In the 2021 college football season, Alabama Crimson Tide football coach Nick Saban was paid $9.3 million in salary. The college itself generated approximately $4 billion dollars for the year. The players received “tuition and fees, room and board, books and other expenses related to attendance.”[1] And, for purposes of worker’s compensation, players are not even considered employees of their school which means that if they are injured on the field they are left to pick up their medical costs out of their own private insurance, if they have it.[2] Organizations like the National Collegiate Athletic Association (NCAA) have long justified their Rules which severely limit the players’ compensation by pointing to the “amateur status” of the game. See, if college athletes were paid a competitive salary, college sports would not be an “amateur” competition anymore and this would somehow diminish fans’ enjoyment. In 2023, this all changed. Somewhat.
The NCAA and others have long relied upon the “amateur status of the game” reasoning to prohibit college players not just from receiving pay for playing, but also from entering into deals where they would profit from their status as athletes. Advertisements. Endorsement deals. Monetized social media appearances. This is often referred to as “Name, Image, and Likeness” rights or “NIL” for short. The argument goes that if a college player gets paid to appear in an Under Armor ad, or lends their name to a summer sports camp, this raises them up to celebrity status like professional players. This, the NCAA has argued for years, could affect the “amateur status” of the game by raising players to the status of celebrities. Then, it’s no longer an amateur competition; it’s a contest of big name personalities just like the pros.
The NCAA regulations, however, have never stopped the schools from using their athletes’ names, images, and likenesses to promote their sports programs. As any student at Michigan State University during the 2000’s will remember, the Spartans used their quarterback Jeff Smoker’s name, image, and likeness to promote the program. The 2002 football schedule featured an image of Smoker and bore the phrase “where there’s Smoke… there’s fire!” This image was also promoted as a poster fans could hang in their rooms. Students at the time passed under a similar billboard sized banner bearing his image and this slogan when they walked to class. It is unclear why the schools’ use of an athlete’s image in this way would not impact the “amateur status of the game” any more than the student athletes’ own use. If having the quarterback’s face on a billboard makes him a “celebrity,” then why wouldn’t it jeopardize the “amateur status of the game” any less when the school does it itself than if a private company does? This begs the question whether the rules were designed to protect the “amateur status of the game” from the threat of celebrity-style players, so much as to protect the member schools from using the athletes to promote their brand without compensating the athlete.
In 2021, the NCAA fought for its right to prevent student athletes from profiting from NIL all the way to the US Supreme Court. They lost. In NCAA v. Austin, the Supreme Court considered the legality of the NCAA’s rules limiting “educated related benefits” including NIL compensation. The Supreme Court concluded that the restrictions violated Section 1 of the Sherman Antitrust Act because they amount to “contract[s], combination[s], or conspiracy[ies] in restraint of trade or commerce.”[3] The Sherman Act is a federal law designed to promote market competition by outlawing restraints of trade. According to the Supreme Court, prohibiting student athletes from receiving benefits like NIL forces them to accept a lower wage than the market would otherwise allow. So, held the Court, these Rules amount to unlawful price fixing behavior. The Court specifically rejected the NCAA’s argument that the prohibition should be upheld because it preserves the “amateur status of the game,” finding that the damage to student athlete’s ability to receive fair market value for their time and efforts far outweighed this concern.[4] According to the Supreme Court, student athletes’ right to be paid what they’re worth outweighed the NCAA’s desire to protect the “amateur status of the game.”
Meanwhile, a number of States began enacting laws also prohibiting the NCAA and member schools from interfering with collegiate athletes’ rights to profit from NIL. Michigan’s Governor Gretchen Whitmer, for instance, signed the Compensation of College Athletes Act.[5] The Act specifically prohibits intercollegiate athletic associations (it lists the NCAA specifically) from interfering in any way with a college athlete’s profiting from NIL or even from engaging an agent to help promote their NIL. It also prohibits schools in the State from denying scholarships as a result of college athletes’ attempts to profit from their NIL.
After losing at the Supreme Court and faced with State laws specifically prohibiting it from interfering with College Athlete’s attempts to earn money from their NIL Rights, the NCAA magnanimously decided to change its Rules. As of today, the NCAA Rules no longer prohibit a college athlete from profiting from his or her own NIL rights.
A word of caution to student athletes: The Michigan law, and similar laws in other states, do not give them carte blance to do whatever they want with their names and likenesses. Under Michigan’s law, schools are still allowed to prohibit their players from doing endorsement deals during games or school functions. So, one could not sign with Nike to wear their shirt during game. The Law also specifically allows schools to enforce disciplinary rules. Schools typically have morals clauses that allow them broad discretion to discipline players for illegal behavior or conduct that the school believes hurts its reputation. Athletes are considered ambassadors of their school. The school can discipline them if it believes they are not living up to this role. The Law does not interfere with this, even if the problem comes from monetized NIL activities. So, for instance, if a player posted a racist rant on YouTube, or a Tik Tok video of them binge drinking, fighting, or vandalizing property, they could not be disciplined for being online, but they could be disciplined for violating their schools’ morals clause. The same morals clauses could also be a basis to discipline a player for advertising an undesirable product. Say a certain quadruple-insane alcoholic beverage company runs a campaign that promotes underage binge drinking among university students and they decide they want to pay prominent college athletes to appear in their ads. The school could, conceivably, discipline the appearing player for violating their morals clause by affiliating with an undesirable product, without violating the NIL law. The point is: even with the new protections of their right to sell NIL rights, athletes should still exercise caution and common sense in what they do, and for whom they do it. To avoid disputes, schools would also be well advised to provide clear guidance on what promotional activities are considered appropriate, and inappropriate, in their Codes of Conduct.
Now, what about High School athletes? The Michigan High School Athletic Association (MHSAA) has long prohibited student athletes from engaging in promotional activities and these rules remain in place to this day.[6] Can they still do this, even after Alden? This is a tougher question. Arguably, the reasoning of the Alden decision would also apply to High School Athletic associations. After all, prohibiting a high school athlete from appearing in a Quest Protein Bar ad has the same economic impact as a college athlete. But, Alden’s reasoning rested heavily on the massive difference between the billions of dollars college athletics pulls in, relative to the tens of thousands room, board, and a degree are worth. Even prominent High School football programs do not receive the massive amounts of money that college sports do. They are still, by and large, funded through bake sales, pay-to-play dollars from parents, and booster groups. These are not the billion-dollar behemoths that Alabama Crimson Tide football is. Would a court find the interest in preserving “amateur status” of the game more compelling in these circumstances? No one knows because it hasn’t been decided yet. But, for now, High School athletes may become ineligible if their State’s association has rules against NIL. (And, most do.)
This is a new day for college athletes. The NCAA can no longer prohibit them from profiting from their NIL. They can do commercials. Become monetized YouTube celebrities. Endorse sports camps under their own names. High School athletes can’t do these things. Yet. And, neither high school nor college athletes can be paid to play. Yet. Whether you agree with college athletes being paid for their NIL or not, that is the law as it is today. But the law continues to change. Stay tuned.
Collin Nyeholt is an Associate Attorney at the Law Offices of Casey D. Conklin, PLC. He is a fourteen-year practitioner with concentration in employment law and state and federal litigation regarding same. He is licensed to practice in the State of Michigan, the federal Eastern and Western Districts of Michigan, the Sixth Circuit Court of Appeals and the United States Supreme Court. He can be reached at: 4084 Okemos Road, Suite B, Okemos, MI 48864, (517) 522-2550, collin@caseydconklin.com.
Casey Conklin is the owner of the Law Offices of Casey D. Conklin. He focuses his practice on estate planning, business planning, and sports and entertainment law. Licensed in the State of Michigan, the Federal Western District of Michigan, and the US Tax Court. He can be reached at: 4084 Okemos Road, Suite B, Okemos, MI 48864, (517) 522-2550, casey@caseydconklin.com
[1] Comment: NCAA v. Austin,135 Harv. L. Rev. 471, Nov. 10, 2021, available at: https://harvardlawreview.org/2021/11/ncaa-v-alston/#:~:text=the%20Supreme%20Court%20upheld%20a,1%20of%20the%20Sherman%20Act, accessed 2/1/2023. [2] https://ublawsportsforum.com/2022/12/09/injured-college-athletes-are-still-left-to-fend-for-themselves/ [3] NCAA v. Alston et al, Case No. 20-212 (US Sup. Ct, 11/10/2021) [4] The Austin panel specifically declined to consider whether prohibiting straight up payment of salaries for playing also amounted to a violation of the Sherman Act. That is a fight for another day. [5] MCL 390.1731 et seq. [6] https://my.mhsaa.com/portals/0/documents/library/history%20and%20rationale.pdf at p. 35. (Student athletes cannot allow name or picture to be used to endorse a camp, or sell for a tux shop.)