Sports & Entertainment Client Alert – NCAA Publishes Interim NIL Policy Clarifications

    By Joseph E. Houchin, Sports & Entertainment

    On October 26, 2022, the NCAA approved and published additional clarifications to its Name Image Likeness (NIL) Policy. Following the NCAA’s initial release of the NIL Policy on July 1, 2021, permitting student-athletes to receive compensation for NIL use, the NCAA published additional guidance in May 2022 and issued two Q&As in November 2021 and July 2022. The stated goal of this week’s most recent NIL Policy update was to address member institutions’ involvement in enrolled student-athletes’ NIL activities.

    As a reminder, while the NIL policy regulates how a student-athlete may be paid for the use of their likeness, various NCAA bylaws still prohibit a number of activities. Athletic department staff are still prohibited from representing a student-athlete in order to market their sports ability. Also, a student-athlete may still not be directly or indirectly paid for their skill in athletics (pay-for-play) including a prohibition on payment for promotion of a university coach’s sports camp. A school staff member may not provide a student-athlete with a special benefit even if it comes from a coach’s separate business venture, however, institutions are allowed to provide “personal development services.”

    The NIL Policy Clarification should be reviewed in its entirety to understand the non-exhaustive list of permissible and impermissible activities related to NIL.  As an overview, the policy details permissible and impermissible activities divided into three categories: education and monitoring; support for student-athlete NIL activities; and support for outside NIL entities and collectives.

    Institutional Education and Monitoring of NIL Activity

    The NCAA advises that wide latitude should be given to a school’s ability to provide educational resources and monitoring for current student-athletes’ NIL activities. In fact, the NCAA notes that schools can and should provide educational opportunities on topics like finances, tax considerations, entrepreneurship, and best practices for social media engagement. Similarly, schools are permitted to provide educational sessions for booster collectives, individual boosters, and potential student-athletes. If it was not clear before, the NCAA clarified that schools should also actively require that student-athletes report NIL deals to the athletics department. Regarding educational and monitoring activities offered by schools to student-athletes, the NCAA did not identify anything impermissible at this time.

    Institutional Support for Student-Athlete NIL Activity

    The bulk of the NCAA’s updated policy deals with specific examples of how a school can and cannot provide NIL support for current student-athletes, boosters, and collectives.

    Permissible activities provided under the NCAA Policy include:

    • Schools MAY engage with NIL entities (boosters and collectives) to inform student-athletes of potential NIL opportunities and administer a marketplace to match student-athletes with those opportunities.
    • Schools MAY provide information to student-athletes about NIL opportunities and introduce student-athletes to NIL entities.
    • Schools MAY provide boosters and collectives with student-athlete contact information, directory information, and MAY provide stored photos/videos/graphics to a student-athlete or NIL entity.
    • Schools MAY provide space on campus and at athletic facilities for boosters and collectives to meet with student-athletes.
    • Schools MAY promote a student-athlete’s NIL activity so long as there is no value or cost to the school. This also means that a school MAY promote NIL activity on a paid platform provided that the NIL entity pays for the advertisement at a fair market rate.
    • Schools MAY purchase a student-athlete’s NIL items that are de minimus in value and available at the same rate to the general public.

    Impermissible activities include:

    • Schools MAY NOT communicate with NIL entities regarding the specific compensation requirements a student-athlete is seeking for an NIL deal.
    • Schools MAY NOT actively participate in the development, creation, execution, or implementation of a student-athlete’s NIL activity.
    • Schools MAY NOT provide services other than education to support NIL activity, including graphics design, tax preparation, or contract review unless that same benefit is generally available to ALL institution students, not just student-athletes.
    • Schools MAY NOT provide access to equipment to support NIL activities, including cameras, graphics software, or computers unless that same benefit is generally available to all institution students.
    • Schools MAY NOT allow student-athletes to promote their NIL activities while participating in athletics related activities.

    Institutional Support for Booster Collectives and other NIL Entities

    Regarding an NCAA institution’s support for NIL entities, the following are provided under the Policy clarifications as permissible activities:

    • School staff members MAY assist NIL entities in fundraising efforts such as appearances and autographed merchandise donations.
    • Schools MAY provide tickets, stadium suites, and other assets to an NIL entity under a sponsorship agreement so long as those same assets are available on the same terms to other sponsors.
    • Schools MAY request that donors provide funds to an NIL entity so long as there is no request that the funds be directed to a specific sport or student-athlete.
    • Schools MAY provide donor information and facilitate meetings between donors and NIL entities.

    Impermissible activities include:

    • Schools MAY NOT donate cash to NIL entities.
    • Schools MAY NOT provide tickets, suites, or other assets to a donor as an incentive for providing funds to an NIL entity.
    • An athletics department staff member MAY NOT be employed by an NIL entity.

    Enforcement of NIL Policies

    Regarding enforcement of NIL policies, the NCAA directed that for any violations occurring before the 10/26/2022 clarification, enforcement staff should only pursue cases clearly contrary to the interim policy. For the enforcement standard, when information provided to the NCAA indicates that a violation occurred there is a presumption of violation unless the institution can establish that the questionable activities complied with NCAA rules and NIL policies. With a presumption of guilt in the event of a violation, colleges and universities should strongly consider beefing up compliance programs and educational and monitoring resources available to student-athletes, staff members, and NIL entities.

    Thorough review of the most recent NIL Policy and published guidance is recommended to ensure compliant NIL activities by schools, student-athletes, and boosters. As the NCAA wisely advises, while these policies apply to NCAA bylaws and their impact on currently enrolled student-athletes, experienced legal counsel should be consulted for issues outside of institutional involvement such as contractual breach, Title IX, and employment matters.

    The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2024.