NIL Is Not the Wild West
Promise me that you won’t keep saying it’s the “wild west”
I jokingly say that I only have one rule for my NIL education and consulting practice...if you use the phrase "wild west", we cannot work together. Unless you are using the term to describe the time in US history when settlers set out across the Appalachian Mountains in the 1750’s to the closing of the frontier pre-1900. 🤠
Because we have more NIL rules and more NIL rule-makers than you can shake a stick at. More than most coaches, administrators, and service providers are keeping track of. And all these rule-makers are creating more guidelines and proposals than student-athletes can possibly understand.
My advice: don’t hold your breath waiting for the Federal Government to ride in like some sort of savior with an NIL bill in hand. We could be years away from that type of legislation passing and even then, I doubt it will be nearly the unifying or clarifying solution that many hope it will be.
Instead, spend some time understanding NIL current web of rule-makers - all 9 of them - and be prepared to track them and adapt to their changes.
How the Federal Government impacts NIL
Internal Revenue Service (IRS)
According to a May 23, 2023 memo released by the IRS Chief Counsel's office, donations made to nonprofit NIL Collectives are not eligible for tax exemption because the benefits they provide to college athletes are not considered incidental to any exempt purpose. The IRS suggests that such practices may be in violation of the law.
The memo went on to say that paid NIL opportunities to collegiate student-athletes do not align with an exempt purpose under section 501(c)(3) and are inconsistent with the treatment of similar taxpayers and sound tax administration.
Since the memo was released, nonprofit Collectives ceased offering tax-deductible donations, but the IRS could take further action, potentially including retroactively taxing prior donations and imposing penalties on both donors and collectives.
Federal Trade Commission (FTC)
The FTC is an independent federal agency responsible for enforcing laws related to consumer protection. The FTC's main mission is to protect consumers from deceptive and unfair business practices by investigating and bringing legal actions against companies or individuals who engage in fraudulent or misleading activities that harm consumers.
According to my analysis, on any given day, nearly 30%-40% of the sponsored social media content posted by student-athletes fails to meet the FTC’s Social Media Influencer Guidelines. According to my NIL Research Poll surveys, about 70% of student-athletes don’t know what the FTC is or how the agency is relevant to them. About 80% have never heard of the FTC’s Social Media Influencer Guidelines.
The agency has issued guidelines that require influencers and brands to disclose any material connections. The FTC's role in enforcing these guidelines is to ensure that consumers have access to accurate and transparent information when making purchasing decisions.
State Department
Students (and student-athletes) from foreign countries who intend to enroll in American universities must have a visa. The specific program of study and the type of educational institution they plan to attend will determine the type of visa required. Most student-athletes obtain an F-1 visa.
The oversight of international students' arrival and status is divided between two government entities. The U.S. Department of State handles the initial application and issuance of visas. Once a visa holder arrives in the country, the U.S. Department of Homeland Security assumes responsibility for granting entry and enforcing immigration regulations that pertain to international students during their stay in the United States.
F-1 student visa holders are only permitted to be employed under specific circumstances (on-campus positions and off-campus work for training in their field), neither of which seem to fit any NIL activity scenarios. Other types of visas that may be available to international student-athletes include the Extraordinary Ability Visa (O-1) and the Professional Athlete Visa (P-1.)
NIL for international student-athletes continues to be a risky endeavor. No student-athlete is guaranteed a visa. If the State Department believes a student-athlete worked without authorization, they can decide to not renew a student visa. And there is no appeals process for an international student-athlete who is denied a visa.
NLRB
The National Labor Relations Board (NLRB) is a federal agency tasked with upholding the rights of employees and fostering fair labor practices across the United States. The NLRB enforces the National Labor Relations Act (NLRA), a cornerstone piece of legislation that safeguards workers' rights to engage in collective bargaining and concerted activities for mutual aid and protection.
Through its enforcement mechanisms, the NLRB investigates and resolves claims of unfair labor practices filed by employees, unions, or employers, addressing issues such as discrimination, retaliation, or interference with organizing efforts. Moreover, the NLRB oversees representation elections, ensuring that employees have the opportunity to choose whether they wish to be represented by a labor union.
By now, you are probably aware that a regional office of the NLRB ruled in favor of the Dartmouth College men’s basketball team, stating that they are employees and have the right to unionize.
The NLRB wrote, “Dartmouth has the right to control the work performed by the men’s varsity basketball team, and because the players perform that work in exchange for compensation.” In the coming weeks, team members will vote on whether to join the Service Employees International Union.
The key roles of state legislators & high school athletic associations
State Legislators
State legislatures serve as the primary lawmaking bodies at the state level in the United States, tasked with enacting laws and policies that govern the state's residents.
They propose, debate, and vote on bills covering a wide range of topics, including education, healthcare, transportation, and criminal justice. Beyond legislation, state legislatures play crucial roles in budgeting and appropriations, crafting the state's fiscal priorities by passing budgets that allocate funds to various government programs and services.
32 states have taken the initiative to pass their own laws to address the rights of college athletes to profit from their NIL.
State legislatures have the authority to draft, debate, and enact legislation that establishes guidelines and regulations governing NIL activities for college athletes within their states.
These laws can vary widely from state to state in terms of their scope, restrictions, and implementation timelines. Additionally, state legislatures may also have the power to amend or repeal existing NIL laws based on evolving circumstances or feedback from stakeholders.
State legislatures may work in collaboration with state athletic associations, colleges, and universities to ensure that NIL policies align with broader state objectives.
State High School Associations
State high school athletic associations play a crucial role in shaping Name, Image, and Likeness (NIL) policy. While NIL laws primarily focus on college athletes, high school athletic associations have a vested interest in establishing guidelines and regulations to protect the interests and rights of high school athletes regarding NIL activities.
Of the 51 state high school associations, 34 now permit their athletes to participate in NIL activity.
These associations have the authority to develop and enforce rules that govern how high school athletes can monetize their NIL, ensuring compliance with state laws, maintaining amateurism standards, and safeguarding the integrity of interscholastic sports.
Additionally, state high school athletic associations may provide education and resources to athletes, coaches, and administrators regarding NIL rights and responsibilities, helping them navigate the evolving landscape of NIL opportunities while preserving eligibility for collegiate athletics.
Associations may collaborate with state legislatures, educational institutions, and other stakeholders to develop comprehensive NIL policies that reflect the unique needs and challenges of high school athletes.
The most recent tracker of states that permit/prohibit NIL can be found at On3.com.
Which brings us full circle: the NCAA, conferences, and institutions
NCAA
As the governing body for college sports , the NCAA has traditionally enforced strict amateurism rules prohibiting athletes from profiting off their NIL while participating in collegiate athletics. However, with the evolving landscape and increased scrutiny surrounding NIL rights, the NCAA was compelled to reconsider its stance.
Consequently, the NCAA has embarked on efforts to develop and implement new NIL rules that strike a balance between preserving amateurism and providing opportunities for athletes to monetize their NIL. Today, NCAA college athletes have the opportunity to benefit from their name, image and likeness by way of a uniform interim policy suspending NCAA name, image and likeness rules for all student-athletes in all sports.
The basic outline of the policy is that:
Individuals can engage in NIL activities that are consistent with the law of the state where the school is located.
College athletes who attend a school in a state without an NIL law can engage in this type of activity without violating NCAA rules related to name, image and likeness.
Individuals can use a professional services provider for NIL activities.
Student-athletes should report NIL activities consistent with state law or school and conference requirements to their school.
In October 2023, a new proposal emerged that would include additions/revisions to the Interim Policy related to registration of NIL service providers, disclosure and transparency, standardized contract terms, and student-athlete education.
Conferences
While the NCAA establishes overarching guidelines, conferences have the autonomy to implement and enforce NIL policies tailored to their member institutions and the specific needs of their athletic programs.
Conferences often serve as influential bodies that facilitate discussions, propose initiatives, and collaborate with member schools to develop NIL frameworks that align with the conference's values and objectives.
Additionally, conferences may establish supplemental rules and regulations to complement NCAA guidelines or address unique challenges within their respective regions. Through conferences, member institutions can share best practices, coordinate compliance efforts, and collectively advocate for the interests of student-athletes while navigating the complexities of NIL opportunities.
Furthermore, conferences may serve as platforms for ongoing dialogue and adaptation as the NIL landscape continues to evolve, providing a forum for stakeholders to address emerging issues, assess the impact of NIL policies, and propose adjustments as needed.
In case you’d like to read a comparison of conference policies, here’s one that compares the Ivy League to the Big Ten.
Institutions
Colleges and universities wield significant influence in shaping Name, Image, and Likeness (NIL) policy, as they are directly impacted by the evolving landscape of collegiate athletics.
These institutions serve as the primary stakeholders responsible for the well-being and development of student-athletes, making their input and decisions crucial in shaping NIL regulations. Colleges and universities have the authority to establish policies and guidelines that govern how student-athletes can engage in NIL activities while maintaining compliance with NCAA regulations and state laws.
Additionally, institutions play a pivotal role in educating student-athletes about their NIL rights and responsibilities, providing resources, support, and guidance to navigate the complexities of NIL opportunities.
Institutions may negotiate and enter into partnerships with athletes, sponsors, and other entities to leverage NIL for mutual benefit, while ensuring transparency and integrity in such arrangements. Moreover, institutions collaborate with conferences, governing bodies, and legislative bodies to advocate for policies that prioritize the welfare and interests of student-athletes, promote fairness and equity, and preserve the integrity of collegiate sports.
Contact me if you’d like an example of a policy from DI, DII, DIII, or NAIA schools.
About Bill Carter
Bill has advised brands on Name, Image, Likeness for 25 years—first in pro sports, now at the college level. He was the Co-Founder of the Gen Z sports agency Fuse, which he sold in 2019. In 2020, he founded Student-Athlete Insights and consults on NIL strategy with Fortune 500 companies and 30+ DI universities. Read more about Student-Athlete Insights.