Written by: Sasha Poche & Freddy Solis
Curious about the ever-changing landscape of Name, Image, and Likeness (NIL) deals for student-athletes? Check out the first article of the series, where we break down the basics of NIL agreements and what athletes and businesses need to know.
Read the first of a series of articles that delve into the key legal issues faced by high-profile individuals, with a significant focus on employment law and how it intersects with the entertainment and business industries. The series also explores important topics such as business deals, intellectual property rights, and reputation management, but consistently emphasizes the importance of employment law in ensuring fair, legal, and beneficial professional relationships.
Name Image and Likeness Contracts
Name Image and Likeness contracts, as the name suggests, provide control of a person’s NIL for commercial use. These contracts have revolutionized opportunities for student-athletes now that the NCAA has allowed student-athletes to profit from their popularity and monetize their personal brands. In the pivotal O’Bannon v. NCAA (2015) case, Ed O’Bannon, a University of California Los Angeles player, claimed that the NCAA’s use of athletes’ images in video games without compensation violated antitrust laws. The O’Bannon court agreed with the athlete and ruled that the use of student-athletes’ images in video games did violate antitrust laws. This decision set the stage for major reforms associated with student athletics as a whole and student-athletes’ ability to be compensated for using their name, image, and likeness. The decision in NCCAA v Alston (2021) changed collegiate athletics forever by allowing student-athletes to be compensated for the use of their name, image, and likeness. This article outlines the basics of NIL contract deals and provides valuable insights for navigating these complex agreements.
Rethinking NIL Compensation for College Athletes
At all times before the Alston decision in 2021, NCAA rules prohibited collegiate athletes from receiving compensation related to their name, image, and likeness due to their status as amateur players. At the same time, colleges and universities have used sports to increase student enrollment and revenue to the tune of millions of dollars. Just one example of the negative impact this had on student-athletes involved Reggie Bush, a star football player at the University of Southern California. He was the 2005 winner of the Heisman Trophy. However, he was forced to forfeit the honor when it was discovered that he received improper benefits, including a car and thousands of dollars in violation of NCAA rules. Under today’s NIL framework, many of those actions would likely be permissible.
In NCAA v. Alston (2021), the Supreme Court held that the NCAA rules violated established anti-trust principles and made student-athlete compensation lawful. Various states then enacted laws permitting NIL compensation. Today, NIL contracts are governed by a mix of federal laws, state laws, and NCAA guidelines. This framework has created a need for legal expertise in navigating this new frontier in collegiate and high school athletics.
What to Consider When Signing an NIL Contract
There are many aspects of NIL contracts to consider before signing one. One significant aspect is the compensation structure, which may include cash, royalties, or in-kind benefits. It is essential to ensure the terms of the contract comply with state laws and tax regulations. The obligations of both parties are also set and can include terms like posting products on social media for the “talent” and payments from the other party or sponsor. Exclusivity clauses are standard for NIL contracts and prevent student-athletes from promoting other competing brands. The duration of the agreement and grounds for termination, such as breaches or failure to perform, are also standard NIL contract terms. Morality clauses, which can be notoriously tricky, outline reputational risks associated with the behavior of an individual that would cause harm to the brand’s image and could ultimately lead to the termination of the contract. Other considerations with regard to NIL contracts include taxes, intellectual property, indemnification, and ambiguities in the contract terms.
“A student-athletes or influencer’s personal brand is valuable, and legal representation is crucial for their rights to be protected. Name, Image, and Likeness agreements are more than just a financial opportunity, but rather a legal responsibility that requires diligent consideration from trusted counsel.”
– Sasha Poche, Associate Attorney
Legal Help with NIL Agreements
Attorneys play a crucial role in mitigating the risks associated with entering NIL agreements. While these contracts offer game-changing opportunities for student-athletes to capitalize on their personal brand, they also come with complexities that require careful navigation. An experienced attorney can help negotiate terms, identify potential red flags, and ensure compliance with all applicable laws. Seeking professional guidance will help student-athletes reach the full potential of NIL opportunities available to them while safeguarding their interests.
NIL agreements have significant legal risks and should be reviewed by trusted counsel. Should you or someone you know require these services, please contact Transcendent Law Group, and our highly skilled attorneys will assist you.