IN THE PUBLIC EYE

When it Comes to College Athletics, Don’t Take Your Eye off the Ball

College athletic programs are in the spotlight these days as its governing body the National Collegiate Athletic Association (NCAA), struggles to provide guidance after they relinquished some limitations put in place under the Name Image Likeness (NIL) rule. A regulation originally designed to prohibit a college athlete from earning compensation on the pitch (field). The revenue boost college athletes provide playing (and suffering) on behalf of their college without compensation or employee classification is at the center of the debate and it is not going away.


One thing is certain, University leaders are busy politicking with lawmakers to have a voice in how their State will perceive the NIL rule as guidance from the NCAA and the Federal Government appears to be dwindling.

 

Federal Involvement

The Supreme Court handed down a landmark decision on June 21, 2021 in an anti-trust case (National Collegiate Athletic Association v. Alston, No. 20-512) that disallowed businesses from using a student athlete’s name, image, and likeness (NIL) without permission and/or compensation. This drastically altered the historic label imprinted on the college athlete by their governing body the (NCAA), which classified them as “student” athletes and not employees. A few days later (June 23, 2021), the NCAA abandoned its original position on disallowing student athletes from profiting on their NIL permitting them to enter into paid sponsorship and endorsement agreements with minimal restrictions.

 

The nation’s institutions expected the NCAA and the Federal Government to unite to create laws or guidelines for the schools pertaining to NIL. With all the partisan infighting within the Capital beltway these days, the feds are simply not in the game. Coupled with the NCAA attempting to redefine its authority after its perceived erosion of power has unfortunately, meant that very little has been done.  The destiny of the college athlete’s compensation issues and employment classification has been left in the hands of the States. 

 

A Pliable NIL Rule

What remains in the NIL rule has open the individual States up for interpretation. Also, major brands are pushing for more relaxed legislation toward college athletes. For example, the original NIL rule stated a foreign student who enters into an NIL agreement may lose their F1 visa which permits them to work in the United States. Now under the less restrictive rule, a foreign student athlete may be allowed to market their NIL with a company doing business outside the United States. Another key push by many of the individual States are to allow high school athletes to take advantage of the NIL ruling. This is an obvious push for businesses to find and promote the NIL of the next superstar before entering the college ranks. 

 

The NIL rule still prohibits the athlete’s NIL agreement from being contingent on which Institution the student will attend. Any resemblance of an NIL deal hinged on recruitment efforts is (currently) a no-no, or so it appears.

 

No Two States are Alike
As the NCAA started to ease up on its own NIL restrictions, many States immediately passed their own legislation to stay ahead of the trend. They anticipated a future tightening of the NIL rule once the NCAA’s congress or the Federal government heard more on the issue and stepped back in. But additional limitations never happened and lawmakers from the States who set legislation early in the process, went back to work to reverse what was already in place. The reason was the fear of being left behind when college athletes went searching for Institutions in States with more agreeable terms for their future money-making efforts. 

 

 

The States that never really confronted the issue originally choosing to wait instead for the Feds to jump-in are in the best position now to design a more athlete friendly program since Congress and NCAA action is not on the horizon. Many States are quickly passing legislations to allow colleges to lend assistance to their student athletes to obtain NIL deals with companies. Some early State adopters of the change in the NCAA’s stance on NIL back in July 2021, restricted certain Institutional involvement anticipating more restrictive measures by the NCAA would resurface. Lawmakers are now busy working on producing the most attractive NIL legislation that will bring the best college-age athletes to their State that will benefit the revenue stream of their own Institutions. What’s good for the Institution is good for the State.

 

How much risk is too much risk?
It appears certain now that college athletic programs will be laser-focused on developing the best NIL support team. The shift of funds from other less lucrative programs will move as will the attention of the leadership. The big question is what will happen to the management of the other risks that will continue to plague an athletic program?  

 

Carefully monitoring the practices (no pun intended), policies, and protocol of the traditional risks such as TBI (Traumatic Brain Injury) program, heat-stress during competition, athletes involved in Title IX or other violent actions, etc. is difficult enough. These negative headline grabbing events of the past has put considerable pressure on athletic programs to manage and the risks are not going away.  Risk Managers on campus are already taxed way too much with the onslaught of compliance and regulatory matters to address on a daily basis.


Perhaps the time has come for athletic programs to carve out a portion of the revenue they are generating and hire a “dedicated” Risk Manager. Institutions currently employ Business Managers/Officers specifically assigned to athletic programs and large academic departments to ensure budgets are managed effectively and legally. So why not use the same logic for creating a Risk Manager of Athletics position with a dotted-line accountability to the Institution’s Risk Management campus-wide program? I suspect most of the Business Managers/Officers of the nation’s athletic departments already have risk management as a bulleted function in their job description. However with NIL evolving and possibly “pay-for-play” for student athletes on the horizon, this may be the best time to establish Risk Manager for Athletics.

 

 

For more information, contact: 

 

Eric Seaborg

Email: Eric.Seaborg@alliant.com