NIL is coming, is Penn State Ready?

  • Post last modified:May 22, 2023

The Changing Landscape of NCAA Control: Names Image and Likeness

barry fenchak for trustee penn state football
The Nittany Lions celebrate after Penn State won a thrilling season opener with a 36sdkfsldfkj-yard field goal as time expired to defeat the University of Central Florida 26-24 in the Croke Park Classic in Dublin, Ireland. Photo by Mark Selders

Photo courtesy: 30 August 2014

“Names, Image, and Likeness”. What it is, and what it isn’t:

In recent months, the topic of “Names, Image, and Likeness” (NIL) has been buzzing, some would say ricocheting, through the orbit of collegiate athletics.

NIL is NOT “Universities paying student-athletes”.

NIL refers to the marketing of a student-athlete’s “Name, Image, and Likeness” in order to generate revenue. It also refers to revenue generated as a result of applying the individual’s fame and reputation in endorsing products and services. For decades, the NCAA had mandated that student-athletes could NOT receive income from endorsements, or from any other means by which they might leverage their popularity and notoriety as an athlete – such as being paid to participate in “autograph signings”. If they did so, the student-athlete would face penalties – ranging from losing their scholarship, to being completely banned from competing in any collegiate athletics at all.

For a good example of the NCAA’s historical regulations on NIL, we can reference the case of Jeremy Bloom, from 2002.

As a young man growing up in Colorado, Bloom was a world-class skier – a member of the US Olympic Team – and a talented football player. As with other US Olympians, Bloom’s expenses were financed through endorsement revenue. Bloom’s endorsement money came primarily from equipment and clothing manufacturers, who paid Bloom to wear and promote their products while on the slopes.

But when Bloom decided that he would also like to play college football at the University of Colorado, he ran into an obstacle more intractable than any mogul he had ever encountered on the ski slopes of the Rockies. The NCAA, even though they permitted student-athlete’s to participate in one sport as a professional (for example, being paid $1 million per year as a professional baseball player for the New York Yankees), and still remain eligible to compete in another sport as a collegiate athlete (for example, college football for the University of Michigan), had very different regulations regarding endorsement (NIL) money.

NCAA rules stated that any individual who received endorsement money as a result of their notoriety as an athlete – no matter what the sport – was disqualified from competing in collegiate athletics in any sport at all.

That all changed this year.

Congress, in response to decades of NCAA hypocrisy – during which time the NCAA and all of the member universities of the NCAA, made billions of dollars, and paid themselves seven and eight figure annual salaries, from revenue generated by selling the NIL of student-athletes – ruled that the NCAA can no longer discriminate and invalidate an athlete’s ability to participate in college sports as a result of the athlete benefiting from their own NIL.

Where things stand currently:

Although Congress has ruled that the NCAA can no longer restrict a student-athlete’s ability to profit from their own NIL – and has set a deadline of July 1, 2021 for allowing athletes to market their NIL – they have “punted the ball” to the individual States’ to set parameters and guidelines for exactly how those athletes may market their notoriety.

Similarly, the NCAA – after fighting for years to prevent the athletes from being able to share in the revenue generated by their NIL – has adopted a dead possum approach with regard to establishing guidelines for their member Universities.

So, each State has begun to enact laws to address the issue – and, as one would expect, their has been no consistency among the State regulations.

Thus far, six states have passed legislation regulating NIL, that will go into effect in July: New Mexico, Arizona, and, not surprisingly, four states in the heart of college-football-crazy SEC country – Alabama, Mississippi, Florida, and Georgia.

A few other states have passed legislation – but with provisions that the regulations do not come into force until a year, or several years, down the line. Many other state legislatures have bills currently moving through some stage of the long winding process between bill-proposal and legislative enactment.

What is the legislative situation in Pennsylvania, which would effect Penn State?

The Pennsylvania Legislature has NOT enacted legislation to govern NIL, and does not have any current bills pending.

We can, however, get a bit of a glimpse as to what such legislation might look like by looking at a bill drafted in 2019, by the PA Assembly, that attempted to address NIL (but died in the PA Assembly’s Education Committee), and looking at legislation enacted in other states

In 2019, the Pennsylvania General Assembly drafted House Bill 1909. You can see that bill here. That bill provided the following guidelines for NIL:

1) Prohibits any University, or any athletic association (Big Ten, NCAA) from limiting or prohibiting any student-athlete from profiting from their “NIL”

2) Prohibits any University, or any athletic association, from limiting or prohibiting any student-athlete from hiring and receiving counsel from Agents or Financial/Business Advisors

3) Prohibits any athletic association – such as the NCAA or Big Ten – from penalizing or excluding any University due to that University allowing student-athletes to profit from their “NIL”

4) Prohibits any limitations or changes to a student-athlete’s athletic scholarship due to their efforts to profit from their “NIL”

5) Prohibits conflicts of interest during official team activities. ie, If Penn State has a contract with NIKE, an athlete can’t be compensated by Adidas to wear Adidas gear during official team activities.
[The statute is silent as to whether or not – in the example used above – it would be allowable for Nike to directly compensate the student-athlete for wearing Nike gear during official team activities. That could get very interesting.]

6) Requires that all student-athletes must disclose to the University all of their contractual agreements involving compensation for their “NIL”

What have other state’s done?

A relatively up-to-date listing of where legislation stands in other states is available here. For the most part, the legislation passed thus far contains all of the same general provisions as the old PA Assembly HB1909, and a few other features. The most common additional features include:

1) Some of the bills clearly stipulate that NIL revenue can NOT be paid directly through the University to the athletes.

2) Many of the bills mandate that Universities DO provide classes and seminars to all student-athletes on topics such as financial literacy, NIL marketing, etc.

3) One of the very much debated issues of NIL has been the ability of athletes to use University “marks” while marketing their NIL (picture the athletes wearing University gear, Penn State logos, etc while engaging in endorsements). Some bills have allowed for such use, while some other bills have not addressed the issue.

4) Several states have specifically banned the receipt of NIL revenue from certain types of businesses (casinos, tobacco, alcohol etc).

What will happen on July 1, 2021 and beyond?

The simple – and accurate – answer is “No one really knows”. Between the US Congress punting the responsibility for control to the States, and the NCAA’s posture – to date – of covering up like a frightened turtle, there in no consensus whatsoever regarding just how NIL will work.

What does seem clear is that those States/Universities that do take proactive steps will assume a clear leadership position with regard to creating an environment that student-athletes will find appealing. It is no surprise that those states, and those universities, located in the heart of SEC Country (who’s tagline is SEC – It Just Means More!) have taken the lead.

Penn State, and Pennsylvania? Not so much.

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