NIL Legislation: States’ Race to the Bottom
One thing that even an Alabama and Auburn fan can agree on is that college athletics is a big-time business. The National Collegiate Athletic Association (“NCAA”) generated over $1.15 billion in revenue in 2021,[1] and in 2019, in 40 out 50 states, the highest-paid state employee was a head coach of an NCAA athletic team.[2] Despite this big-time revenue, college athletes were previously unable to be financially compensated for the money that their literal blood, sweat, and tears brought in due to NCAA rules that heavily restricted the profits student-athletes could pocket in the name of preserving “amateurism.”[3] Meaning, that even when their animated faces were featured in video games or their last names appeared on jerseys worn by fans across the country, student-athletes were generally prohibited from keeping any of the money that their identities and athletic performances generated.[4] That is, until the highest court in the land got involved.
On June 21, 2021, the Supreme Court handed down its unanimous decision in Nat’l Collegiate Athletic Ass’n v. Alston, ruling that the NCAA regulations limiting student-athlete education-related compensation violated Section 1 of the Sherman Antitrust Act.[5] While the majority opinion in Alston did not directly review student-athlete compensation that is unrelated to education, leaving compensation for the use of student-athletes’ name, image, or likeness (“NIL”) unexamined, Justice Kavanaugh’s concurring opinion emphasized that the NCAA’s remaining rules restricting non-education-related compensation similarly raised antitrust concerns – paving the way for the rapid evolution of the NIL landscape that followed.[6]
Less than ten days after the Alston ruling, the NCAA itself voted to permit student-athletes to receive monetary compensation in exchange for the use of their name, image, and/or likeness, and adopted an interim policy to guide initial NIL compensation deals until a federal policy was adopted.[7] This interim policy stipulated that student-athletes could now receive NIL compensation regardless of whether the state where the student-athlete’s institution was located had NIL legislation in place – but for those student-athletes attending an institution where there was a state NIL law in effect, they’d have to comply with that state law in order to retain their eligibility.[8]
Prior to SCOTUS’s Alston decision and the subsequent NCAA vote, many state legislatures across the country had crafted their own state laws regarding student-athlete NIL compensation, hoping to give their state institutions a leg up in the athletic recruiting game.[9] Because a singular NIL deal had a potential payout in the tens or hundreds of thousands, prospective student-athletes would absolutely take into account their ability to benefit from NIL compensation when considering which institutions to attend and play for – thus, any legislation that shaped the state’s NIL landscape in favor of student-athletes was a recruiting tool that any top school would want to take advantage of, and state legislatures had acted accordingly.[10] But once the NCAA announced its interim policy in the wake of the Alston ruling, many of these NIL-pioneering states began second-guessing the boundaries that their pre-Alston laws had established and returned to the political process to turn back the clock in this newest round of the NIL-recruiting game.
In January 2022, Rep. Kyle South of the Alabama House of Representatives sponsored Alabama House Bill 76.[11] The primary, and only, objective of Bill 76 was to repeal Alabama House Bill 404, an NIL bill that Rep. South had been the primary sponsor of less than a year earlier.[12] While lobbying for Bill 76’s passage, Rep. South explained why the repeal of Bill 404 was so vital in light of the NCAA’s post-Alston vote: “[The NCAA] passed a set of rules for their member institutions, and where we find ourselves [in Alabama] is [with] state rules [that are] more restrictive than what the NCAA set forth….”[13] South’s implicit suggestion, which tugged on the heart strings of every Crimson Tide and Auburn Tiger fan on the legislative floor, was that the continued existence of Bill 404 would put Alabama institutions at a substantial recruiting disadvantage. Because Bill 404 was more restrictive than the boundaries established by the NCAA’s interim policy, allowing Bill 404 to continue governing Alabama student-athletes would hinder their ability to maximize NIL compensation, and therefore impair the state’s universities in the game of recruiting and retaining the nation’s top athletic talent.[14] Thus, if Alabama football was to remain at the top of the recruiting game and Rolling Tide fans were to be appeased, Bill 404 had to go.
Accordingly, in February 2022, Alabama governor Kay Ivey signed House Bill 76 into law, officially repealing Bill 404.[15] But this motivation behind Bill 404’s repeal raises the question of what exactly the impacts of the NCAA’s vote were shaping out to be – did the NCAA’s vote inspire a nationwide “race to the bottom” that incentivizes states to adopt the most lenient, athlete-friendly guidelines possible in order to stay atop of the recruiting game?
Looking around the country, Alabama is not alone in its re-evaluation of the state’s pre-Alston NIL laws; South Carolina has also recognized the recruiting disadvantage that excessively restrictive state NIL laws generate.[16] South Carolina Senate Bill 685, the state’s first NIL law, contained some of the nation’s most stringent restrictions on such laws, including a ban on universities facilitating “compensation opportunities” for student-athletes and a ban on NIL deals with sponsors that conflict with the values of the student-athlete’s institution, namely “tobacco, alcohol, illegal substances or activities, banned athletic substances, or gambling.”[17] In an effort to eliminate such restrictions, the South Carolina General Assembly ratified the suspension of Bill 685 via a proviso in the state’s budget for the 2022-2023 fiscal year.[18] When introducing the proposed proviso, South Carolina Representative Tim McGinnis cited the recruiting disadvantage that state institutions would endure if Senate Bill 685 were permitted to stand: “[Y]ou’re going to see some of the best players in the country go to schools that don’t have Clemson or South Carolina in their name.”[19] And in June of this year, when Governor Henry McMaster announced his vetoes for the state budget, the suspension of Senate Bill 685 was not included – meaning, that the suspension of Bill 685 stands, and the NCAA’s interim policy now governs in South Carolina for the rest of this fiscal year.[20]
Florida is also grappling with the political process to ensure that the state’s universities are not disadvantaged by pre-Alston NIL legislation.[21] Florida’s initial piece of NIL Legislation, Senate Bill 646, prohibits universities and their athletic departments from facilitating NIL deals for their student-athletes, one of many limitations that the NCAA’s interim policy does not contain.[22] As a result, Florida Rep. Chip LaMarca proposed a new bill that would amend the Bill 646, making it significantly easier for Florida colleges to assist their student-athletes in the NIL dealmaking process.[23] However, the proposed bill, House Bill 939, and its Senate counterpart, Senate Bill 1428, both died in committee – so, for now, the state’s pre-Alston legislation remains.[24]
Other states are also exploring legislative remedies to their pre-Alston NIL laws, demonstrating how the desire for the least-restrictive NIL regulations possible is truly reverberating around the country – Connecticut, Tennessee, Illinois, Louisiana, Missouri, and Mississippi all have taken steps towards amending their former NIL legislation in the hopes of removing any NIL obstacles that would deter prospective student-athletes from attending their state’s institutions.[25]
But while state legislatures have been active, there has been little, if any movement, at the federal level since the Alston decision and subsequent NCAA vote. In the fall of 2021, the House of Representatives Subcommittee on Consumer Protection and Commerce held a hearing focused on NIL, hearing testimonies from the NCAA, National College Players Association, and others.[26] And while Subcommittee Chair Janice D. Schakowsky said that the Subcommittee would serve as the forum to discuss next steps for a federal NIL response, there has been no new legislation introduced and all previously introduced bills, all coming prior to the Alston ruling and NCAA vote, have been blocked in committee.[27] Because the NCAA interim policy was supposed to be precisely that, only interim, until Congress adopts federal legislation to guide NIL deals in all 50 states, individual state legislation continues to be the name of the game.[28]
Even though federal legislation would usher in nationwide uniformity and predictability to this relatively uncharted NIL territory, such federal action would raise substantial questions as well. Could student-athletes eventually unionize? How much government oversight over collegiate sports is enough, and how would the federal government co-exist with the NCAA in this endeavor? These major inquiries will continue to nag Congress, student-athletes, and the NCAA, and will only escalate in importance as NIL deals continue to grow to even larger scales – and until the federal government provides a response, states will continue to take the legislative lead in governing this domain.
Footnotes
