Understanding the current legal landscape for NCAA name, image, and likeness (NIL) agreements can be a challenge. The opportunity for college student-athletes to profit from endorsement deals utilizing their own personal brand is still new and the currently evolving NCAA rules, specific state laws, and rules from individual colleges and universities should be carefully reviewed to ensure compliance. Diligent tracking of industry updates, including the recently updated NCAA guidelines restricting the recruiting involvement for booster collectives as summarized here, will need to be navigated by athletes, agents, boosters, and the universities.
Where many states have enacted legislation to codify the new NCAA rules permitting NIL agreements, North Carolina relies on executive order. Executive Order 223 was issued on July 2, 2021, in response to the enactment of the NCAA Interim Policy and NCAA v. Alston allowing student-athletes to receive compensation for their name, image, and likeness. While the ability for college student-athletes to be paid for endorsement deals brought a groundswell change, applicable regulations still restrict certain activities in North Carolina.
Under the order, student-athletes may not enter into an NIL contract or receive compensation that directly induces their enrollment or continued attendance at a particular university or participation in a specific sport. Additionally, NCAA institutions are barred from providing compensation directly to student-athletes for their NIL. Finally, so long as the representation complies with the NC Uniform Athlete Agent Act and the federal Sports Agent Responsibility and Trust Act, student-athletes may work with an agent to negotiate or solicit NIL deals on their behalf.
Further, under the North Carolina executive order, NCAA institutions may (but are not required to) impose certain restrictions on student-athlete NIL compensation including:
- Prohibitions if the NIL agreement infringes on an existing contract of the university;
- Prohibitions on NIL compensation from supporting institutions owned or partially owned by the university;
- Reasonable restrictions on NIL opportunities for student-athletes from brands or product categories that reflect negatively on the values or image of the university;
- Limitations on NIL agreements that conflict with team activities or official university events;
- Requirements or procedures to ensure that NIL compensation to a student-athlete is commensurate with fair market value;
- Limitations on student-athletes’ use of a university’s facilities, equipment, logos, or other intellectual property as part of NIL deals; and
- Reasonable reporting requirements to the university by student-athletes of NIL agreements including.
Review of a particular college or university’s policies and consultation with the athletic department compliance office will be necessary to determine which of these requirements have been adopted by the institution as well as the mechanism for reporting prospective and current NIL deals.
Importantly, because Executive Order 223 applies only to post-secondary educational institutions, North Carolina is one of several states where the current legal framework does not allow for NIL compensation for high school student-athletes competing under the North Carolina High School Athletic Association (“NCHSAA”). Subject to specific requirements, the NCHSAA 2021-2022 Handbook requires under Rule 1.2.15 that student-athletes maintain their amateur status in order to be eligible for participation. High school student-athletes competing for independent associations may have more freedom to enter into NIL deals, but close examination of applicable rules and consultation with school and association administrators is encouraged.
The opportunities for NIL agreements for college student-athletes in North Carolina are new and exciting. However, due to the quickly evolving legal and regulatory landscape and the potential consequences in the event of noncompliance, close consultation with a knowledgeable attorney is highly encouraged.
