College Athletes Are Monetizing

In this episode of Law, disrupted, John is joined by Lori Odierno, the lead lawyer and business affairs negotiator across WME’s sports division, to talk about the ability of college athletes to exploit their name, image, and likeness (NIL) rights.

The conversation begins by discussing how the phenomenon of college athletes being able to exploit NIL rights resulted from antitrust litigation against the NCAA and a Supreme Court ruling that did not address NIL rights. They explain how the Supreme Court struck down NCAA restrictions on the extent to which colleges could reimburse athletes for educational expenses, and how that decision became the impetus for the NCAA to pivot its policy on NIL rights in a sweeping and unexpected way.

Together, they dive into how the business and legal framework have evolved into, as Lori described it, “a web of complicated and ambiguous rules and laws” that are very hard for student-athletes to navigate. Lori explains that when the NCAA removed its restrictions on NIL rights, it set new rules for athletes to maintain eligibility. One of those rules requires athletes to comply with state laws concerning NIL rights. However, this can be difficult, as 24 states adopted NIL legislation or executive orders, and those laws were far from uniform.

The discussion moves on to examples of how law varies across states, including California and Texas, two of the richest recruiting territories in the country. They touch on how California encourages and promotes high school students engaging in NIL activity, whereas Texas prohibits them from doing so. In other states, an athlete’s NIL rights might be restricted by the state association for a given sport. In those states, if an athlete is at high school that is a member of the state association for a particular sport, the athlete may lose eligibility for engaging in NIL activity based on the state association’s rules.

Lori and John also discuss the restrictions in some states that NIL contracts cannot extend past an athlete’s college eligibility. They observe that the intent behind such restrictions is likely to prevent large, powerful brands from locking young athletes into low-value long-term contracts early in their careers before they’ve established their personal brands. However, they also discuss the anomaly that these restrictions might prevent athletes from monetizing their NIL rights after their playing careers are over, but when their name, image, and likeness still have value.

The discussion then turns to how agencies now analyze their potential opportunities with an athlete, by looking at NCAA rules, the laws of any states that might be involved, and the individual school’s policies. Lori and John note that despite the recent changes to NIL rights, athletes still cannot get paid to play a sport or for achieving certain benchmarks while playing.

Lori and John then explore the arrangements that some booster clubs have at universities where they create collectives that provide NIL opportunities for athletes. These collectives are currently under investigation by the NCAA and vary widely in how they operate. The two compare collectives that offer the same income opportunities to every athlete and those that offer more to certain star players than to others. They also discuss the potential that these differently structured collectives have for affecting team chemistry over time. They explain that while boosters may form collectives for exploiting NIL rights, the schools the athletes attend cannot form such collectives as that would violate rules against offering students financial inducements.

Finally, John asks Lori to provide some advice to current or prospective college athletes about what to expect when trying to navigate the NIL laws. Among other advice, she suggests that athletes exercise caution with their NIL rights, as a misstep in this field could jeopardize their eligibility. She also suggests that they consult frequently with their school athletic director to learn the school’s policies in addition to the NCAA’s rules and the applicable state law.