Weekly Column: Where Does NIL Go From Here?

In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about the Florida Legislatures' changes to their existing name, image, and likeness (NIL) law and the ripple effect it may have across the Union.

You can read the full column below.

The Florida Legislature voted unanimously to repeal and change its name, image, and likeness (NIL) law just two years after passage. The original NIL law went into effect in July 2021. Floridians and athletes playing in that state will still be able to profit from NIL, but three important changes will occur going forward. It is likely that other states will follow Florida’s lead.

First, the new law, likely to be signed by Governor Ron DeSantis, will allow universities to assist in the introduction and brokering of NIL deals between college athletes. The initial NIL law forbid university employees from acting as a procurer of NIL deals (e.g., a go between or agent of sorts). The new law will allow university officials to introduce and help broker NIL deals for student-athletes. One question about the new arrangement will be the appearance of impropriety and the issue of universities using NIL to recruit and induce college athletes to sign with the underlying institution. There is also the issue of whether universities will profit from the introductions and dealmaking.

Second, Florida’s revised NIL law will make the education of college athletes mandatory surrounding NIL deals. For example, a college athlete will receive financial literacy and entrepreneurship education as part of receiving money for licensing their NIL. According to Opendorse, Other states have provided education and businesses like Altius Sports Partners have made their mark in the industry by partnering with universities athletic departments to provide education to college athletes, but few states or universities have required such education until Florida. The California Legislature through State Senators Nancy Skinner and Steven Bradford may have been the first to author NIL legislation in the Union, but Florida was the first to set a go live date in 2021 and will be the first to enact major changes to their NIL law.

The two provisions are very practical in nature. However, one of the more important provisions that will remain in this new NIL is not only that college athletes may continue profit from their NIL in a free-market environment, but also that universities will not be able to use NIL as a recruitment or inducement tool. The aforementioned issue continues to be one of the larger concerns of the NCAA, universities, and college athletes and something that is ripe for abuse and corruption. NCAA President Charlie Baker will have a tough task ahead of him to bring the NCAA up to speed on anti-corruption, compliance, monitoring, education, parity in conferences (particularly in the Power 5 and specifically in the Big Ten and SEC), and fairness issues.

Third, Florida’s new NIL law will provide liability protection for coaches at universities where a college athlete’s NIL is affected by playing time. The aforementioned is good policy for protecting coaches making game plan decisions, but it raises a question about NIL deals when connected to performance and pay-for-play. A traditional NIL pulls from three buckets: (1) money, (2) product, and/or (3) equity for the services of social media posting, advertising, endorsing, or consulting, or some similar activity or job. However, there have been serious questions in the “wild west” era around whether NIL contracts can be connected to performance, playing time, or whether a college athlete is playing for a certain university, which has become a more prevalent issue in the transfer portal era. As long as NIL exists legally, the above are questions that NCAA President Baker, universities, and legislatures will have to solve in the coming months and years.

Meanwhile, in California, the legislature is considering whether to pay college athletes more money unrelated to free market NIL payments from university television revenue or an athletic department surplus (e.g., 50% into a college fund). In addition, any payments would have to be made according to Title IX rules (e.g., equal payments to all student athletes regardless of sport profit or gender). There is also a proposed college athlete bill of rights and one provision that supports graduating and education. If the legislation passes (such legislation has failed previously), universities may then look for ways to spend the money to avoid a surplus because the main driver of UCLA and USC leaving the Pac-12 for the Big Ten was to gain about $40-60 million in additional television revenue per year. This is especially true for UCLA that has $100 million dollars in athletic department debt.

The draft legislation in California also specifically states that employment is not to be assumed by the guaranteed payments. However, guaranteed payments in legislation for college athletes would lend to a stronger argument for an employee-employment relationship, especially under California’s AB 5 rules on defining independent contractors and in comparison to professional athletes. An employment misclassification dispute would be a major litigation issue for universities. Legislatures might be better off regulating the existing NIL free marketplace to ensure college athlete education and protection and NIL compliance as issues remain with NIL recruiting, collectives, and boosters. Legislatures would be wise to force professional leagues to create established minor leagues and remove rules on being drafted from college or threaten the removal or weakening of professional sports’ antitrust exemptions. Regardless, there remains many NIL challenges ahead with possible solutions on the horizon.

About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.