Sports Law Attorneys Discuss Changes to Student-Athlete Compensation
November 15, 2021
Moderator Kassandra Ramsey, chair of the Sports Law Subcommittee of the D.C. Bar Arts, Entertainment, Media, and Sports Law Community
With more than half of U.S. states having enacted legislation allowing college athletes to profit off their name, image, and likeness (NIL), sports law attorneys have seen significant developments in their practice in recent years as well as increasing confusion about what these rules and laws mean for their clients and others.
Sivonnia DeBarros, founder of SL DeBarros Law Firm, LLC, said there is an increased need to educate clients about the law surrounding NIL. “It’s not just students,” DeBarros said at a November 8 D.C. Bar Communities virtual panel discussion. “It’s the people surrounding the student athletes who are looking for direction, like their parents.” Some of these parents are seeking guidance on how to become agents for their kids, DeBarros said.
Part of the need for education involves managing money gained from NIL, according to Luke Fedlam, sports law practice leader at Porter Wright Morris & Arthur LLP. “It’s not just basic financial literacy,” Fedlam said. “[It’s] how to budget, plan for taxes, manage and understand contracts and the legal side of things. We’ve had conversations with companies as well that want to work with student athletes because they didn’t get a primer on how to enter this [NIL] space based upon what the rules and regulations are.”
California was the first state to pass an NIL law with its 2019 Fair Pay to Play Act, allowing college athletes in that state to secure endorsements and sponsorships without losing scholarship eligibility. To date, 28 states have passed NIL legislation. In June 2021, the National Collegiate Athletic Association (NCAA) adopted an interim policy allowing all collegiate athletes to get compensated for use of their name, image, and likeness. There is no federal NIL law, but several bills are pending in Congress.
Kassandra Ramsey, founder of the Law Office of Kassandra Ramsey, P.L.L.C. and chair of the Sports Law Subcommittee of the D.C. Bar Arts, Entertainment, Media, and Sports Law Community, said allowing college athletes to profit off their NIL would address some of the financial inequities in the multibillion-dollar college sports industry.
Tom McMillen, president and CEO of LEAD1 Association, described the current NIL legal landscape as “the wild, wild West.” Early NIL compensation discussions focused more on the guardrails for keeping student athletes out of trouble regarding NIL, McMillen said. “Then you have the Justice Department raise issues . . . a number of congressional bills, lots of state bills passed. Eventually the NCAA threw up its hands and said, ‘For now, we are just going to have a simple policy: no pay for play in recruiting instances. That’s where we’ve kind of [had to] dumb this thing down to abide by your state, abide by your institution’s polices. Good luck.’”
DeBarros spoke on the need for coaches and athletic departments to learn how to navigate situations in which one or more athletes on a team have NIL contracts and the other teammates don’t. She argued that it could have a negative impact on the team’s morale and camaraderie.
“[As a coach], the last thing you want to do as an extension of the school is provide that information to a student athlete without really knowing if it’s legit,” DeBarros said. “Because it could cost the student athlete their eligibility. We already know prior to the enactment of the NIL [laws] that a lot of student athletes have lost their eligibility for playing for activities that were not allowed by the NCAA. So, we got to make sure that the people who are put there to protect these athletes all have competency in NIL.”
New Rules, More Questions
The same confusion and uncertainty exist in high school sports. Ramsey mentioned that Texas has forbidden its high school athletes from engaging in NIL deals, while other states have left it to their school athletic associations to sort out the rules and regulations.
McMillen said NIL is a gray area right now regarding high school student athletes, but he believes that eventually they will get the same rights and benefits as their college counterparts. “Where it gets tricky is with a high school kid moving into college [and the whole conflict provision],” McMillen said. “If the state doesn’t have any conflict provisions or any [NIL] law, [the high school athlete] could have signed a deal with Nike then goes to a school [with an Under Armour deal] — then it would just depend on what that school’s policies are.”
There is one distinct difference when it comes to high school student athletes getting compensated for their NIL, said Fedlam. “Parents will have to sign these contracts on behalf of their sons and daughters. So, when we think of this, the education requirement for parents to know what they are signing on behalf of their young person opens up a lot of other doors so that parents aren’t unknowingly getting their sons and daughters in a bad deal, where they are being taken advantage of down the road,” Fedlam said.
International college athletes, meanwhile, currently are ineligible for NIL compensation. Casey Floyd, co-founder and chief compliance officer at NOCAP Sports, a comprehensive athletic marketing platform, explained that international college athletes are restricted from benefiting from NIL because the applicable visa regulations haven’t been updated.
“So, it’s an issue for the Department of Homeland Security and its component agencies — U.S. Citizenship and Immigration Services, U.S. Immigration and Customs Enforcement, and U.S. Customs and Border Protection,” Floyd said, noting that there are a few loopholes. “So, we’ve been working with immigration attorneys in the American Immigration Lawyers Association for four months on an initiative to modernize some of these restrictions. There are several ways to fix this. Because there is no federal NIL legislation, international athletic eligibility for NIL compensation could be addressed at the interpretive level by the governing agencies.”
McMillen believes that Congress will eventually pass an NIL law, but right now there’s too much on the table. “Republicans, for the most part, want a simple NIL law that would preempt state laws and solve some of these issues that we're talking about,” he said. “Democrats want a lot more than that. They want NIL plus, plus, plus, including employment status and collective bargaining. NIL on a national basis might get done down the road, but in conjunction with a lot of other issues. NIL is just too small of a ball right now to stand on its own.”
