The Future of Name, Image and Likeness: Past, Present and Future

It is no secret that the intercollegiate athletics landscape has changed drastically over the last five years, as student-athletes have been permitted to license their Name, Image and Likeness (NIL) in exchange for compensation. These changes, kicked off by state legislatures in California and Florida, were escalated by student-athlete-initiated legal action. As a result, the National Collegiate Athletics Association’s (NCAA’s) ability to police student-athletes and athletic programs, particularly as it relates to NIL rights, has eroded. At the heart of these legal and administrative changes has been the demise of the NCAA’s classification of collegiate athletes as “amateurs.” This article gives a brief history of the NCAA with a special focus on the Association’s policy of student-athlete “amateurism,” as well as outlining the legal and administrative rulings that have ended that chapter of the NCAA’s history. Finally, the article concludes by previewing potential forthcoming developments as student-athletes and athletics departments move forward with a firmer understanding that the era of amateurism is in the past and the player compensation era is here to stay.

A Brief History of the NCAA’s Policies on Amateurism and Name, Image and Likeness

The NCAA’s Foundation: Amateurism

The NCAA was established in 1906 as a response to serious player health and safety issues arising from unregulated football activities at colleges and universities in the United States. In its early days, the NCAA established rules that were designed to promote player safety and level the playing field of intercollegiate athletic competitions. These included restrictions on participation by freshmen and graduate students, restrictions on sports betting, and most importantly, the requiring the amateur status of its participating athletes. The NCAA focused its efforts on preserving its policies surrounding amateurism to continue to maintain competitive balance between its member-institutions and to ensure the sustainability of intercollegiate athletic programs across the country.

Cracks in the Surface of Amateurism

The NCAA’s amateurism policies have lasted for more than a century, and only recently have they begun to crack due to legal challenges brought by current and former student-athletes. The first true challenge to the NCAA’s authority was in 1984 with the United States Supreme Court case National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma. In the case, the University of Oklahoma and the University of Georgia sought to control their television rights, which was in direct opposition to the NCAA’s television contract with CBS. The NCAA feared that, if fans were to have more access to televised football games, ticket revenue would suffer significantly. The Supreme Court held that the NCAA’s artificial restriction on television agreements was in direct violation of the Sherman Antitrust Act. However, towards the conclusion of the Court’s opinion, Justice John Paul Stevens wrote “The NCAA plays a critical role in the maintenance of a revered tradition of amateurism in college sports. There can be no question but that it needs ample latitude to play that role, or that the preservation of the student athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act.” This one piece of dicta which would come to shape the NCAA’s behavior for nearly four decades.

In 2004, Jeremy Bloom, a University of Colorado football player and former professional skier sued the NCAA in the Colorado Court of Appeals case Bloom v. National Collegiate Athletic Association. Bloom sought to retain his endorsements from his skiing career while competing on the football field at Colorado. As a result of the case, Bloom won the right to play NCAA Division I football while still retaining the right to ski professionally but remained barred from engaging in skiing-related sponsorships and brand deals.

In 2008, the NCAA would settle a case with then-Stanford University football player Jason White. As a result of the settlement, the NCAA and its member-institutions agreed to establish a $10 million fund for health insurance and post-graduate scholarship opportunities for student-athletes. In 2014, the Big Ten Conference became the first conference in the NCAA to guarantee all athletic scholarships for four years. This was a major shift from the previous policy of annually renewable scholarship agreements and gave student-athletes a much stronger platform than they once held. The following year, Northwestern University football players, led by quarterback Kain Colter, successfully voted to unionize but unsuccessfully petitioned the National Labor Relations Board to classify football student-athletes employees of the university. This was a new avenue for student-athletes to take in the fight for their compensation and wellness rights and would be duplicated by the men’s basketball team at Dartmouth College in 2024, as its members voted 13-2 to join the SEIU Local 560.

The O’Bannon Decision Lays the Groundwork for NIL as We Know It

In 2015, one of the most famous NIL cases O’Bannon v. National Collegiate Athletics Association was decided by the United States Court of Appeals for the Ninth Circuit. In the case brought by former UCLA basketball star Ed O’Bannon, the NCAA was found to have violated the Sherman Antitrust Act in denying student-athletes the opportunity to license their public image. The Court also ruled that the NCAA must allow its member-institutions to grant full cost-of-attendance scholarships to student-athletes. EA Sports and Collegiate Licensing Corporation settled with O’Bannon for $40 million payable to former student-athletes whose likenesses appeared in basketball and football video games between 2003 and 2015. This case resulted in the decade-long absence of the beloved “NCAA Basketball” and “NCAA Football” video game franchises and is credited with moving the NIL conversation forward at warp speed.

The demise of amateurism in intercollegiate athletics is, in many ways, due to the success of the NCAA itself. The “amateur athlete” title permitted the NCAA to retain total control of the legal rights and financial benefits stemming from all collegiate athletic performances. This included television broadcasting rights, merchandising and even the right to license one’s image for use in a video game. These legal victories and administrative changes evidence the growing sentiment that student-athletes deserved more compensation than what the NCAA allowed them to receive.

The Floodgates Open and the NIL Era Begins

The results of those sentiments began in September 2019, when California became the first state to pass a bill regarding NIL rights, the Fair Pay to Play Act. The bill gave intercollegiate student-athletes the right to profit from the commercial exploitation of their NIL rights regardless of what NCAA rules were in place. However, despite the law being passed, student-athletes could still face discipline from the NCAA for making and accepting endorsement deals, while schools based in California were threatened with bans from NCAA-sanctioned championships. Subsequently, Florida passed a similar law which accelerated the timeline.

In June 2021, the United States Supreme Court’s ruling in landmark case National Collegiate Athletics Association v. Alston resulted in a significant change to the NCAA’s approach. The Supreme Court held in a 9-0 decision that the NCAA’s policy of limiting noncash education-related benefits like paid post-eligibility internships, post-eligibility undergraduate or graduate scholarships, study-abroad expenses, and tutoring, violated the Sherman Antitrust Act. Nearly four decades after their ruling in National Collegiate Athletics Association v. Board of Regents of the University of Oklahoma, the Supreme Court ruled that the comment on NCAA amateurism policy by the Court was made in passing and should not be considered as binding to future cases. Instead, responding to the compensation restrictions, the Court determined student-athletes had no other viable alternative to the NCAA to compete in the amateur sports market with how strongly the NCAA dominates it. As such, the NCAA acted in an anti-competitive fashion with how it limited student-athlete compensation. This case removed limits from education-related/in-kind benefits like those mentioned above. The Court also recognized that the NCAA was systematically exploiting the labor of student-athletes by capping their compensation under the guise of amateurism.

By July of 2021, an interim NCAA policy on NIL took effect allowing student-athletes across divisions the ability to profit off the exploitation of their NIL rights with minimal restrictions. This accelerated the end of the amateurism label in the NCAA and opened the floodgates for NIL deals across the country. An estimated $917 million dollars in NIL deals were signed over the next year by student-athletes across the nation including the Cavinder twins, Livvy Dunne, Shedeur Sanders and more.

The 2023-24 Academic Year Brings Monumental Changes

The past nine months have seen a historic slew of changes to long-standing NCAA policies. In December 2023, West Virginia University basketball player RaeQuan Battle won a temporary restraining order against the NCAA’s one-time transfer and “year-in-residence” transfer policies. NCAA student-athletes who transferred twice were then immediately eligible. Despite this legal victory, the NCAA threatened student-athletes that, should the NCAA win in future litigation on the topic, they would be at risk of losing a year of eligibility.

Through the first half of 2024, a slew of judicial and administrative changes were made, further pushing college sports into the NIL era. First, on January 10^th, the NCAA’s rulemaking authority, the NCAA Division I Council, voted to create a standardized NIL contract and a registry of approved agents to assist student-athletes with making informed NIL-related decisions. In February, a regional director of the National Labor Relations Board (NLRB) determined that Darthmouth Men’s basketball players were employees. This is the closest that student-athletes have ever come to being considered employees, which would close the door on amateurism forever. However, Dartmouth College has refused to collectively bargain with the basketball players, opting to challenge the regional director’s decision in front of the full NLRB.

On April 22, 2024, the NCAA made massive changes affecting the NIL landscape, writing into their bylaws the removal of nearly all remaining transfer restrictions and allowing schools to directly aid current student-athletes when seeking NIL deals. All NCAA Division I student-athletes who are academically eligible, in good standing with their previous school, and meet progress towards degree standards at their new school were made eligible to transfer. The rule-change applied to all student-athletes regardless of how many times they had previously transferred or their degree status. Prior to the change regarding NIL assistance, collectives were mainly involved with finding deals for student-athletes and the schools themselves could not participate. This new policy leaves the door open for schools to bring NIL deal sourcing in-house for the first time ever.

In May, Jaden Rashada, a quarterback from the University of Georgia, filed Rashada v. Hathcock with the United States District Court for the Northern District of Florida against affiliates of the University of Florida’s football program, including well known Gator booster Hugh Hathcock as the named defendant. The civil suit alleges that a historic $13.85 million NIL deal offered by the school’s Gator Collective was simply a ruse to get him to commit to Florida rather than a good faith offer. This was one of the first major lawsuits for bad faith regarding an NIL deal.

What Is Next in NIL?

The Fallout From NCAA v. House and Its Related Litigation

In May 2024, a multibillion-dollar settlement was reached in the landmark NCAA v. House antitrust case. The settlement marks an end to the NCAA v. House, Hubbard v. NCAA and Carter v. NCAA cases that all surrounded the same topic of student-athlete compensation lost to NCAA amateurism policies. The settlement as proposed will distribute approximately $2.8 billion dollars over the next decade to NCAA student-athletes who competed prior to the NCAA lifting NIL restrictions in July 2021. The NCAA itself will cover $1.2 billion (approximately 42% of the total settlement) from budget cuts, new revenue generation strategies and use of its reserve funds — 33% will come from Football Bowl Subdivision (FBS) schools, 13% from Football Championship Subdivision (FCS) schools, and the remaining 12% from non-football-playing Division I, Division II, and Division III schools. These schools will need to make significant alterations to their operating budgets, which could result in schools cutting sports, dropping divisions or eliminating their athletics departments entirely.

Moving forward, the settlement will also lead to athletics department revenue being shared with student-athletes for the first time ever. This is scheduled to begin in the NCAA’s 2025-26 fiscal year and will allow schools to directly distribute up to 22% of the average “Power-4” school’s department-wide revenue to student-athletes. This number could also rise as future media deals and revenue opportunities make themselves apparent. Currently, this amounts to an average of $20 million per year per school to NCAA student-athletes across the country in addition to what they currently receive by way of tuition scholarships and room and board stipends. The total amount of this settlement could exceed $20 billion dollars, which would make it one of the largest payouts from an antitrust class-action in history.

To avoid future Title IX litigation, schools will need to find a way to distribute revenue-sharing payments in an equitable manner. The final process is likely to not take into consideration factors like sport played, position on the roster, playing time, gender and academic status. Most likely, a school will divide its allotted House settlement funds by the number of student-athletes that it has and that will equal the payment. For example, Ohio State University has approximately 1,000 student-athletes. Distributing funds in this way would produce a result where the football team’s male starting quarterback receives the same $20,000/year payment as a substitute on the women’s field hockey team. It is important to note, however, that the Title IX policy will only apply to direct disbursements of funds related to the House settlement. Thus, while schools will likely still have to equally distribute scholarships and House settlement funds, NIL opportunities will still operate on a free market basis.

While the settlement has been agreed to by the NCAA and its major “Power-4” conference schools, it is not without its challengers. Houston Christian University (HCU) filed a motion to intervene in the House v. NCAA lawsuit in June 2024 arguing that the school’s financial interests were not taken into account by the terms of the proposed settlement. HCU’s thoughts are being echoed by smaller schools from across the nation as they wrestle with the daunting future of competing with larger schools with access to even less resources than they currently have.

On the playing field, the settlement will also force the NCAA to replace its current policy of scholarship caps for each sport with roster member limits. Currently, each NCAA-sponsored sport has a number of scholarships that can be allocated across the team. For example, in baseball, an NCAA Division I school may allot 11.7 scholarships across its roster. This commonly results in most student-athletes receiving partial scholarships and very few, if any, receiving full scholarship awards. With the settlement as proposed, schools will have the potential to offer full scholarships to all student-athletes who participate on the baseball team while limiting the number of total student-athletes on the roster. This could stifle smaller schools with fewer resources as they may not be able to compete for talent with larger schools which could offer all their baseball players full scholarships in addition to lucrative NIL opportunities.       

Gender Equity Issues Could Await Schools in the Post-House Settlement Era

Naturally, the proposed revenue sharing agreement raises multiple issues regarding equity in compensation between male and female student-athletes. In the 2022-23 fiscal year, $900 million of the NCAA’s $1.14 billion in revenue came from the NCAA’s media rights deal with Warner Bros., Discovery and CBS for the NCAA Division I Men’s Basketball Tournament, otherwise known as March Madness. In terms of revenue generation at the school level, the top four NCAA-sponsored sports by average revenue are football (a sport with virtually no female athletes), men’s basketball (an all-male sports program), men’s hockey and baseball. Because male athletes generate most of the revenue, female athletes could suffer in this new era with smaller revenue sharing distributions and less frequent media opportunities.

There are examples of situations where NIL distributions have proven to be more equitable, particularly for high achieving teams. At the University of Utah, women’s gymnasts, women’s basketball players and men’s basketball players were each given leases to 2024 model year Chrysler vehicles by the school’s NIL collective. This investment has already paid off for the gymnastics team as they reached the NCAA gymnastics national semifinals in 2024 and have signed the nation’s 2^nd-ranked incoming freshman class for the 2024-25 season. For this to become a widespread trend, schools, donors and brands alike will need to make a concerted effort to funnel their NIL dollars towards female student athletes. This example shows that there are opportunities for stakeholders to earn tangible returns for supporting the equitable treatment of male and female athletes across the nation, particularly when one views the endorsement power of female student-athletes who harness social media to a greater extent than their male counterparts.

Immigration Laws Impacting International Student-Athletes Will Require Reform

Currently, there are over 25,000 international student-athletes across the NCAA who are subject to NIL opportunity disparities due to United States immigration laws. Because most, if not all, international student-athletes are allowed into the country on F1 student visas, which constrain the legal employment activities available to those admitted into the U.S. through this status, they are extremely limited in what they can earn in compensation outside of their academic pursuits. This harms brands as well as student-athletes, because brands are unable to utilize the notoriety of these student-athletes in their home countries to better penetrate those markets for their products and students are unable to fully realize the economic benefits stemming from their labor and NIL.

Two-time Consensus National Player of the Year and Purdue University basketball star Zach Edey, struggled to find his footing in the NIL landscape. Edey was able to find a loophole in immigration policy that allowed him to earn NIL compensation from passive sources like jersey sales or NIL opportunities in his home country of Canada. These laws severely impact an international student’s earning potential when compared to their American-born counterparts and force them into unique situations to recoup some of their losses. While he was on a team bonding trip in the Bahamas, former University of Kentucky basketball star Oscar Tshiebwe spent most of his week earning approximately $500,000 making a flurry of NIL-related appearances. A bill has been introduced in the United States Senate to address an international student’s ability to earn additional wages through active NIL opportunities, though nothing has yet been passed.

Discussions Regarding Student-Athlete Employment Classifications Will Continue

The fight over how to properly classify the relationship between student-athletes and the schools they represent will likely wage on over the next three to five years. As mentioned previously, the NCAA has worked diligently for decades to keep student-athletes classified as amateurs. As the conversation around NIL has heated up, so has the movement to classify student-athletes as employees of the colleges and universities that they represent on the playing field. From a legal standpoint, by being classified as employees, student-athletes would gain access to a minimum wage for their labor, overtime pay and caps on the number of hours that student-athletes can devote to their teams through travel, practice, community service and media responsibilities. The schools themselves seek to “stop the bleeding” and push back against continued changes in student-athlete compensation. This change in employment classification could lead to a change to the nature of student-athlete compensation in its entirety (i.e., paying a wage rather than awarding a scholarship).

Bills have been proposed in the United States House of Representatives which would ban student-athletes from being classified as employees of the schools they play for. These have been made in response to unionization efforts by student-athletes at schools like Dartmouth and Northwestern over the past decade. If the bill were to pass, student-athletes would lose even more ground to their schools in terms of bargaining power, unionization efforts would become nearly impossible, and the free market nature of the NCAA Transfer Portal would continue indefinitely. If the bill ultimately fails, student-athletes could be deemed employees by the National Labor Relations Board. This would pave one of the clearest paths to the development of multiyear roster agreements between student-athletes and their teams as well as the end of the uncertain, free-market nature of the NCAA transfer portal. While recent bill passage efforts have stalled, federal intervention remains a real possibility in the NIL era.

Institutions Will Shift Collective Operations In-house

In April 2024, the NCAA announced plans to allow schools the leeway to directly assist their student-athletes in finding NIL opportunities. This is likely to lead schools to follow the University of Missouri’s lead in bringing NIL operations in-house and move away from allowing third-party NIL collectives to do that work on their behalf. Of the 362 NCAA Division I member institutions, 213 already have NIL collectives in place for their student-athletes (about 58%). These collectives will likely still face many of the equity issues discussed above. For example, almost 90% of the NIL compensation allocated to these collectives has been dispersed to NCAA Football and Men’s Basketball programs, leaving only 10% of these funds available to every other athletic program in their respective institutions.

Moreover, collectives from the highest-earning programs in the major conferences have raised over double the amount of funding obtained by collectives representing some of the major conferences’ less prestigious members. The disparity between the top major conference collectives and nonmajor conference collectives is even greater, as collectives from top programs in major conferences have raised over 10x the amount of funding obtained by collectives from major conference institutions.

Schools will now be able to leverage their current partnerships with marketing companies like Learfield to provide their student-athletes with the most lucrative NIL deals. This means more deals will likely be signed with more prominent brands and figures. These properties may also become subjects of investment from private equity funds, as institutions like Florida State University are currently exploring in their efforts to break with the Atlantic Coast Conference. Fairness problems could be exacerbated as the number of brand partnerships and marketing deals increases, and as the NCAA continues to lose its control over the off-court actions of intercollegiate athletes. For instance, schools are currently allowed to restrict athlete participation in brand campaigns for certain goods (e.g. vice industries). The NCAA’s power to preclude student-athletes from marketing in these areas may not last for much longer as state statutes could intervene, opening a brand-new spigot of endorsement deals available to student-athletes. These untapped markets and access to in-house deal-sourcing services could lead to even greater disparities between the most and least successful student-athletes, collectives and programs.

Concluding Remarks

After more than four decades of sustained dominance in the courtroom, the NCAA’s legal fortress has almost entirely collapsed. The concept of “amateurism” as it was once known is dead, as NCAA student-athletes now have the ability to exploit their NIL rights for endorsements and may soon be permitted to earn an income directly from NCAA member schools, whether as employees or not. However, this newfound ability is not without its challenges. Student-athletes and schools alike will continue to confront institutional and legal hurdles, particularly as NIL opportunities continue to develop and change. Schools and actors taking advantage of the new intercollegiate athletic landscape will be challenged to adapt and learn how to equitably and sustainably disperse this newly available money to student-athletes across the country. The future of NIL, student-athlete status, and intercollegiate athletics programs is uncertain, and our outlook on the field more generally will continue to transform in the coming years. What we see today as the NCAA will not be the NCAA of the near future, making it critical for student-athletes, parents, collectives and institutions to counsel with legal advisors who stay abreast of the latest in this dynamic field.

Questions?

Please do not hesitate to contact Fredrikson with any questions about this rapidly changing area. Chris Pham, the attorney leading Fredrikson’s Sports & Entertainment Group, along with Charlie Bennett and Tarun Sharma, are experienced in this field and are happy to work with you to evaluate and execute NIL and other related deals.