NCAA clarifies position on permitted NIL activities | Holland & Knight LLP

The National Collegiate Athletic Association (NCAA) on October 26, 2022, offered new direction on the name, image and likeness (NIL) activities of universities, student-athletes (SA), and other entities supporting the NIL industry. In short, NIL is about the commercial use of student-athlete publicity rights. The new rules continue to prohibit pay for play or performance, which is a core tenet of the NCAA’s definition of amateurism. The proliferation of NIL agreements and lack of regulation has created a need for the NCAA to clarify how institutions, SAs, and NIL entities can operate in this space. The October guidelines emphasized the educational purpose of institutions, the separation of institutions in their supporting roles from businesses in NIL roles, and the continued prohibition of paid adjacent activities in the NIL space.

Background: NCAA Interim NIL Policy and May 2022 Guidelines

The NCAA released its draft NIL policy on July 1, 2021, amid an evolving antitrust landscape, a lack of federal NIL laws, and a number of state NIL laws and executive orders that were in conflict with NCAA rules then in effect. The draft NIL policy stated that the NCAA would defer to any law or executive order governing NIL in the state of the college the SA attended. For states without legislative or executive guidelines, the policy provided that athletes could be compensated for NIL agreements by third parties (i.e. entities other than their universities, university staff, or professional teams in their sport competition) while remaining eligible to compete.

In May 2022, the NCAA issued additional guidance to clarify how NIL agreements affect boosters, which the NCAA generally defines as an entity that promotes an athletic program by providing benefits to SAs or their families. At the time of the May 2022 guidelines, it was suspected that many entities seeking to create NIL agreements with SAs fell under this definition. The May guidelines focused on prospective SAs (PSAs), reaffirming that boosters cannot participate in recruiting and that institutions cannot facilitate a relationship between booster and PSA. For current SAs, the May guidelines emphasized that NIL agreements cannot compensate SAs for registration decisions, athletic performance or achievement, or team membership. Rather, the agreement should be based on the “value that each athlete brings to the NIL agreement”.

October 2022 Tips

In its latest guidelines, the NCAA offered a non-exhaustive list of dos and don’ts for institutions, SAs, and NIL entities. The main theme was how institutions can support SA and NIL entities while continuing to promote amateurism and education. These do’s and don’ts fall into two categories: institutions providing information and education, and institutions acting as supporters rather than agents.

The recent guidelines emphasize the dissemination of information by allowing institutions to organize training sessions for anyone in the NIL sphere: SAs, NIL entities, boosters and PSAs. For ASes, these sessions can include topics such as financial literacy, taxes, entrepreneurship and social media. The guidelines encourage the distribution of information by prohibiting any type of relationship between the AS and the institution where the institution benefits from the AS’s NIL agreement, shares revenue with the AS, or compensates the AS for promoting the athletic department. In sum, even with the advent of NIL, many of the traditional restrictions on business relationships between the SA and the institution remain the same.

The new NCAA NIL guidelines apply the same emphasis on distribution of information and education to the relationship between donors, the institution and NIL entities: sponsorship agreements are permitted between NIL entities and the institution , but the institution cannot subscribe to the entity or donate. cash to the entity. Similarly, while the institution can provide donor information to a NIL entity, or even direct a donor to provide funds to a NIL entity, the institution cannot induce a donor through tickets or a suite. in a sports competition to provide funds to a NIL entity. .

Other do’s and don’ts in the guidelines establish institutions as supporters, not agents. For example, institutions can engage with NIL entities to create a market or inform SAs of opportunities – a supporting role. Assistance may include retweeting an SA for NIL purposes, allowing on-campus meeting space for SAs and NIL entities, or providing photos, videos or other stored media SAs and NIL entities. Conversely, institutions cannot advocate or negotiate on behalf of SAs regarding specific SA agreements with NIL entities, “proactively assist” in implementing an individual SA’s NIL activity, or provide support services for the NIL business such as graphic design, tax preparation or contract. exam that are not available to the general student body. These activities are moving away from support and towards action on behalf of SA.

Conclusion and takeaways

By its own admission, the NCAA’s latest NIL guidelines don’t fill in all the gaps about what is — and isn’t — permitted NIL activity. Because this is an evolving area with further clarifications likely to be forthcoming in early 2023, legal counsel is essential to avoid entering into agreements that could adversely affect the compliance status of the university, to the eligibility of the AS and the applicability of a specific NIL agreement. Holland & Knight will continue to actively monitor these developments, and although the NCAA Division I Board of Directors has directed its enforcement staff to seek action in this area solely related to gross violations of policy occurring before the guidelines, he also reported enforcement staff will be more assertive with violations occurring after the guidance.

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