase would undoubtedly make more per appearance than Vanderbilt’s right guard. That’s just a fact. This is still capitalism. Policing that seems like a massive hurdle, as does policing whether a service was actually provided by the student-athlete and universities aren’t just using local businesses as a back-door way to give them money. (Remember the Maurice Clarett fiasco over that car he was using?)
Another hurdle is the use of this in recruiting. The NCAA is determined to prevent schools from promising a 5-star quarterback a third-party advertising deal in addition to their scholarship:
The board is requiring guardrails around any future name, image and likeness activities. These would include no name, image and likeness activities that would be considered pay for play; no school or conference involvement; no use of name, image and likeness for recruiting by schools or boosters; and the regulation of agents and advisors.
That seems a bit naive. Local businesses have all the incentive in the world to get the best possible recruits on campus because obviously the better the team plays, the more fans come to their businesses. That’s not new. What is new would be them working with universities to have plans in place so that the second these kids on campus, they could have these advertising opportunities.
Again, that wouldn’t be the case for everyone. The market would dictate that. But in an era when recruiting is consumed more than ever because of social media, 17-year old kids will have juice. Schools with the best third-party advertising opportunities suddenly have a bit more to offer than simply “a coaching staff with a proven track record of developing NFL talent.”
Where else does this get messy? There’s also the tax issue. This is considered taxable income. For a bunch of college-age kids who have probably never done taxes, that creates a new set of potential issues. Will we see big-time college athletes audited? That can be overcome, but again, we’re talking about beefing up athletic departments to help navigate that at a time when the entire college athletics revenue model is up in the air with COVID-19.
Unfortunately the place where this doesn’t get messy is the return of the EA Sports NCAA Football video game. There won’t be any group licensing like there is in professional sports. The subject will be revisited in 2021. One issue at a time.
If you were holding your breath on the next NCAA video game, stop. Why one would ever hold their breath on the NCAA to modernize is beyond me.
But hey, at least we got Wednesday’s developments. That’s a start. A major start. Beginning in 2021, we will no longer live in a world in which billion-dollar TV contracts are agreed upon and the National Player of the Year can’t get a few thousand dollars to do a meet-and-great at Walk-On’s. That’s a step in the right direction.
The path moving forward is going to be tricky to navigate. This is no longer a black and white world as it relates to NIL issues. We’re about to begin a gray, murky chapter in the story college athletics.
Here’s hoping it’s fairer than the last one.