College Sports: Sharper Resolution
By the start of the 2020 college football season, athletes in multiple sports could be earning income from an appearance at a local sporting goods store, giving short-game golf lessons at a country club or using money from their selection to the Allstate Good Works Team to start a foundation.
This is the possible future of the name, image and likeness movement in college athletics, based on legislative proposals or bills in nearly 20 states — and the vision is rapidly becoming much clearer.
Heading into the new year, six states have introduced bills that could be up for a vote as early as the first half of 2020. Ten other states have NIL proposals.
California, the state that started it all, already signed its bill into law in September. North Carolina and Ohio are in different phases of proposing federal legislation that would make NIL rights the law of the land, not just their states.
Each of the bills would provide college athletes with the ability to monetize their NIL rights. Some, if passed, would take effect as early as next summer. Others have a much longer runway, out to 2024. President Mark Emmert said the NCAA’s main concern is that state-by-state NIL laws will be impossible to regulate overall, which is why the governing body could respond by taking these states to court to slow down the process while also seeking a solution that would work nationwide.
Since Gov. Gavin Newsom (D) signed California’s bill protecting college athletes from NCAA penalties if they profit from their NIL rights, other states have moved with surprising speed to put forth their own version of essentially the same bill with various nuances.
“You’re seeing the domino effect,” said Ramogi Huma, a former UCLA linebacker and longtime college athlete advocate who has helped some states craft their bills.
The NCAA is trying to keep pace, but the governing body of 1,100 institutions is not known for its nimbleness or ability to enact change quickly. It assembled a working group co-chaired by Big East Commissioner Val Ackerman and Ohio State Athletic Director Gene Smith to study the issue and propose a way to permit NIL rights as long as they’re tied to education. But those ideas might not be ready for next steps until January 2021 (see timeline, page 27).
“The ball, literally and figuratively, is in the NCAA’s court,” Newsom told Sports Business Journal. “If they are going to slow walk this, they are going to pay a huge price. Not just in terms of public opinion, but they will be in litigation probably with a half-dozen states within the next year.
“It’s in their interests to figure this out and do so quickly. … If the other states move forward, that would put pressure on California to fast track it. There is nothing to suggest we won’t if we feel it’s helpful, but there is nothing to suggest it’s necessary because we are seeing some movement by the NCAA.”
KEY FACTORS: What moves will influence NIL progress in 2020?
Huma has been fighting for college athlete rights since he was playing at UCLA in 1995, where he formed what became the National College Players Association, which he said now has some 20,000 members who are either current or former college athletes.
In more than 20 years, he’s seen legislation come and go with little to no progress. Senate Bill 93 was introduced in 2003 by California Sen. Kevin Murray, for example, and passed in the senate but failed in the assembly after it was criticized by “representatives from dozens of California colleges,” according to a 2003 ESPN story.
This year, Huma consulted with Rep. Nancy Skinner on the Fair Pay to Play Act. He said he had little expectation that it would pass the California house and senate, much less by unanimous votes.
“It was unexpected by us,” Huma said. “We didn’t know if we’d have enough support, period.”
When Newsom ceremoniously signed the bill into law on LeBron James’ HBO show, “The Shop,” publicity surged in other states. Huma’s dream of creating a set of marketing rights for college athletes was finally becoming a reality. He’s now consulting with Florida politicians on an NIL bill.
“I think Gov. Newsom led the way on this,” Huma said. “Instead of quietly signing the bill, he helped maximize exposure of it. It helped raise the issue with other states, and it helped the momentum as well.”
There are three primary areas that will drive the NIL issue forward in 2020: The proposed legislation in nearly 20 states; appeals in the Alston v. NCAA case; and the NCAA’s working group.
The California law and the NCAA’s reaction have been well-documented. But the Alston case has flown mostly under the radar since March, when U.S. District Judge Claudia Wilken ruled that the NCAA was suppressing student-athlete compensation but required little action by the organization.
The NCAA’s projected one-year timeline to finding a resolution on NIL rights:
Jan. 22-25, 2020
Status update and discussion of general concepts during division-specific delegate sessions at the NCAA Convention
Updates to divisional presidential committees and the Federal and State Legislation Working Group reports to Board of Governors during NCAA governance meetings
Continued discussion and feedback in each division
Continued discussion on potential legislation at NCAA governance meetings
Sept. 1, 2020
Deadline for Divisions II and III Presidents Councils to sponsor legislation
Nov. 1, 2020
Deadline for submission of legislative proposals in Division I
Jan. 13-16, 2021
Anticipated vote on legislative solutions by each division at the NCAA Convention
Both sides followed with appeals. The plaintiffs are arguing for no cap on compensation, or an open-market system that would permit college athletes to fully exploit their rights and marketability. The NCAA is asking for the decision to be overturned.
Jeffrey Kessler, a Winston & Strawn partner who is one of the lead attorneys for Alston, said he expects the case to play out in 2020. While the NCAA has come away relatively unscathed from their legal losses so far, the Alston case and before it, the O’Bannon case, provided impetus for the California bill to move forward in 2019.
Elizabeth McCurrach, a senior associate in BakerHostetler’s sports group, has been tracking the legislation in different states on sports gambling. After California passed its NIL law, McCurrach began tracking similar proposed NIL bills.
“Other states did not want to be left behind,” she said. “It is not so dissimilar from what we are seeing in the gambling realm with states trying to get to market quickly.”
Some states, like Florida and Michigan, are proposing bills that would go into effect in July 2020.
“That speeds up the timeline exponentially,” McCurrach said. “Those states would have a pretty clear recruiting advantage, so it would definitely force the issue a lot sooner.
“Despite being the spark that started this fire, the California law doesn’t take effect until January 2023 and actually even has some language along the lines of being open to ‘revisiting the issue’ depending on the results of the NCAA working group. … A July 2020 deadline doesn’t leave too much room for collaboration and compromise, and the NCAA likely won’t have even finished their proposed rules changes.”
THE STRUCTURE: What will the marketplace look like?
The jockeying for position has already begun.
College athletes could soon be looking to monetize their NIL rights, and one organization already is stepping in to help them. OneTeam, the business created by RedBird Capital and the players associations for the NFL and MLB, has said it will attempt to aggregate the rights of college players with the help of Huma’s NCPA.
If OneTeam is able to do that, the agency could become a clearinghouse for NCAA athletes.
“Right now, every player in the NFL signs a group licensing agreement with us, the NFLPA. So, in college, it would work the same way,” said Ahmad Nassar, CEO of OneTeam and formerly the chief at NFL Players Inc.. “Every athlete who wants to participate would sign a group licensing assignment with an organization.”
With the NCAA’s collegiate model under siege by lawmakers and labor attorneys like Kessler, and the NCAA itself saying it’s time to modernize the rules about NIL rights, the next question becomes what type of structure will emerge. How will this new marketplace operate? Various scenarios are just beginning to take shape and could certainly change as the space matures over the ensuing years.
Theoretically, each player could go it alone with the help of an agent, but to maximize revenue opportunities, college players more likely would want to be part of a group licensing arrangement like professional players.
Virtually no one interviewed for this story believes OneTeam will have the space to itself, though.
“If you look at the NFL, we have 32 teams. But there are 300 colleges and universities represented amongst those 2,000 or so players,” Nassar said. “So, I would imagine in the aggregate, the college market is quite large.”
Most experts think Learfield IMG College eventually will enter the player marketing space. But that scenario is fraught with complications.
Learfield IMG College is the largest collegiate marketing business in the country, with rights to more than 200 schools and other collegiate properties. A big piece of its business is selling sponsorships for its schools.
Pairing school marketing and media rights with athlete rights could provide significant added value for the buyer and the seller. Will athletes trust that their rights will be marketed as vigorously as the schools’? Will the schools be put off if athletes start taking away business?
Industry sources say that most of Learfield IMG College’s conversations with schools now center on protecting the value of the schools, as well as its own rights.
A clause in most multimedia rights contracts called “diminishing events” is intended to protect the rights holders, like Learfield IMG College, JMI Sports or Van Wagner, in the case a major event diminishes the value of their rights.
If the overall pie in collegiate marketing stays like it is and brands divert some of their college spending away from schools to the athletes, that could be damaging monetarily to a big company like Learfield IMG College.
Dan Gale, a former CBS sales executive, consults with several FBS schools on their multimedia rights for Leona Marketing Group. The loss of value for the schools in the NIL age is something “that’s definitely being discussed in contracts right now,” he said. “It’s a glaring issue, including in some contracts where we’re at the 1-yard line.”
ATHLETE MARKETABILITY: Where’s the most value for players and sponsors?
A common refrain about college athletes’ NIL rights goes something like this: There are only two or three players on every campus who have the marketing juice to generate significant revenue from their rights.
Many marketing experts have begun to believe otherwise.
“There’s going to be more opportunities than that,” said Fishbait Marketing’s Rick Jones, a veteran collegiate marketer who has worked with Capital One, Infiniti and Allstate, among others. ”You’ll have some people who utilize them correctly, and you’ll have some that don’t.”
The potential marketing and endorsement opportunities run the gamut, marketers say, from local deals to national deals, social media influencers, instruction, content creation and appearances.
It’s not at all farfetched to imagine Dick’s Sporting Goods or Academy Sports bringing in college football players from nearby teams during their back-to-school promotions. Or a basketball player hosting a sponsored podcast. Or a local car dealership using athletes to help bring in more customers.
“There’s a lot of excitement right now among marketers,” said Mike Boykin, CEO at Bespoke Sports & Entertainment. “We could start to see some of this next football season, and I mean in a highly visible way. Aggressive brands and progressive marketers will go hard. Others will wait two or three years, but they will look back and go, ‘Why didn’t we do that?’”
Dan Keats, director of sponsorship marketing at Allstate, helped form the Good Works Team, which highlights high-achieving college football players who also excel off the field. New NIL policies could open the door for Allstate to do more with those winners. For example, Allstate could contribute money toward an athlete’s foundation, Keats said on Jones’ “From the Bridge” podcast.
Boykin thought of another example: Vanderbilt quarterback Mo Hasan, who has started a program called “Second Spoon” to package leftover food from the school’s dining hall and deliver it to Nashville’s homeless in a food truck. What sponsor wouldn’t want to be a part of a story like that?
“Marketers have to stop thinking of themselves as an ATM and start thinking like an investment banker,” Jones said. “How can we use this opportunity to facilitate positive change?”
Will there be opportunities for possible abuse? Certainly. The hazards of moving to a new collegiate model are evident. There will be potential stories of players getting paid to go to a school through these new NIL opportunities. Those kinds of stories exist now, though.
In the absence of generational change from the NCAA, however, politicians and attorneys are taking a swing at overhauling the system.
What awaits NIL legislation next year remains to be seen, but the level of activity in nearly 20 states suggests that 2020 could be a landmark year in the evolution of the collegiate model.
“These name, image, and likeness bills could really affect the whole amateurism system,” said BakerHostetler’s McCurrach. “I don’t think it’s going to slow down any time soon.”