For years, the National Collegiate Athletic Association (NCAA) went out of its way to prevent its athletes from monetizing their position in American society. While maintaining the purity of amateur sports might have been an honorable goal, its credibility was rendered nonexistent by the billions of dollars circulating throughout the college sports industry. In more recent times, athletes have been allowed to start capitalizing on their name, image, and likeness (NIL), opening the door to some rather large-scale changes. But what exactly does NIL mean? Here’s an introduction, starting with a touch of history.
Brief History
The NCAA formed in 1906 (as the Intercollegiate Athletic Association of the United States) with a respectable enough mission of protecting athletic participants, particularly those playing football. It became apparent early on that the popularity of college sports lent itself rather well to another mission—making money.
Of course, the money thing threatened the concept of amateurism upon which the NCAA was built, leading to the mid-century coinage of the term student-athlete, a designation that emphasized student and averted classifications that could indicate employment. Over time, the mismatch between institutional revenue (a lot) and student-athlete compensation (zero, not including scholarships) became laughable. In non-pandemic years, the NCAA was pulling in over one billion dollars, and its president was taking home around three million of that amount.
To make matters worse, the NCAA and its corporate partners were profiting from the NIL of current and former athletes. Perhaps the most notable example came to light in a 2009 lawsuit filed by former UCLA basketball star Ed O’Bannon. In the suit, O’Bannon claimed he was entitled to compensation from an NCAA-branded video game that used his likeness (along with the likenesses of many others). The ruling, issued in 2014, went in his favor, and despite going through the usual appeals process, set the stage for what was to come.
Modernization
In 2019, California—in part inspired by the above—passed a state law that starting in 2023 prohibited universities from reprimanding college athletes for receiving endorsement money. Other states followed suit, introducing their own laws, some of which went into effect even sooner.
Meanwhile, the courts remained involved, and on June 21, 2021, the US Supreme Court unanimously upheld the ruling of a lower court in NCAA v. Alston that found NCAA restrictions on non-cash education-related benefits to be in violation of antitrust law.
Left with no option in what has been described as legislative gunpoint, the NCAA issued an interim policy stating that athletes could monetize their NIL so long as such activity stayed within the bounds of relevant state laws (if such laws existed) and university rules. To coincide with the start date of certain state laws, the policy went into effect on July 1, 2021.
The Current Landscape
Keep in mind that whatever I write here is bound to change—like tomorrow—but it’ll give you a snapshot of where the NIL thing stands.
As expected, athletes—and entities eager to capitalize off athletes—have wholeheartedly jumped on board. A growing area of business involves linking athletes to such entities, and agents have thus found their way into the mix.
Monetization strategies have included standard endorsement deals, jersey sales (of one’s own jersey), autograph signings, camps, and posting on social media (an option for those with large followings).
While athletes in high-visibility sports such as football are receiving much of the attention, the evolving industry has been pleasantly surprised to see those in less visible sports—including many women’s sports—benefiting from novel economic opportunities.
Needless to say, concerns have been raised. School choice is clearly being affected by NIL deals, leading to all sorts of questions about the unfair use of such deals as a recruiting tool (though early indications suggest this phenomenon, which clearly needs regulation, might actually be leveling the playing field). Similarly, collectives designed to raise NIL funds for specific universities are blurring the line between NIL and “pay for play,” particularly when athletes are hardly required to deliver a service.
Given the rather chaotic landscape created by multiple state laws, the NCAA has pushed for standardization via federal legislation. In the meantime, some pioneering states have actually amended or repealed their laws, finding them more restrictive than having no law at all.
The bottom line—it’s the Wild West.
At ComposeMD, I look forward to the day that I can capitalize on this NIL situation. In the meantime, I’ll just write about it.
(This article was updated on March 18, 2024.)
