Brands Should Capitalize on NIL Despite the Legal Landscape

 

Many Brands Remain On the Sideline

While big brands including Hooters, Resse’s, Buffalo Wild Wings, Dick’s Sporting Goods, and TurboTax have jumped into NIL, many major sports sponsors are not doing NIL deals - yet. I frequently hear that they are concerned about NIL’s “turbulence,” particularly around legal issues. Many brands have remained on the sidelines, continuing to spend marketing dollars on stable and well-known sports properties, waiting for NIL’s legal uncertainties to settle down.

But I think the NIL legal landscape is calmer than brands realize. I have the benefit of being neck-deep in NIL data and news, but I’m a marketer and not a lawyer. So to keep my optimism and advocacy in check, I sat down with two of NIL’s leading attorneys - Mit Winter of Kennyhertz Perry and Darren Heitner of Heitner Legal. We discussed a few of the concerns I hear most from brands.


Student-Athletes Already Had NIL Rights

We should put to rest the notion that NIL is new - and therefore a risky proposition for brands.

NIL is the right of publicity, rooted in state laws to protect celebrities and public figures from others using their name, image, and likeness to promote commercial products without their permission. NIL isn’t new. “NIL rights go back roughly a century and are derived from an individual's right to privacy.” (Darren Heitner)

Not only is NIL not a novel legal concept, but as a marketing notion, it isn’t new either, as sports marketers have been doing athlete sponsorships for over 100 years. So what changed? 

“The Alston decision (in the summer of 2021) didn’t hold that NCAA rules that restrict college athletes from being compensated for their NIL were an antitrust violation. It held that rules that limit the educationally related benefits schools can provide to athletes violate antitrust law. So it didn’t deal with NIL directly. But the decision (and the pending state laws) did lead to the NCAA issuing its bare bones interim NIL policy instead of the more detailed policy it had been working on.” (Mit Winter) 

NIL didn’t begin in July of 2021, nor is it something that brands should be wary of now.


State NIL Laws Are Not Overly Complex

I hear routinely from brands, particularly those with retail locations spread out across the country, that navigating various NIL state laws seems daunting. Unfortunately, I think politicians have muddied the waters here for their political gain, often grandstanding about passing superior NIL legislation than a neighboring state (often in an effort to give their in-state university’s football program a competitive advantage.)

But the truth, similar to the NCAA’s legislation, is that these new state NIL laws did not give any rights to athletes that the athletes didn’t already have. “The NCAA had just been restricting College athletes from acting on that right. The state laws are basically saying that the NCAA can no longer enforce its rules that prevent college athletes from monetizing their NIL. The differences among state NIL laws is relatively minor.” (Mit Winter)

What is important for brands to understand is that the landscape of state laws is not as dysfunctional as it’s made out to be. Working with student-athletes across states is not complex.


A Federal Law May Be Fools Gold

Another thing I hear from brands is a wait and see approach, or more specifically, that brands should wait for a federal law to go into effect. I disagree. Despite some media reporting about the impact of federal legislation or how it’s a priority to new NCAA’s president Charlie Baker, Congress isn’t going to be an NIL savior.

To begin with, there is broad disagreement on what a federal bill should look like or why it should exist at all. “What the NCAA is now asking Congress to consider is not a national right of publicity law affecting all individuals, but instead an NIL law that would only cover college athletes. If the right of publicity is a state issue, then why are we deciding once again to single out a specific class of individuals?” (Darren Heitner)

Should a federal law be something that brands support? Well I’m not going to answer that for you, but consider this: a federal NIL law will likely put more restrictions on college athletes - not less. And more restrictions means less flexibility that brands will have when partnering with student-athletes. I still don’t think federal legislation is imminent, nor do I think it will have the “teeth” that its advocates think it will.


NIL’s Future May Look Like Professional Sports

Finally, I hear hesitancy from brands about the legal NIL fights to come. 

NIL has irreversibly changed what it means to be an “amateur” athlete. And what we are seeing now is just the start. Legal wrangling over unions, revenue sharing, and direct payments from institutions to athletes are almost a certainty.

Some brands - like some college sports fans - might find these changes to be unsavory. But it’s doubtful that these developments in college sports will reduce a brand’s opportunities to work with college athletes. There may, in fact, be more brand opportunities. All the while, keep in mind that there has been no data that shows a decline in the fandom of college sports due to NIL.

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Bill Carter is an NIL Consultant, Educator, and Speaker. He is a NIL Columnist for Sports Business Journal and teaches NIL in College Sports at the University of Vermont’s Grossman School of Business. Click here to read about Bill’s NIL Consulting and NIL Education for sports organizations, universities, and brands.