In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about the name, image, and likeness (NIL) legislation in Congress and the impact of federal law changes to the college sports industry.
You can read the full column below.
With multiple pieces of name, image, and likeness (“NIL”) legislation being discussed or introduced in Congress, namely the United States Senate, bipartisanship on the NIL issue seems to be providing a pathway to federal legislation on a matter that seemed highly unlikely in the recent and distance past. How much credit is former Governor Charlie Baker (R-MA) to be given as the newly minted President of the NCAA? Certainly, President Baker’s experience as a politician will help working in Capitol Hill circles to get legislation passed that provides for uniformity across these United States for NIL laws and regulations.
The bill introduced by Democrat West Virginia Senator Joe Manchin and Republican Alabama Senator Tommy Tuberville has the stated purpose of “strik[ing] a balance between protecting the rights of student-athletes and maintaining the integrity of college sports.” The title of the legislation is “Protecting Athletes, Schools and Sports Act”, or PASSA for short, which is not to be confused with PASPA, the Professional and Amateur Sports Protection Act (e.g., gambling prohibition) deemed unconstitutional by the United States Supreme Court in Murphy v. NCAA in 2018. The PASSA legislation, if passed by both Houses of Congress and signed by the President, would provide the following: (1) a uniform NIL law for the United States, (2) a prohibition on NIL deals that include “sin” industry or unsavory products or businesses, (3) with the Federal Trade Commission (FTC) serving as an NIL agent licensing and approval body for deals through a database, (4) a limitation on collectives and boosters that requires an underlying connection to the university and that their representation and services for student-athletes must be equal between male and female (e.g., money), (5) a limitation on college athlete transfers without penalty to students who have completed three years of eligibility, (6) better insurance for college athletes during and after leaving the university, and (7) stronger requirements for scholarships to be honored. The legislation provides for somewhat of an antitrust exemption for the NCAA, but it is not obvious or blatant, and students would not be classified as employees.
The legislation is admirable from the standpoint that it attempts to streamline NIL processes, the dealmaking of the industry, and to allow for more parity among the states and universities in recruiting athletes through NIL. However, short of overseeing the sale of securities, private contracts have never been subject to government, let alone the federal government, for review or approval. It is a very dangerous proposition that takes away the ability for private contracting in favor of centralized control that is more akin to a former Soviet Bloc country under the thumb of a foreign power.
Moreover, surely states legislatures will file lawsuits for the constitutionality of the federal government wiping out their NIL laws. PASSA would commandeer the states to not do something similar to PASPA. It is clear that the United States Supreme Court has ruled the Tenth Amendment prohibits the federal government from forcing states to pass or not pass certain legislation, or to enforce federal law. PASSA would force states to follow the new law and forgo their own state law(s). Furthermore, the Tenth Amendment to the United States Constitution (ratified on December 15, 1791), provides that any powers that are not specifically given to the federal government, nor withheld from the states, are reserved to those respective states, or to the people at large. Contracting between private parties and even educational institutions has always been a private, local, and state power and was never meant to be regulated by the federal government particularly on an individual level. PASPA should have been an example to legislators that a federal mandate against powers and authority reserved to people and states should be left alone.
There is also something to be said about encouraging competition among the states and educational institutions. It was indeed competition, started by the State of California in passing the Fair Pay to Play Act that led to other state legislatures passing laws that allowed for NIL. In one fell swoop through PASSA, Congress would take that away for a one-size-fits-all model. In many ways, the NCAA lost its chance to have a streamlined legal system when it took too long to act upon NIL calls and opportunities. Lastly, forcing private brands and businesses to offer equal money to male and female athletes and sports to enter into the university to do business is also a major breach into private dealmaking and might conflict with the recent United States Supreme Court decision in finding that affirmative action-type programs that benefit one person over another on qualifications other than merit is unconstitutional unless strictly and sufficiently limited. Whether you agree or not, some businesses might have an equal protection clause 14th Amendment issue against universities for something that might be more akin to using LEED-type ratings for brands and businesses to accomplish a similar purpose.
Some of the provisions of the Manchin-Tuberville legislation addresses major issues specifically for collectives and boosters being connected to universities for oversight and fairness. It also limits transfers, which when combined with NIL works more like a play-for-pay system of incentives and not what the framers of NIL legislation intended. The legislative intention was a private system for student-athletes to benefit and profit, not the universities or anyone else. The transfer limitation also follows National Basketball Association Commissioner Adam Silver’s recent comments about limiting self-demanded trades of players under contract. The insurance, scholarship, and product/service protections and limitations will also provide more clarity, possibly more fitting for a college campus.
Many in the industry do not believe federal legislation on NIL will pass the U.S. Senate, or the U.S. House of Representatives. However, if PASSA is successful in receiving enough votes and the President’s signature, state-sponsored lawsuits would almost certainly ensue to declare a federal NIL law unconstitutional. Congress getting involved in private contracts would indeed be a very rare and unusual approach. It is an approach that has been tested before with PASPA and to this point has failed. On the other hand, an NIL system left unchecked is similar to sports betting without regulation and prohibition. This is where the NCAA would be wise to issue member institution rules (as is its role and responsibility) on NIL as baselines and thresholds for states, universities, and athletes. The NCAA and member institutions relying on the federal government to do its work will be a mistake in the short-term and long-term as it opens pandora’s proverbial box for adding private contracting to federal government purview.
Conferences, for all their work in realigning schools and their programs, should look to standardized academic and NIL regulations as well among its members. It could also mean more autonomy for the Power Five Conferences and/or moving revenue producing sports like Men’s basketball and football out of the NCAA’s jurisdiction. Whatever the plan or result, college sports does not need saving, it needs guidance and leadership on the ground that does not involve Congress or the federal government. It needs the NCAA and universities to do their jobs. It also needs direct feedback and input from the student-athletes.
About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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