In 2021, a groundbreaking shift occurred in college sports: student-athletes were, for the first time, permitted to profit from their name, image, and likeness (NIL). This monumental change, ignited by the Supreme Court's decision in NCAA v. Alston, marked the beginning of a new era where college athletes could finally join their professional counterparts in benefiting financially from their personal brands. However, the rapid evolution of NIL compensation has introduced a host of complex issues and regulatory challenges that continue to shape the future of college athletics.

Background

The Supreme Court's ruling in Alston held that the NCAA's restrictions on education-related benefits for student-athletes violated federal antitrust laws, paving the way for NIL compensation. This decision has significantly altered the landscape of college sports, creating new opportunities for athletes to earn money through various means, such as licensing agreements, business sponsorships, participation in sports camps, and autograph signings.

One of the most significant developments has been the rise of NIL collectives. These entities, often formed by boosters or alumni, raise funds and create NIL opportunities for student-athletes. Collectives have sparked a new arms race in college sports, as boosters use NIL to support their favorite teams and outbid competitors for top talent .

Regulatory Framework

The current NIL regulatory framework is a patchwork of federal, state, and NCAA regulations. There is no overarching federal law specifically governing NIL, though Congress has introduced several legislative proposals, and the NCAA has been lobbying for standardized national laws . The NCAA's key priorities include establishing a uniform national NIL standard, obtaining limited antitrust protection, and ensuring that student-athletes are not classified as employees .

State laws vary widely, with 31 states having enacted some form of NIL legislation. The NCAA has issued interim guidance prohibiting pay-for-play and improper recruiting inducements, and requiring that student-athletes be compensated only for work performed . However, the lack of specific and tailored guidance due to potential antitrust violations has left many questions unanswered.

Recent Developments

The evolving NIL landscape has prompted various stakeholders, including the NCAA, student-athletes, and federal agencies, to take more targeted actions. In January 2024, the NCAA Division I Council approved new NIL disclosure and transparency rules, which will be implemented in August 2024. These rules include disclosure requirements, standardized contracts, and comprehensive NIL education for student-athletes .

In March 2024, NCAA President Charlie Baker halted investigations into third-party NIL collectives following a federal court injunction in Tennessee. This injunction prevents the NCAA from punishing athletes or boosters for negotiating NIL deals during the recruiting process or while in the transfer portal, further complicating the regulatory environment .

The Employee Classification Debate

A major issue looming over the NIL landscape is whether student-athletes should be classified as employees of their colleges or universities. This classification would grant athletes federal protections, including the ability to unionize. The National Labor Relations Board (NLRB) recently determined that Dartmouth's men's basketball team could unionize, recognizing them as employees . Additionally, an ongoing NLRB complaint against the NCAA, Pac-12 Conference, and the University of Southern California could set a precedent for all student-athletes to be classified as employees .

Conclusion

The Supreme Court's decision in Alston and the NCAA's subsequent NIL guidance have dramatically reshaped college sports. The rise of donor-funded collectives and the ongoing debate over student-athletes' employment status continue to add layers of complexity to the NIL landscape. As stakeholders and regulators work to refine their policies and regulations, the future of college athletics remains in flux. The next few years will be critical in determining how these issues are resolved and how college sports will continue to evolve in this new era of NIL compensation.