- Posted on: Oct 19 2021
By: Michael Lehr
Ready – Set – Shift: NCAA’s NIL Overhaul
NCAA Student-Athletes MAY Now Be Able to Monetize Their Name, Image, and Likeness | Part 2
This is part two of a four part series; If you would like to go back and read part one of “Ready – Set – Shift: NCAA’s NIL Overhaul,” click here.
Despite these lofty ideals for decades, the NCAA had little to no power to enforce its rules and regulations. In fact, in 1929, the Carnegie Foundation published a 350-page report on college athletics, noting that payments were being paid directly and indirectly to players across the country to influence their decision on where to play. As such, in 1948, the NCAA adopted what was termed the “Sanity Code” to regulate college sports – (1) reiterating its opposition to players being compensated, (2) authorizing the implementation of enforcement mechanisms, such as suspension or expulsion of an offending institution, and (3) allowing colleges and universities to pay their athletes’ tuition. The NCAA failed to recognize that their decision, albeit a well-founded idea on how to maintain amateurism in sports, effectively cut off student-athletes profiting from their abilities in any manner and would lead them to the present state of legal woes.
Over the next 50 years, the NCAA periodically reorganized, expanding its reach and enforcement authority. In 1985, as a result of mounting pressure from university leaders and Congress, the NCAA again restructured. This evolvement essentially placed the NCAA university and college member presidents and chancellors in a bloc that determined national rules and regulations through various committees. During this period of growth and modernization, the NCAA revenue streams exploded. But, with that increase in revenue, old concerns over the commercialization of “amateur” sports reemerged, but this time focusing on the “unbalanced” or “unfair” exploitation of student-athletes, NCAA institutional members seemed less concerned with true amateur competition. It became recognized as troublesome that the athletes who garnered national attention, which successes in turn funded the NCAA’s lucrative broadcast deals, were prohibited from receiving payment themselves.
Recognizing the complexity of the matter, during this same period of growth and modernization, the NCAA expanded the permissible costs that a college or university may pay for its athletes. In 1948 the universities were limited to covering their athletes’ tuition, but as of 2014, the NCAA permitted payment for the “full cost of attendance” – including tuition, room, board, books, fees, and money for incidental expenses such as laundry. The NCAA also implemented programs such as the “Student Assistance Fund” and “Academic Enhancement Fund” as ways to further support the financial needs of student athletes, including some benefits unrelated to education, such as insurance premiums, clothing, and certain travel expenses. Despite these many changes to the structure and permissible methods of payment, one ultimate issue remained: does the NCAA’s restriction on student athletes receiving compensation via methods unrelated to education (such as direct “pay-for-play” payment for athletic performance, NIL endorsements, etc.) violate federal anti-trust laws, especially when considering the sources and amount of revenue available and the concentrated power within and without the NCAA? Today, the television rights for the NCAA March Madness Tournament alone bring in over a billion dollars a year. Presently, the NCAA is governed by a Board of Governors – a 20-member unit consisting primarily of university chancellors and presidents – that adopts and implements policies and regulations which address issues affecting the NCAA and its members.
Despite some of its failing arguments in the Alston case, the NCAA has known for decades that its unique relationship with amateur sports did not excuse it from standard rules prohibiting anti-competitive acts or omissions. One of the first major challenges to the modern NCAA structure came in the 1984 U.S. Supreme Court decision, NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984). There, the NCAA entered into negotiations with ABC and CBS regarding the television rights to broadcast college football games. Specifically, the NCAA prohibited its members from negotiating television rights outside of the plan it negotiated with television content distributors. In response, several schools with major football programs created the “College Football Association” (“CFA”) to jointly negotiate the television rights independently of the NCAA’s plan—leading the NCAA to announce disciplinary action against any school that joined the CFA. In a 7-2 decision, the Court held that the NCAA’s plan and proposed disciplinary action violated the Sherman Antitrust Act because it created a monopoly over the market of viewers of college football games. However, in an off-handed comment (commonly referred to as “dicta”), the Court noted that the NCAA’s role in maintaining the tradition of amateurism in college sports is “entirely consistent with the goals of the Sherman Act.” Id. at 120. The NCAA relied on this statement repeatedly during the NCAA v. Alston litigation.
This is part two of a four part series; stay tuned for part three of “Ready – Set – Shift: NCAA’s NIL Overhaul”! If you would like to go back and read part one, click here.
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The author, Michael Lehr, is an Associate at the law firm of Dunlap Bennett & Ludwig, PLLC. Kurt R. Klaus and Alex Butterman contributed to writing this article.
Dunlap Bennett and Ludwig, PLLC: is a multi-state and international law firm whose Media & Entertainment Law Section attorneys have decades of experience dealing with NIL (individual name, image, and likeness) matters, intellectual property, business formation, and disputes, and commercial transactions.
Michael Lehr is a litigation attorney who routinely deals with intellectual property disputes such as trademarks and copyrights that may arise in modern media/entertainment. Michael provides businesses and individuals with legal counsel whenever disputes arise and helps his clients navigate the complex waters of litigation—while trying to help them avoid it at all cost. Michael is an avid sports fan.
Kurt R. Klaus (Media & Entertainment Law Section Lead) is a media/entertainment business and legal affairs attorney who provides counsel to individuals and companies working in entertainment (television, music, digital, talent, copyrights) and branding (influencers, trademarks, social media, compliance). Kurt structures conventional and creative solutions for clients that mirror the needs of emerging and traditional media/content landscapes. He supports contractual and pre-litigation aspects of entertainment, marketing, and social media functions and partnerships, including media content production and distribution, influencer engagements, branding transactions, and NIL rights and negotiations. Prior to practicing law, Kurt produced television commercials and worked in the recording industry. Kurt is the father of an NCAA D-I athlete and an amateur sports enthusiast.
Alex Butterman (Trademarks Section Lead) is an intellectual property attorney specializing in the procurement, registration, enforcement, and maintenance of trademark and copyright rights and leads the trademark registration practice at Dunlap Bennett & Ludwig. Alex was a trademark examining attorney at the U.S. Patent and Trademark Office and has worked in several intellectual property boutique law firms for the past two and a half decades. Alex is an avid sports fan, and in law school, authored an article about the Major League Baseball anti-trust exemption, which was published in an American Bar Association section journal.
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