“Game On” For College Athlete Compensation Changes at State and Federal Levels, 0921 SCBJ, SC Lawyer, September 2021, #52

PositionVol. 33 Issue 2 Pg. 52

Game On” for College Athlete Compensation Changes at State and Federal Levels

No. Vol. 33 Issue 2 Pg. 52

South Carolina BAR Journal

September, 2021

By Laura A. Ahrens and Gregg E. Clifton

College athletics has seen tremendous change and uncertainty in the past year due to COVID-19 challenges. This trend of uncertainty will continue throughout 2021 and beyond as state and federal entities tackle student-athlete compensation and name, image and likeness (NIL) rights issues. These issues have the potential to monumentally impact the arena of collegiate sports law. Alongside the ever-increasing number of state and federal legislative proposals surrounding NIL rights, the NCAA has agreed to allow student-athletes to earn compensation for the use of their NIL. Currently 20 states have passed laws granting student-athletes NIL rights and many of those states—including South Carolina— began offering student-athletes opportunities to market their name, image and likeness on July 1, 2021.

Effective July 1, 2021, the NCAA Board of Directors implemented a policy that delegates the issue of NIL rights to collegiate conferences and individual colleges and universities. Despite such guidance, the NCAA has continually avoided adopting and implementing any formal NIL modifications to their current bylaws over the last two years. This delay afforded the U.S. Supreme Court the time to issue their landmark decision in NCAA v. Alston, affirming the Ninth Circuit’s conclusion that the NCAA has violated federal antitrust laws by limiting educationally related benefits for student-athletes.1

State NIL legislation

Several states have successfully passed legislation creating NIL rights for student-athletes. Many states—including South Carolina, Alabama, Florida, Georgia, Kentucky, Mississippi, New Mexico and Texas—have authorized student-athletes to begin entering into NIL compensation contracts as of July 1.The other state laws have various effective dates during the remainder of 2021 and into 2022 and 2023.

As the first state to pass NIL legislation, California has served as a model for other states. California’s law allows college student-athletes to earn compensation for the use of their name, image, or likeness, and in some instances, to hire representation to protect their interests. Many of the laws require student-athletes that enter into endorsement agreements to disclose those opportunities to university officials.

South Carolina’s Name, Image, and Likeness Law

College athletes in South Carolina can earn compensation for the use of their NIL and obtain agents. South Carolina Attorney General Alan Wilson certified the effective date of the bill as July 1 after the NCAA agreed to allow student-athletes to earn compensation for the use of their NIL. State Senators Hembree, Kimpson, Setzler, Scott, Turner, Malloy, Matthews, and Jackson introduced Senate Bill 685 on March 23, 2021. On May 6, 2021, Governor Henry McMaster signed Senate Bill 685 into law.

The law applies to eligible intercollegiate athletes and post-secondary educational institutions in South Carolina. Although the law opens the door to NIL compensation, it also provides limits. College athletes in South Carolina will only be able to receive NIL compensation from third parties for endorsements, non-athletic work product, and activities related to a business that the athlete owns. College athletes in South Carolina may not earn NIL compensation for any of the following: • the athlete’s athletic participation, performance, or recruiting inducements by a higher education institution or its boosters;

• endorsement of tobacco, alcohol, illegal substances or activities, banned athletic substances, gambling, or sports betting;

• activities that use the institution’s facilities, uniforms, or intellectual property in connection with the use of the athlete’s NIL;

• activities that occur during participation in academic, athletic, or team-mandated activities; and

• activities that conflict with existing institutional sponsorship agreements or defend institutional values, if the institution elects to prohibit NIL compensation on these grounds.

The law prohibits institutions from adopting or maintaining contracts, rules, regulations, or standards that prevent or unduly restrict an athlete from (1) earning NIL compensation, or (2) obtaining an agent for the purpose of securing NIL compensation. Institutions and athletic conferences are also prohibited from directly or indirectly creating or facilitating NIL compensation opportunities for athletes. Further, to earn NIL compensation under the law, an athlete is required to: (1) abide by his or her institution’s and athletic department’s policies with respect to missed class time and good academic standing; (2) meet all academic requirements of the athletic association and conference to which the institution is a member; (3) disclose existing NIL contracts to the institution and its athletic department prior to enrollment or signing a financial aid agreement or team contract; and (4) disclose the terms of proposed NIL contracts to the institution prior to signing the contracts, in a manner designated by the institution.

Federal NIL legislation

Six federal NIL bills have been introduced in the U.S. Senate and House of Representatives. These bills are likely to gain support quickly as federal legislators work to avoid the reality of conflicting state laws where there is no uniform standard for NIL usage and rights.

1) Amateur Athletes Protection and Compensation Act2

On February 24, 2021, Senator Jerry Moran introduced the Amateur Athletes Protection and Compensation Act (the “Protection Act”). The Protection Act seeks to establish a federal standard to allow student-athletes to beneft from the use of their NIL. The Protection Act would allow student-athletes to sign endorsement deals so long as the agreements do not violate a school’s code of conduct. Additionally, the Act would grant student-athletes the right to enter a professional sports draft and retain eligibility if they do not receive compensation from a professional sports league, team or...

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