The Bank is Open for Collegiate Student-Athletes: What You Should Know About Name, Image and Likeness

This article, authored by WLJ Sports Law attorneys Judy Simmons Henry and Collins Hickman, originally appeared in the Fall 2021 issue of The Arkansas Lawyer. 

June 30, 2021, July 1, 2021, and January 1, 2022—these three dates have and will alter the landscape of collegiate athletics in Arkansas and elsewhere as we’ve known it for the last century. But first, let’s roll backward to 2019. The amateur sports world was calmer, although a soft roar of collegiate athletes’ voices was rumbling across the nation.¹ By summer of 2020, student-athletes were chanting loudly to lift the NCAA ban on their “right to work.”²

Claims of disparate treatment among college students and profiteering at the expense of student athletes were the heart-cries of the movement. But athletes were unable to muster enough force to impact the rigid NCAA regulation prohibiting payments to most amateur collegiate athletes.³ Undeterred, student-athletes, their parents and in some instances, coaches and athletic directors of institutions of higher education took their concerns to state legislators, who listened.⁴ By summer 2021, the movement had reached its peak.

A few states’ newly-passed laws giving athletes more control over their publicity rights were on the verge of becoming effective on July 1, 2021.⁵ The NCAA was now under immense pressure to address its conflicting bylaw prohibiting work compensation for athletes. The NCAA’s initial hope was that Congress would pass a federal law to make a uniform solution to its impending problem.⁶ However, after a pair of Senate hearings in June 2021, it was clear that no federal law was on the immediate horizon.⁷ And around this same time, the Supreme Court of the United States struck down the NCAA’s rules that limited the amount of education-related benefits that schools could provide to their student-athletes in National Collegiate Athletic Association v. Alston.⁸ With the unfavorable ruling in Alston, the NCAA was concerned that antitrust liability would result if it issued a blanket restriction on compensation rights for student-athletes.⁹ Backed into a corner, the NCAA had no choice. Its actions on June 30, 2021, will forever be recognized as a monumental day in collegiate sports.

On this date, just one day before state laws were to go into effect, the NCAA’s Board of Directors approved a “temporary” policy that allowed student-athletes nationwide to begin profiting from the sale of their name, image, and likeness (NIL) beginning on July 1, 2021.¹⁰ With the prohibitions officially lifted, some athletes took immediate advantage of their newly-minted NIL rights as the clock struck midnight.¹¹ As stories of student-athletes partnering with businesses to use their NIL in exchange for payment made the front-page headlines, the result of this monumental change in collegiate athletics was becoming a reality.

Just as the NIL era arrived in dramatic fashion, so too did questions. Without many answers being readily available, some coined the NIL developments as the “Wild, Wild West” of the sports world.¹² But, after a few months in, some of the dust has settled. So, what should you know?

While the NCAA relented and relaxed its athlete work compensation prohibition, it kept in place companion restrictions prohibiting both “pay for play” and recruitment incentives.¹³ The NCAA also prohibited athletic performance from being the “consideration” for NIL compensation, meaning that some “work” is required of the student-athlete.¹⁴ Additionally, academic institutions cannot provide compensation to student-athletes in exchange for use of their NIL.¹⁵ But other than these prohibitions, the NCAA essentially stepped back and joined the masses as a sideline spectator of what is to come in this new NIL world. As its parting act, the NCAA placed the responsibility on colleges and universities to police NIL activities in light of their own state’s law.¹⁶ For schools in states without effective state laws, each higher education institution could publish its own guidelines until such state law is enacted or becomes effective.¹⁷ Arkansas falls into this latter category of states.

Primer of New Arkansas Law

Arkansas’ NIL law, named the Arkansas Student-Athlete Publicity Rights Act, passed in April 2021, becomes effective January 1, 2022.¹⁸ The Act allows student-athletes to earn compensation for the commercial use of their publicity rights.¹⁹ In other words, a business may contract with a student-athlete to use that athlete’s name, voice, signature, photograph, or likeness in conjunction with the promotion of the business’ products, goods, or services.²⁰ While schools remain free to establish and enforce academic standards, team rules, and disciplinary guidelines,²¹ institutions and athletic conferences generally may not prevent or penalize student-athletes for receiving compensation for the commercial use of these personal assets.²²

Notably, the Act’s definition of a “student-athlete” limits the right to profit from their NIL to those enrolled at an institution of higher education who are eligible to engage in a varsity athletic program at the institution.²³ High school athletes, at least in Arkansas, must still ask family for money rather than the local car dealership, restaurant, or other business.

The Act expressly provides some logical restrictions of which businesses and athletes should be aware. For example, an NIL contract may not require a student-athlete to promote a business or product during a game, practice, or other team-related activity.²⁴ Student-athletes also may not promote certain prohibited products, such as alcohol, firearms, and drugs, to name a few.²⁵ Any NIL deal that conflicts with a contract, policy, rule, regulation, or standard of the school where the athlete attends will be deemed void and unenforceable.²⁶ A transaction involving the student-athlete’s performance or lack of performance in an athletic competition is likewise off limits.²⁷ Importantly for the schools, the Act also does not provide a blanket waiver for student-athletes to use the college or university’s intellectual property.²⁸ Generally, the school’s written consent must be given prior to the student-athlete appearing in an NIL activity sporting the jersey, colors, logos and other trademarks of their school and team.²⁹

The Act now allows student-athletes to hire attorneys licensed in Arkansas, among others, to represent their interests in NIL dealings.³⁰ An attorney serving in this representative capacity is tasked with complying with the disclosure requirements of the student-athlete’s school related to NIL contracts.³¹ The Act expressly requires that every NIL contract be provided to the respective university where the student-athlete attends.³² If the attorney fails to follow the university’s disclosure rules, it could be an expensive mistake. The Act allows the school or student-athlete to bring a cause of action against a representative in certain circumstances.³³  Specifically, a representative may be liable for punitive damages, attorneys’ fees, and other costs of litigation for causing either the university or student-athlete to lose eligibility or suffer financial harm.³⁴ Just as with any practice area, knowing the NCAA regulations, Arkansas law, and each institution’s rules is essential.

“Temporary” Guidelines

Since Arkansas’ Act is not effective until January 1, 2022, many Arkansas colleges and universities have established NIL compliance guidelines for representation and transactions in the gap period, July 1 to December 31, 2021. And as you probably guessed, these institutional rules are not uniform.

While many collegiate rules mirror the provisions set forth in the Act, there are some subtle but important differences among the schools. A major difference is found in the disclosure requirements for representation agreements, proposed contractual terms, actual NIL agreements, and ads for goods and services. While these policies may appear to be temporary, the Act provides that Arkansas universities will retain the authority to designate the time period and manner of when the disclosure of the NIL transactions should be made.³⁵  Because of this permission, and the fact that the Act does not provide for these disclosures, a continual review of each institution’s rules is essential. And beware—these rules are subject to change at any time.

What’s Missing?

While the Act regulates who can work and provides for some control over the reporting processes, it doesn’t address either equity or quality of the work transactions. Even though there is typically disparate experience on the sides of the NIL transaction, and substantial room for businesses to take advantages of inexperienced or unrepresented student-athletes, the Arkansas law, which is drafted heavily in favor of the student, allows the market to dictate which students get NIL opportunities and the fairness, or lack thereof, of the deal.

What’s Next?

As recently as September 29, 2021, the general counsel for the National Labor Relations Board (NLRB) issued a memorandum that declares certain student-athletes as “employees” of their schools.³⁶  This development affords those athletes numerous protections under the labor laws. While the NLRB only has jurisdiction over private universities, the NLRB has fired a shot declaring that it “will consider pursuing charges [for violations of the National Labor Relations Act] against an athletic conference or association even if some member schools are state institutions.”³⁷ What the NLRB has in mind for states like Arkansas, where its Act specifically provides that students are not deemed employees of their school, is unsettled at this time.³⁸

Until Congress eventually steps in and provides a uniform federal law pertaining to NIL work transactions, individual state laws, higher education requirements, and NCAA regulations will continue to evolve and govern. For now, the only certainty is that there is no turning back—NIL transactions are here to stay.

Endnotes:

1. Colin Dwyer, NCAA Plans To Allow College Athletes To Get Paid For Use Of Their Names, Images, NPR (Oct. 29, 2019), https://www.npr.org/2019/10/29/774439078/ncaa-starts-process-to-allow-compensation-for-college-athletes.
2. Tom VanHaaren, Pac-12 Football Players Show Unity, List Demands in Letter to Conference, ESPN (Aug. 2, 2020), https://www.espn.com/college-football/story/_/id/29583023/pac-12-football-players-show-unity-list-demands-letter-conference.
3. NCAA responds to California Senate Bill 206, NCAA (Sept. 11, 2019), https://www.ncaa.org/about/resources/media-center/news/ncaa-responds-california-senate-bill-206.
4. Sarah Kellogg, House Committee Advances Bill Allowing Arkansas College Athletes to Make Money Off Publicity Rights, KUAR (Mar. 23, 2021), https://www.ualrpublicradio.org/post/house-committee-advances-bill-allowing-arkansas-college-athletes-make-money-publicity-rights.
5. Jada Allender, The NIL Era Has Arrived, Harv. J. Sports & Ent. L. (July 1, 2021), https://harvardjsel.com/2021/07/the-nil-era-has-arrived-what-the-coming-of-july-1-means-for-the-ncaa/. (Texas, Alabama, Florida, Georgia, Mississippi, and New Mexico had NIL laws going into effect on July 1, 2021, as of June 30, 2021, with two states, Kentucky and Ohio, having executive orders becoming effective on July 1st).
6. Sam Cooper, A New Era: NCAA Approves Change to Allow Name, Image and Likeness Payments for College Athletes, Yahoo Sports (June 30, 2021), https://sports.yahoo.com/ncaa-takes-next-step-toward-nil-payments-with-rule-change-expected-to-pass-on-wednesday-203631607.html.
7. Alan Blinder, Hopes Fade for Imminent Federal Deal on College Athletes, Pressuring N.C.A.A., N.Y. Times (last updated Sept. 29, 2021), https://www.nytimes.com/2021/06/17/sports/ncaafootball/ncaa-federal-bill.html.
8. 141 S. Ct. 2141 (2021).
9. Andrew Brandt, Business of Football: The Supreme Court Sends a Message to the NCAA, Sports Illustrated (June 29, 2021), https://www.si.com/nfl/2021/06/29/business-of-football-supreme-court-unanimous-ruling.
10. NCAA, Interim NIL Policy (2021).
11. Dan Murphy, Let’s Make a Deal: NCAA Athletes Cashing in on Name, Image and Likeness, ESPN (July 1, 2021), https://www.espn.com/college-sports/story/_/id/31738893/ncaa-athletes-cashing-name-image-likeness.
12. Khristopher J. Brooks, It’s the “Wild, Wild West” for Companies Hoping to Monetize College Athletes, CBS NEWS (July 30, 2021), https://www.cbsnews.com/news/nil-college-athletes-collegiate-sports-ncaa/.
13. See NCAA, supra note 7.
14. Name, Image and Likeness Policy: Question and Answer, NCAA (July 1, 2021), https://ncaaorg.s3.amazonaws.com/ncaa/NIL/NIL_QandA.pdf.
15. Id.
16. See generally NCAA, supra note 7.
17. Id.
18. H.B. 1671, 93rd Gen. Assemb., Reg. Sess. (Ark. 2021).
19. Ark. Code Ann. § 4-75-1303(a) (2021) (effective Jan. 1, 2022).
20. Ark. Code Ann. § 4-75-1302(1)(A).
21. Ark. Code Ann. § 4-75-1307(a)(4)(A)–(D).
22. See Ark. Code Ann. § 4-75-1303(a)–(d).
23. Ark. Code Ann. § 4-75-1302(7)(A).
24. Ark. Code Ann. § 4-75-1304(a)(1).
25. Ark. Code Ann. § 4-75-1307(b).
26. Ark. Code Ann. § 4-75-1304(a)(2), (b).
27. Ark. Code Ann. § 4-75-1304(a)(3).
28. Ark. Code Ann. § 4-75-1307(a)(3).
29. See Name, Image, Likeness, Univ. of Cent. Ark., https://ucasports.com/sports/2021/7/1/nil.aspx (last visited Oct. 4, 2021); Regulations, Ark. State Univ., https://astateredwolves.com/sports/2021/8/3/nil-regulations.aspx (last visited Oct. 4, 2021).
30. Ark. Code Ann. § 4-75-1305(a).
31. Ark. Code Ann. § 4-75-1306(b)(1)–(2).
32. Ark. Code Ann. §4-75-1306(b)(1).
33. Ark. Code Ann. § 4-75-1308.
34. Ark. Code Ann. § 4-75-1308(a)(2)(A)–(B).
35. Ark. Code Ann. § 4-75-1306(a)(1)–(2).
36. See Nat’l Lab. Rev. Bd., Memo. GC 21-08, Statutory Rights of Players at Academic Institutions (Student-Athletes) Under the National Labor Relations Act (Sept. 29, 2021).
37. Id. at p. 9, n. 34.
38. Ark. Code Ann. § 4-75-1307(a)(6).

**About the Authors:

Judy Henry, a former collegiate gymnast, has been engaged in an active business litigation practice for 33 years and serves in management of Wright Lindsey Jennings as its business litigation chair. Henry is the firm’s sports law group leader, representing D-1 coaches, athletes and, previously, the NCAA. Most recently, Henry has led the charge for Name-Image-Likeness/Publicity Rights representation of businesses and athletes in Arkansas and regionally.

Collins Hickman is an associate attorney who joined Wright Lindsey Jennings in 2020. Hickman has a diverse practice that centers around transactional and commercial litigation matters, as well as estate planning. He also supports firm clients as a member of the firm’s sports law team focusing on Name-Image-Likeness regulations.