Title IX and NIL: Where Do We Stand Now?
| | Student Rights, Title IX
Last fall, the settlement proposed to put an end to the antitrust cases against the NCAA and college conferences with respect to student-athlete compensation raised big questions about revenue sharing arrangements for student-athletes and whether Title IX would apply to those arrangements. At the time, the Department of Education unofficially said that schools would need to structure revenue-sharing arrangements so that they complied with Title IX, including arrangements for sharing revenue for a student’s name, image, and likeness (NIL). In the last few days of the Biden Administration, this guidance became official. Revenue-sharing payments would have to be distributed “proportionately” between male and female athletes to avoid violating Title IX.
Less than a month later, however, the Trump Administration rescinded the Title IX guidance on NIL. So, what is the status currently? And what legal challenges should we expect because of this sudden shift? Revenue sharing is a complex issue. The funds at stake are immense, yet this is an intensely emotional issue as well, both for students who feel that they are potentially being cheated out of revenue for their own personal achievements and for athletes who, as a group, believe that they have been systemically denied equal opportunities for far too long.
NIL Deals for College Athletes
Years of Tradition
Although sporting events have been popular spectator events for a large part of human history, only recently has it become honorable for athletes to receive compensation for their services. Events with professional paid athletes were considered to be organized for entertainment or rigged for betting and not truly competitive, so true fans followed college sports and other events committed to retaining the amateur status of their athletes.
Today, wrestling may be the only sport where professional events are viewed as theater more than competitive athletics, and that is an image deliberately cultivated by promoters and embraced by fans. Professional athletes in other sports are respected for their dedication and hard work, and in most cases, no one would dream of accusing them of accepting bribes to throw a game or of failing to give their all to support their teammates.
But clinging to the honorable notion of the amateur athlete, colleges continued to refuse to allow any of their competitors to profit in any way from their skill. They argued tradition, but in reality, schools may have been trying to keep from opening the Pandora’s box that would ultimately require them to pay players, adding to the cost of their programs. Finally, in 2021, the NCAA made rule changes that allowed student athletes to at least be able to profit from the use of their name, image, and likeness, shortened to NIL.
Understanding NIL
In reference to sports, NIL relates to the right to use an athlete’s name and other attributes in marketing and promotional efforts such as advertisements, product endorsements, autograph signings, and social media campaigns. It is sometimes referred to as the “right of publicity.” If a shoe company were to feature photos of a runner in an ad without that runner’s consent, that runner could sue the company for violating NIL or publicity rights.
The term NIL first came to public attention about 20 years ago when a class-action antitrust lawsuit was filed against the NCAA, arguing that the refusal to share revenues received from the use of college athlete images in video games and broadcasts was a violation of antitrust laws.
Traditionally, student athletes forfeited their right to their own NIL rights when they agreed to pay for a college program. Instead, the colleges and athletic conferences retained the rights. As the money brought in by college athletics has grown by leaps and bounds over the years, the NIL rights have become substantially more valuable, and critics demand that the organizations should have to share some of the funds they were taking in based on their students’ NIL.
NCAA Rule Change in 2021
In 2021, the NCAA adopted interim policy changes that allowed college athletes the chance to gain financial benefit from their name, image, and likeness. Because NIL rights for student athletes are governed not only by NCAA rules but also by laws in many states, the NCAA rules take those laws into consideration. The new rules permitted student athletes to participate in NIL activities so long as those activities were consistent with any applicable state laws. The rules clarified that student athletes were permitted to hire “professional services providers” such as agents, business advisors, and tax accountants. In fact, many schools started requiring athletes to receive business training or obtain professional advice before making deals. Schools also sometimes implemented rules prohibiting athletes from promoting certain types of products. In addition, schools frequently require students to report the details of NIL arrangements or obtain approval before signing any deals.
The NCAA made it clear in 2021 that they would not allow “pay-for-play” in college sports or tolerate “improper recruiting inducements.” At the time they adopted interim rules, the expectation was that federal law could be enacted to bring standardization to requirements. However, years later, standards continue to be set according to state laws and school policies.
What’s at Stake
College students have been offered a wide variety of deals since the policies changed. Media tech company On3 keeps a tally of NIL valuation of top college football and basketball players that is updated weekly. All players in the top 50 have estimated NIL values worth over $1.5 million.
But even players without national recognition have been working with local businesses to use their NIL in product promotion. Some capitalize on their given names or nicknames for marketing campaigns. For instance, football cornerback “Kool-Aid McKinstry” worked out a deal with the soft drink company where they created a new flavor in his honor, with his image on the package, of course.
While these NIL deals and profits have been individual, there is a more organized payout at stake. Boosters at various colleges and universities support collectives that can pay vast sums of NIL money to athletes who agree to play for their school. While state laws often try to prevent the use of NIL deals as recruitment tools, there is no doubt that it is happening.
The NCAA has proposed to allow schools to pay athletes directly under the terms of a settlement agreement set to be finalized shortly. This settlement would pay funds from TV revenue, ticket sales, and other sources that athletic conferences and the NCAA members have been keeping for themselves. Assuming the present version of the agreement is finalized, schools will share revenue with student athletes, and a mechanism would be put in place to restrict big-money offers from booster clubs to keep major programs from simply buying the best athletes.
Revenue Sharing and Title IX
Not surprisingly, many NCAA member athletic departments expect to distribute revenue sharing funds with athletes participating in sports programs that generate the greatest revenue for the school, which are typically football and men’s basketball. Obviously, this would provide a disproportionate share to male athletes.
Is that a violation of Title IX? Does it illegally discriminate against female athletes? The Biden Administration said that revenue sharing payments should be treated as a form of “athletic financial assistance” and, like athletic scholarships, the funds need to be shared among male and female athletes according to their percentage of participation in athletics rather than the amount of revenue their programs generate for the school. In addition, while money from third party NIL deals such as direct endorsements would not be subject to Title IX requirements, the Administration noted that if private source funds—which could include those massive booster funds—create disparities in men’s and women’s athletic programs, then these agreements could potentially raise Title IX obligations.
However, since the Biden Administration guidance on revenue sharing has been rescinded by the U.S. Department of Education, schools at the moment appear to be able to distribute payments as they choose. In the announcement rescinding the application of Title IX to NIL revenue, the Trump Administration says the Department of Education lacks authority to require schools to distribute student-athlete revenue based on equity considerations.
The decision is denounced by those who believe the revenue-sharing arrangements allow schools to discriminate against female athletes for an unlawful purpose. It is expected that there will be challenges in the courts, and it will be interesting to see what judges rule about the scope and reach of Title IX in this regard.
Protecting Students’ Rights and Opportunities Regardless of the Current Rules
Colleges and universities have organized legal departments that always watch out for the best interests of the school, sometimes at the expense of the rights of individual students. At Nesenoff & Miltenberg, we are devoted to protecting students, faculty, and staff when schools fail to live up to their obligations under Title IX and other laws. We monitor every piece of guidance and every court decision so that we are always prepared to offer the best opportunities to achieve a just outcome under the circumstances.
If you need assistance asserting or protecting your rights on campus anywhere around the country, we invite you to schedule a confidential consultation to learn more about the assistance our experienced team may be able to provide. Just call 212-736-4500 or contact us online.