Proposed NIL Guidelines Create Barriers for Marketers

The Center for Research in Intercollegiate Athletics (CRIA) estimates that rights holders allocate more than $500 million in multimedia rights fees annually to institutions in the Football Bowl Subdivision. In total, IEG estimates that more than $1.2 billion is spent by marketers each year on college sport properties.

Yet, the voice of the marketers who allocate these funds seems to be conspicuously absent from the debate surrounding the “guardrails” that are currently being developed to govern the monetizing of the name, image, and likeness (NIL) rights of current student-athletes. I sense that their voice has been crowded out of the discussion, given that the intercollegiate athletics administrators and elected officials leading the charge on the establishment of these guidelines seem laser focused on ensuring that these guidelines first and foremost ensure that any funds allocated towards student-athletes are not recruiting inducements. 

However, the consequences of these actions may in the end dissuade many of the brands currently devoting significant portions of their budgets to intercollegiate athletics properties from leveraging the NIL rights of student-athletes, resulting in a reduction in the value of these rights. 

Perhaps that is the goal of this legislation. Regardless, there may be an opportunity to develop guidelines that accomplish the twin goals of discouraging the use of payments for NIL rights as a recruiting inducement, yet at the same time encouraging brands to allocate funds toward and activate against NIL rights.

Why must these two objectives be mutually exclusive? Below are just a few suggestions that could accomplish both. 

Embrace Group Licensing

Without a doubt, the most head-scratching decision with regard to NIL rights has been the steadfast refusal to allow student-athletes to participate in group licensing, a point that has been trumpeted by numerous administrators, such as North Carolina’s Bubba Cunningham and Duke’s Kevin White. 

The well-respected Collegiate Licensing Company (CLC) could easily serve as a liaison between the representatives of student-athletes and the hundreds of licensees with whom they already have a relationship to negotiate fair compensation for a student-athlete’s licensing rights. As a profit-maximizing entity, CLC is incentivized to maximize licensing income for its clients (such as the schools it currently represents), while at the same time negotiating a mutually beneficial agreement for licensees, a role in which it has served for decades. 

Student-athletes would have the option to either opt in or out of any proposed licensing program. For example, if the quarterback at Alabama does not feel the licensing fee proposed by his marketing agent and CLC is sufficient, he can simply choose to not participate. Universities currently have the same decision to make across hundreds of licensees. 

Perhaps most importantly, group licensing is the only NIL-related activity that requires no additional time commitment from student-athletes, allowing them to continue to focus on team-related activities and academics (remember those?), while being fairly compensated by licensees for their NIL rights. This point alone should be sufficient for group licensing to be a cornerstone of any future NIL legislation.  

Allow Marketers to Leverage School IP 

The guidelines suggested by federal legislators would not only prevent student-athletes from partnering with sponsors who conflict with the school’s exclusive sponsors, it would also bar marketers who currently have the rights to school intellectual property (IP) from activating those rights alongside the images of student-athletes.

While restricting the ability of brands to ambush exclusive school sponsors is a good idea, the issue is that no sponsor wants these rights to be disentangled, and this solution is inconsistent with how this issue is typically handled in professional sport. Further, what institution would not want brands such as AT&T, Nissan, and State Farm that already own rights to dozens of schools to feature their student athletes in their campaigns? If the main goal is to prohibit recruiting inducements, a second option would be to require brands to be a partner of the school in order to leverage NIL rights of current student-athletes, or at minimum pay a licensing fee. 

In a perfect situation, the NIL rights of current student-athletes are an activation platform that allows sponsors to truly leverage the power of intercollegiate athletics, rather than a stand-alone investment. Allowing brands to leverage school and student-athlete IP together helps ensure that’s the case, resulting in a mutually beneficial win for student-athletes as well as institutions. 

Maintain Confidentiality

Another guideline administrators have suggested is that all NIL-related agreements should be public, again to help ensure payments are not recruiting-related. Given that coaches and administrators are ensured confidentiality in their own personal agreements with apparel brands, shouldn’t student-athletes be afforded the same rights? 

Confidentiality clauses are commonplace and are beneficial to both brands and agents. Some student-athletes may also have interest in partnerships that are more of a business-to-business variety. There’s no reason why a student-athlete shouldn’t be allowed to keep such arrangements confidential.

Legislate Gender Equity

Many have suggested that if institutions have any role whatsoever in the NIL rights space, that payments made by brands will need to provide similar opportunities to both male and female student-athletes. Others disagree. I would suggest that any federal legislation related to NIL rights should be consistent with the existing federal statute of Title IX. 

Forcing brands to allocate equal funds to both male and female student-athletes would not only have the desired effect of discouraging those who seek to use NIL payments as a recruiting inducement, it’s also smart marketing. Coca-Cola, Gatorade, and Visa already feature the images of male and female athletes together as part of their award-winning campaigns. At minimum, such equality should be mandated within the group licensing environment.

In the end, if intercollegiate athletics administrators and elected officials insist on the establishment of “guardrails” to limit the ability of student-athletes to freely market NIL rights, the suggestions herein may help to both limit the ability of nefarious actors to commit recruiting violations, while at the same time encouraging brands that already have significant investments in intercollegiate athletics properties to leverage these new marketing rights. 

Jonathan A. Jensen, Ph.D., a former executive with sport marketing agencies Omnicom and Publicis Groupe, is an assistant professor of sport administration at the University of North Carolina at Chapel Hill.