NIL need-to-know: Answers to basic questions you have about new rules for college athletes

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The new era of college sports has arrived, an era that allows for athletes to earn money using their name, image and likeness. This, of course, was strictly prohibited throughout the history of the NCAA, under the concept of “amateurism.”

You have, for sure, heard all sorts of mentions of “NIL laws” and such. Chances are, you have questions. We’ll try to answer some of those today, starting with this one: NIL is not the same as NFT, though athletes can make money selling NFTs.  

Are players going to make money?

Yes. Finally. 

Are they going to be paid by the schools? 

No. Nothing’s changed in that respect. This is about an athlete’s ability to market herself/himself, outside of the university. A school still can’t give an athlete a “signing bonus” or anything like that to persuade them to attend their school. These new rules/laws don’t allow schools to pay athletes.

From the NCAA’s interim NIL policy: “While opening NIL activities to student-athletes, the policy leaves in place the commitment to avoid pay-for-play and improper inducements tied to choosing to attend a particular school. Those prohibitions would remain in effect.”

How are players going to be paid?

Lots of ways, and by lots of people, honestly. Keeping track is going to be a giant mess, at least for the first year or two as everyone adjusts to the new — and long overdue — normal. Basically, if any person wants to pay an athlete to endorse and/or represent them, that’s now legal. Any sort of advertisement is legal. Any sort of personal appearance — for example, signing autographs for $20 each at a car dealership, with the athlete keeping a sizable cut of the cash, or a star player making a paid apperance at a nightclub — is suddenly above-board. 

The basic guiding principle is this: Everything an athlete makes has to fit under the umbrella of “fair market value,” which is admittedly a bit vague.

How are the athletes going to keep track of everything?

Again, from the interim policy: “College athletes can use a professional services provider for NIL activities.”

These service providers — such as Icon Source and DreamField — are already popping up. More are here, and more will follow. 

Do the athletes have to report NIL deals to compliance departments? 

For that answer, we’ll bring in Adam Arnaout. He’s an attorney in Florida specializing in NIL and Intellectual Property and the founder of Arnaout Athletics & Entertainment.

“Yes. Athletes are required to disclose all NIL deals to their athletic compliance department to ensure that the deal is in compliance with state NIL Law (or, in the absence of a state NIL law, the school’s own developed NIL policy). Many schools are utilizing apps like Opendorse and INFLCR, which act as streamlined portals for athletes to upload the NIL contracts so they can be reviewed and approved by the compliance department.”

Is anything actually illegal now? 

Of course. It’s still the NCAA. Let’s say there’s a big booster that owns a car dealership. That booster still can’t say, “I’ll give you $50k to attend and star for my alma mater.” That’s still illegal. There are still going to be the same type of recruiting restrictions that have resulted in infractions and punishments in the past.

Aren’t there ways around that? 

Yep. And they’re not even really loopholes, even though they might feel like it because of how we’ve been conditioned to think about the NCAA and “amateurism.” They’re just “legal ways to pay athletes for their services” now. In the above example, an athlete who signs with a school could immediately start a series of personal appearances and endorsements over his/her first year at the school and get paid a total of $50k. Probably couldn’t get away with $50K for one autograph signing — that’s not market value — but if it’s 10 appearances/promotions at $5,000 each? That’s all fine now, because it’s a player using his/her “celebrity” at a school to make money, not using his/her promise as a recruit to get encouragement money.

So how could a player actually get in trouble? 

Again, Arnaout: “Though it varies depending on the law of the specific state, the most likely ways an athlete may lose his or her eligibility are: 1)  an illegal “pay-for-play” situation, as in a high school recruit being paid by a college booster in order to influence the athlete's choice of college or university, and 2) entering into a deal that is clearly not commensurate of the fair market value of the services provided (i.e. A $5 Million sponsorship for one social media post).”

This is all about social media, isn’t it?

Not all about it, but social media will be a huge source of income for athletes. Lots of them already have huge followings on social media, and they already have the influence that comes with the big follower counts. Now, they can finally cash in, with paid tweets/endorsement, advertisements on their YouTube pages or any way “normal” social media heavyweights have cashed in for years. The playing field is leveled. 

What about those jerseys they sell in school bookstores? Everyone knows why they’re selling that specific jersey number, even if the player names aren’t on the back.

Once more, Arnaout: "The athletes are not receiving a cut of those un-named bookstore jerseys. The athletes can however, sell their own merchandise or personally branded clothing freely and independently of the schools now."

What’s an example from the past where an athlete got in trouble, but would be OK now?

Remember the backup UCF kicker with the YouTube channel? Donald de la Haye was (and still is) very good at producing YouTube content, and most of the videos had nothing to do with college football. But because he was a college football player, any sort of money he made threatened to make him ineligible. Instead of compromising with the NCAA — which would have required giving away some of the money he’d earned — he stopped playing football. Now, there would be nothing wrong with what he did at all (because there was never anything wrong with what he was doing, outside the twisted worldview of the NCAA). 

What about bowl games? Could, let’s say, the Gator Bowl pay a player who might have been considering sitting out — to prepare for the draft, or for whatever reason — with some sort of endorsement deal on the condition he plays in the game? 

Arnaout, one last time: “Great question! While it would again vary depending on the state statute, in Florida, that would be a violation. Our statute specifically states that compensation may not be provided in exchange for athletic performance, so if a bowl game or third party entity monetarily induced a player to appear in competition, it would be a violation.”

 

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