01 Jul Businesses Have a New Way to Market – Athletes Finally Able To Cash In on Their NIL
Alex WeatherfordSenior Associate
“I put on my Levi Jeans one leg at a time like everyone else. Every morning I have my bowl of Wheaties and enjoy a cup of Folgers before heading out to 24 Hour Fitness in my brand-new Ford Raptor.”
This could be the way your favorite college athletes sound at their next press conference as the N.C.A.A. changed its policies for students and schools everywhere after several states changed their laws to allow student athletes to profit from their names, images, and likeness (“NIL”). This change was accelerated by the six states that have legislation that became effective on July 1, 2021: Texas, Alabama, Florida, Georgia, Mississippi, and New Mexico and thirteen other that will become effective later.
The Supreme Court followed the trend and unanimously ruled that the N.C.A.A. could not bar modest payments to student-athletes. Justice Brett M. Kavanaugh wrote a concurrence that said, in part, “Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate… under ordinary principles of antitrust law, it is not evident why college sports should be any different. The N.C.A.A. is not above the law.”
Autograph signings and paid appearances could soon become the new normal for college athletes. Bo Nix, the much-maligned quarterback for Auburn University, quickly took advantage of the new policies and laws.
In Texas, the Texas State Senate approved Senate Bill 1385 on NIL law by a 28-2 vote. The bill was approved by the Texas House of Representatives by a vote of 117-27 on May 23, 2021. The NIL law became effective July 1, 2021, and will control the compensation that student athletes will be eligible to receive for their NIL. The NIL law will help universities in Texas to continue to attract top student athletes and help in keeping Texas athletes from leaving the state.
The Texas NIL law comes with some restrictions. Student‑athletes may not endorse alcohol, tobacco products, e-cigarettes or any other type of nicotine delivery device, anabolic steroids, sports betting, casino gambling, a firearm the student athlete cannot legally purchase, or a sexually oriented business. The restrictions in the NIL law will likely come with some push back from the student athletes and/or the industries that fall within the restricted businesses.
It is unknown how the landscape of college athletics will evolve with the new laws in place, but some universities have already launched internal programs to help student athletes keep informed of the changes and help maximize each athletes’ brand. Texas A&M University created AMPLIFY, while the University of Texas launched LEVERAGE.
While the new policy enacted by the N.C.A.A. and Texas’ state law may be new, the fundamental issues facing student athletes are not. While they will continue to be students first and athletes second, they are now self-contained businesses as well and will need guidance to navigate the changing landscape of college athletics. Moreover, businesses have a new avenue to market their products and services. But endorsement deals come with their considerations in contracts.
Given that there is now an entirely new group of individuals able to endorse these products and services, it is likely that many businesses, including some small and medium-sized businesses as well as startups that have never been involved in endorsement deals, will pursue these marketing opportunities. It is important for these businesses to obtain legal representation in preparing these kinds of endorsements from attorneys who have experience navigating these relationships.