One Year After Senate NIL Hearing, a Federal NIL Law Remains Elusive
Last June, I testified before the U.S. Senate in a hearing on whether Congress should adopt a national NIL standard. A year later, Congress appears no closer to passing NIL legislation.
The hearing, which included NCAA president Mark Emmert, was seen as a last-ditch attempt to nationalize NIL before state statutes went into effect on July 1, 2021. Those statutes contemplate similar, but nonetheless different, NIL rights. Some prohibit certain categories of endorsements, such as those linked to gambling or adult entertainment. Others require college athletes to take coursework before they’re eligible for pay. Still others mandate that NIL deals be “commensurate with market value.”
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The NCAA, which had long opposed NIL and unsuccessfully battled Ed O’Bannon in court, contends that one federal NIL standard would promote fairness and predictability (I supported that position in my testimony).
But the NCAA failed to persuade enough Senators, Congressmen and Congresswomen. In fact, not one NIL bill made it out of committee or for a vote.
Since then, the NCAA has continued to lobby for a federal NIL bill. Conversations with Congressional staffers indicate that three major hurdles exist:
1) The college sports industry has functioned fine without a federal NIL statute.
Leaving NIL to the states, it’s been argued, would bring about chaos and confusion, with conflicting rules and uncertain standards. That type of turmoil could destabilize the college sports industry, repel fans and cost schools and conferences money.
Those concerns haven’t materialized.
While state NIL statutes contain variations, the NCAA’s lack of noticeable NIL enforcement created a vacuum that market actors rushed to occupy and, by doing so, diminished the practical importance of those variations.
For example, while NIL collectives have drawn controversy over boosters paying recruits large sums of money, the NCAA already has rules barring pay-for-play. It’s up to the NCAA to enforce them.
Also, litigation and other legal controversies haven’t surfaced at the state level. Many state NIL statutes lack meaningful enforcement mechanisms. If a school or athlete is potentially violating a statute, it’s unclear which person or entity would be able to bring a legal action. Many potential enforcers of state NIL statutes also lack an incentive to pursue legal action. Would a local law enforcement officer, state regulator or politician want to make it harder for a popular in-state school to compete against out-of-state rivals?
Plus, as states enjoy control over NIL, they’re less likely to want to relinquish it. That position might have been strengthened, too, by U.S. Supreme Court rulings this term promoting states’ rights and diminishing federal oversight.
Other metrics suggest that NIL hasn’t damaged college sports. TV ratings, for example, indicate that fans continue to watch their favorite teams even if some of the players are paid influencers and endorsers.
To the extent there is chaos, abrupt and high-profile conference realignments might be a more likely culprit.
2) The NCAA has sought an antitrust exemption as part of a federal NIL statute.
The NCAA contends that an exemption from antitrust law is necessary to effectively regulate NIL. The basic logic: NCAA rules preventing a “free market” for NIL could run afoul of antitrust law.
The validity of that concern has drawn skepticism and made federal NIL legislation less enticing.
First, while the U.S. Supreme Court held in Alston that NCAA rules restricting compensation for academic-related expenses violated antitrust law, the Court did not forbid the NCAA from restricting compensation for athletic-related activities. Long-established NCAA rules that prohibit pay-for-play remain in place. State NIL statutes, moreover, distinguish allowable NIL from unauthorized pay-for-play.
Second, many Republican and Democratic lawmakers are skeptical of antitrust exemptions given how antitrust law is ordinarily applied. Antitrust law is designed to ensure that competing businesses actually compete. Competitors, including colleges, are barred from conspiring in ways that harm consumers, such as through higher prices, diminished product innovation and inferior options. It is difficult to prove a violation of antitrust law, which is largely deferential to defendants. Most antitrust lawsuits never reach juries and are instead dismissed. Put differently, mere exposure to antitrust scrutiny is not tantamount to a violation of antitrust law. The NCAA wouldn’t need an exemption if it uses reasonable rules.
The NCAA also appears self-interested in seeking an antitrust exemption. The NCAA is currently being sued under antitrust law in House v. NCAA. The case, a trial for which is scheduled in 2024, argues that the NCAA and its member schools violated antitrust law by conspiring to prevent players from NIL opportunities until 2021. An exemption that would render House null and void runs counter to the viewpoints of some in Congress.
3) The right of publicity has historically been a matter of state law.
NIL became a popular acronym in recent years, but its legal foundation is not new. It reflects a carve out of the “right of publicity,” which is explicitly or implicitly recognized by states through statutes and court rulings. The right makes it illegal to use a person’s identity for commercial purposes without consent. The right varies by state in terms of protected characteristics (such as name, image, likeness, voice or signature) and how long it lasts (in some states the right continues after death, which is relevant for estates of deceased musicians and actors).
Depending on how it is worded, a federal NIL statute could pose unintended consequences. Is a college athlete functioning as an athlete when she or he is influencing on social media? Or are they an influencer or entertainer? Would a federal NIL statute or a state right of publicity statute apply?
Meanwhile, other federal officials can address NIL concerns. In May, the Federal Trade Commission proposed revised advertising guidelines to combat misleading marketing in social media influencing, which will cover college athletes’ NIL deals. Concerns over foreign college athletes potentially jeopardizing student visas by signing NIL could be addressed by the Department of Homeland Security or by immigration law changes.
As NIL enters its second year, the NCAA faces an uphill climb in attracting the support of Congress for NIL action.
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