The race to enact Name, Image and Likeness (NIL) legislation moves forward on a state-by-state basis while the NCAA continues to hold its promised formal NIL legislation in abeyance while awaiting one of several federal legislative proposals to move forward. While the number of states that have either introduced legislation or passed formal NIL laws grows at a rapid pace, Georgia has now joined Florida, Alabama, New Mexico and Mississippi by enacting a name, image and likeness law with a July 1, 2021 effective date.
While all state NIL legislation contains similar provisions providing student-athletes with the ability to profit from the use of their name, image and likeness, each state law contains certain unique provisions. The following is a brief summary of the most recent state NIL enactments with July effective dates.
House Bill 617, signed into law by Governor Brian Kemp on May 6, 2021, which will be effective July 1, 2021, contains several distinct provisions. First, the law empowers colleges in the state to elect a requirement that all student-athletes share up to 75% of the name, image and likeness compensation generated and received by each athlete. The required sharing would occur pursuant to the pooling of funds “for the benefit of individuals previously enrolled as student-athletes in the same school.”
The funds would be held in an escrow account controlled by each school’s athletic director that would be distributed to former student-athletes upon graduation or 12 months after leaving school early, on a pro-rate basis based upon “the number of months the individual was a student athlete.” The law specifically provides a restriction that a school cannot distribute these escrowed funds in any way that discriminates against a student based on race, gender or other protected characteristics.
An important caveat to the student-athletes sharing requirement contained in the Georgia law allows each individual school to decline the NIL revenue sharing requirement. While the revenue pooling is certainly unique, it is expected that most major Division I programs within the state will exercise their right to decline the revenue sharing as failing to do so would likely put Georgia schools at a huge recruiting disadvantage against other states that have passed NIL laws that have schools within the ultra-competitive Atlantic Coast Conference and Southeastern Conference. Commenting on the reality of the opt-out provision, Georgia Deputy Athletic Director Will Lawler stated, “We have no plans to provide for the pooling arrangement.”
The Georgia law also compels all colleges to provide at least five hours of financial literacy and life skills during the freshman and sophomore years.
On April 7, 2021, the Student Athlete Endorsement Act (Senate Bill 94) became law in New Mexico permitting college student-athletes within the state to receive compensation for the use of their names, images, and likenesses, to hire representatives to represent their interests, and mandating that a student-athlete may not be compelled to forfeit his/her rights in order to participate in intercollegiate athletics. The law applies to endorsement contracts entered into on and after July 1, 2021.
The law specifically prohibits universities within New Mexico from:
preventing a student athlete from fully participating in athletics without penalty: (a) for receiving food, shelter, medical expenses or insurance from a third party; or (b) for earning compensation from a third-party as a result of the use of the student athlete’s name, image, likeness or athletic reputation;
Prohibiting or discouraging a student athlete from wearing footwear of the student athlete’s choice during official, mandatory team activities so long as the footwear does not have reflective fabric or lights or pose a health risk to a student-athlete;
Prevent a student athlete from receiving compensation for the use of the student athlete’s name, image, likeness or athletic reputation when the student athlete is not engaged in official, mandatory team activities; or
Arrange third-party compensation for the use of a student athlete’s name, image, likeness or athletic reputation or use such deals as inducements to recruit prospective student athletes.
New Mexico student-athletes are specifically prohibited from entering into any name, image and likeness agreements that require a student-athlete to advertise during official, mandatory team activities without the approval of the student athlete’s post-secondary educational institution.
On April 20, 2021, House Bill 404 became law, permitting student-athletes to be paid for the use of their names, images, and likenesses, to hire representatives to represent student-athletes’ interests, and declaring that a student-athlete may not be compelled to forfeit his/her rights in order to participate in intercollegiate athletics. The law goes into effect on July 1, 2021.
The law provides that a student-athlete may earn fair-market value compensation for the use of their name, image, or likeness. The law also provides, in pertinent part, that student-athletes may not:
Be prevented from using professional representation relating to name, image, or likeness opportunities; and
Have their scholarships revoked or reduced because of his/her receipt of compensation for use of their name, image, or likeness, or as a result of the student athlete obtaining professional representation pursuant to this act.
In turn, student-athletes are prohibited from allowing from the use of their names, images, and likenesses to promote:
A tobacco company or brand, including any tobacco product, alternative nicotine product, electronic nicotine delivery system, or any electronic nicotine delivery system, any alcoholic beverage company or brand, any seller or dispensary of a controlled substance, including, but not limited to, marijuana, any adult entertainment business or casino or entities that sponsor or promote gambling activities;
Wear any item of clothing, shoes, or other gear with the insignia of any entity while wearing athletic gear or uniforms licensed by a postsecondary educational institution or otherwise competing in any athletic competition or institutionally-sponsored event
In addition, the law mandates financial literacy and life skills teaching for student-athletes. No school is required to provide tax guidance or financial safeguards in addition to the mandated educational programs. The programming may not include any marketing, advertising, referral, or solicitation by providers of financial products or services.
On April 16, 2021, the governor of Mississippi signed Senate Bill 2313 (i.e., the “Mississippi Intercollegiate Athletics Compensation Act”) into law permitting student-athletes enrolled in a “postsecondary educational institution” in Mississippi to be paid for the use of their names, images, and likenesses, to hire representatives to represent student-athletes’ interests, and declaring that a student-athlete may not be compelled to forfeit his/her rights in order to participate in intercollegiate athletics. The law will become effective on July 1, 2021.
The act further authorizes a student-athlete to hire an agent to negotiate marketing opportunities after providing the school seven days advance notice of their agent selection, while mandating disclosure of endorsement deals to their schools before the deals can become effective. In addition, the act prevents any state educational institution, booster, individual, or other entity from providing compensation to a prospective student-athlete to enter into NIL agreements as a recruiting inducement before that student-athlete is enrolled in a particular school. As with almost all current state laws, the Mississippi law prohibits student-athlete endorsement of gambling, marijuana, sports betting, tobacco, alcohol, or performance-enhancing supplements.
The Mississippi bill also mandates that the student-athletes exercise of their NIL rights will not make them employees or independent contractors of their educational institution. At the same time, it prevents athletic associations, like the NCAA, from denying the student-athlete or the academic institution from participating in intercollegiate athletics as a result of the NIL rights provided in Mississippi law.
The act further provides, any contract for the use of a student-athlete’s name, image, or likeness may not extend beyond the student-athlete’s participation in the sport at the institution.
In turn, student-athletes are required to or prohibited from doing the following:
Before any contract the use of a student-athlete’s name, image or likeness is executed, and before any compensation is provided to the student-athlete in advance of a contract, the student-athlete shall disclose the contract to a designated official of the school in which the student is enrolled.
No student-athlete shall enter into a name, image, and likeness agreement or receive compensation relating to the name, image or likeness of the student-athlete before the date on which the student-athlete enrolls at a postsecondary educational institution.
Additionally, postsecondary educational institution may impose reasonable limitations on the dates and time that a student-athlete may participate in endorsement, promotional, social media or other activities related to the license or use of the student-athlete’s name, image and likeness.
The Mississippi act requires student-athletes obtaining legal representation to use lawyers licensed by the State of Mississippi. Also, athlete agents are required to comply with the terms of the Uniform Athlete Agents Act (Section 73-42-1 et seq., Mississippi Code of 1972) and the Sports Agent Responsibility and Trust Act (i.e., SPARTA).
Several states, including South Carolina and Louisiana are in the final legislative phases of enacting NIL legislation. The state of Texas, which has considered several NIL proposals is expected to join the other states with a potential NIL law with a proposed effective date of September 1, 2021.
Although no NIL bill has passed to date in Texas, the Texas Senate recently voted in favor of an amended version of a proposal to allow student-athletes in the state to enter into NIL agreements.
Senate Bill 1385, sponsored by Senator Brandon Creighton, passed on a 28-2 vote and would go into effect in September 2021. The bill contains a statement of intent declaring that the United States Federal Government should take the lead in ratifying uniform NIL legislation, but in the absence of federal action that Texas should not be left behind as other states gain a competitive advantage by allowing their student-athletes to commercialize their NIL.
S.B. 1385 prohibits postsecondary institutions in the State of Texas from limiting or prohibiting student-athletes from earning compensation from NIL agreements, or from obtaining representation relating to the use of their NIL. Like other state bills, S.B. 1385 restricts Texas institutions from directly providing compensation to student-athletes for their NIL. The Texas bill contains the requirement that student-athletes must disclose NIL agreements to their institution. Interestingly, S.B. 1385 disclaims that student-athletes shall not be considered as employees under Texas State Law.
The current Senate bill differs from Texas’s prior NIL proposals in that it clarifies a morality clause which prohibits student-athletes from endorsing gambling or illegal firearms. S.B. 1385 also restricts student-athletes from using institutional IP in NIL endorsements, and from engaging in commercial activities which contradict institutional honor codes.
Finally, the bill mandates that Texas institutions provide life skills and literacy workshops for its student-athletes, and it provides student-athletes with the ability to earn money through signing autographs.
Jackson Lewis P.C. © 2021National Law Review, Volume XI, Number 127