With the turn of the calendar yesterday and the fall semester right around the corner, as well as the House case and other litigation filling up your inbox, you may have missed the launch of new extremely important NCAA rules yesterday, August 1, 2024—namely NCAA bylaw 22, appropriately named “Name, Image and Likeness Activities.” Most of this bylaw was adopted by the Division I Council during the National Convention on January 10, 2024, while the portions more related to institutional involvement were adopted later on April 18, 2024. The bylaw is complicated for both the institution and student-athletes (S-As), and possible penalties for non compliance can be confusing.
The following is a summary of the entirety of Bylaw 22 that athletic directors and institutional practitioners need to know and implement on campus as soon as possible.
General Principles
Bylaw 22 confirms S-As can receive NIL compensation, but not pay-for-play. In addition, all NIL agreements must still include quid pro quo of some kind. The bylaw notes that the NCAA has provided a significant amount of educational materials on its website aimed at educating S-As on all facets of NIL deals, including intellectual property, taxes, personal finance, standard contractual terms, etc. In addition, the new NCAA NIL Assist website, launched yesterday, includes a centralized voluntary registry for all professional service providers, such as agents and financial advisors.
Changing Role of Institutions
By far the most significant change is the relaxing of rules related to support provided to S-As by institutions. Moving forward, as outlined below, schools may provide significant NIL assistance and services to S-As, but with one extremely important caveat—schools may only provide the below services to S-As if the S-As disclose all of their NIL deals over $600 to the school. The disclosure rules are complicated and discussed below.
Services Schools May Provide to Student-Athletes
Schools may now explicitly identify and facilitate NIL opportunities for S-As with third parties. Moreover, the schools may provide those services to S-As in-house with their existing employees and staff, or they may hire outside professional third parties to assist S-As with all services incidental to NIL deals. For example, schools may have their existing institutional multimedia rights providers (e.g. Learfield, Van Wagner, etc.) identify and facilitate deals between its existing or new corporate sponsors and S-As. Schools may hire outside attorneys to represent S-As with their NIL activities, as well as specialized tax professionals to support these activities. Schools should be mindful about potential conflicts of interest in providing such professional services. For example, a professional hired by the school may be ethically prohibited from representing an S-A in their negotiation with the school’s collective if the school has control over the collective. Likewise, a professional may have a conflict representing all of a school’s S-As on NIL activities if it requires the professional to choose which S-As receive NIL offers.
While institutions may provide such support moving forward, NCAA bylaws make clear the S-A maintains independent authority over any and all aspects of their NIL agreements. Further, the S-As are not required to accept institutional assistance or 3rd party assistance provided by the institution and, instead, can proceed on their own, or hire their own professional service providers.
Disclosure Requirements
Schools are required to establish policies and procedures for S-As to disclose their NIL activities. The S-As do not have to disclose their NIL activities, but they can only access institutional support for their NIL activities if they disclose all NIL agreements that are over $600 (or are over $600 in the aggregate with the same vendor). If S-As choose to disclose their NIL activities, they must do so within 30 days of entering the NIL agreement and they must attest, pursuant to NCAA Unethical Conduct bylaws (and, thus, NCAA enforcement), that their disclosures are complete, accurate, and consistent with school, conference, and NCAA rules and applicable law. Further, they must attest that the agreements are not pay for play or an inducement to enroll or remained enrolled at a specific school. With the NCAA Division I Board directing NCAA Enforcement staff in March not to enforce NCAA rules involving 3rd party participation in NIL activities, such as inducements, its not clear whether this provision should be required until the injunction currently in place in the Tennessee and Virginia vs. the NCAA U.S. District Court case pending in the Eastern District of Tennessee is resolved.
S-A disclosure requirements are numerous and very detailed. For example, within 30 days of enrollment, S-As must disclose all current and expired NIL deals. This appears duplicative for transfer S-As that previously disclosed the same deals at their prior universities. In addition, S-As must disclose a lot of details related to each NIL agreement, such as:
• the name and contact information of the individuals involved in the agreement, including “a description of the nature of the relationship between such individuals”;
• the terms of the agreement including what services and rights were granted by the S-A and the financial structure of the agreement;
• the name and contact information of all professional service providers involved in arranging any aspect of the agreement, including a description of the relationship between the service provider and the involved parties; and
• the compensation terms between any service provider and the S-A (such as a contingency fee; agency fees, etc.).
If a S-A fails to disclose all of this information properly within 30 days, the institution may give the S-A a “reasonable amount of time” to correct the deficiency. This implies there would not be a penalty for the S-A associated with late compliance, but creates questions of how long is “reasonable?” After a “reasonable” amount of time has expired beyond 30 days, the institution would need to discontinue providing these NIL support services to the S-A. In addition, the bylaw further clarifies that institutions would only be held accountable through the NCAA enforcement process if they “clearly demonstrate a disregard for its [NCAA] stated policies.”
Institutions must disclose all such NIL information to the NCAA twice a year. As you have likely read, the NCAA NIL Assist website linked above will aggregate the disclosed information into a database that is accessible to the public so that all involved parties can have a more realistic picture of the NIL marketplace in the future.
Designing a disclosure system and policies and procedures to comply with NCAA bylaw 22 is and will be challenging for campus practitioners. Further, the related changes coming next year via the House litigation and a pivot to “authentic NIL” will result in further confusion. We are working with schools to help them navigate this planning process.
Please Contact us with questions:
Jay Ezelle 205-868-6025 or jezelle@starneslaw.com
Daniel Feig 205-868-1844 or dfeig@starneslaw.com
Tabor Novak 205-868-6042 or tnovak@starneslaw.com
Clayton Bromberg 205-868-6084 or cbromberg@starneslaw.com
Averie Jones 205-868-6043 or ajones@starneslaw.com
