The NCAA approved a policy allowing college athletes to profit from their name, image, and likeness (NIL) on July 1, 2021. This policy change was a result of a 2021 Supreme Court ruling that the NCAA could not prohibit student athletes from receiving education-related payments. The NCAA’s interim policy allows student-athletes to benefit from their NIL without jeopardizing their eligibility. The policy also states that college athletes can participate in NIL activities that are consistent with the laws of the state where their school is located.
Contracts are a very important aspect of NIL deals. As such, student-athletes need competent representation who can review contracts and recognize when certain contract provisions are harmful to the student-athlete.
In particular, two contract provisions can jeopardize a student-athlete’s future:
1. “Contracts That Don’t Properly Tie Payment to NIL”
A student-athlete’s NCAA eligibility is of the utmost importance when reviewing NIL contracts and negotiating on behalf of the student-athlete. Student-athletes and their representation should keep this at the top of their priorities.
The Bewley brothers are a prime example of the consequences from payment being improperly tied to NIL. Matt and Ryan Bewley are twins and former five-star basketball recruits. The brothers are ineligible to play NCAA basketball at Chicago State University for the 2023-2024 season because of a few words in the contracts they signed in 2021.
In the summer of 2021, the Bewley brothers signed contracts with Overtime Elite (OTE) prior to the NCAA passing the interim policy for NIL. The brothers played with OTE for two seasons.
The NCAA denied the Bewleys from playing at Chicago State University “on the basis that they had played for a professional team when playing for OTE.”
The NCAA based its decision on the contracts the Bewley brothers signed with OTE in 2021. The NCAA regarded the contracts as “agreements to compete in professional athletics for a professional team with pay-for-play compensation.”[1]
In the OTE contract was the provision “[d]uring the course and scope of employment, the Player shall perform work, duties and services at the direction of the Company.”[2] The NCAA determined that the brothers received payment from OTE for professional services, instead of scholarship or NIL compensation.
The Bewley brothers brought a federal lawsuit against the NCAA and alleged that the NCAA had violated the Student-Athlete Endorsement Rights Act ( Illinois’ version of a NIL law for student-athletes). “The brothers claimed that the compensation they received from OTE was in exchange for the use of their NIL and not a salary for playing on a professional team.”
The Bewley brothers pointed to former OTE players Rob Dillingham and Kanaan Carlyle who both remained NCAA eligible and played at NCAA member schools during the 2023-2024 season — despite similar OTE contracts.
The judge sided with the NCAA and held each contract was an “employment contract with a professional league … [and was] much more than just an NIL contract.”[4]
The NCAA provided an argument that OTE used a different model the year in which Dillingham and Carlyle joined OTE. That model provided athletes with a scholarship rather than a salary. Additionally, that contract did not include a provision that tied compensation to services. As a result, Dillingham and Carlyle’s NCAA eligibility was preserved, unlike the Bewley brothers.
The provisions in Dillingham and Carlyle’s contracts included “financial aid for ‘actual and necessary expenses,’ ‘educational related expenses,’ and permission to engage in ‘name, image, and likeness’ opportunities.”[5]
The Bewley brothers played in OTE with Dillingham and Carlyle “during the same points in their respective high school careers for presumably comparable payments.” The Bewley brothers NCAA eligibility was jeopardized. On the other hand, Dillingham and Carlyle recently finished their first year of collegiate basketball at high-profile schools.
Ultimately, the Bewley brothers can not play at a NCAA school because their contracts reflected a pay-for-play concept that did not properly tie their payment to NIL.
2. “Contracts that May Violate State NIL Law”
The NCAA’s interim policy did not implement a standard policy for NIL deals across all NCAA colleges.
The NCAA’s policy permits student-athletes to participate in NIL deals that are in accordance with the state law where the NCAA school is located. If a student-athlete agrees to a NIL contract that is not allowed under the applicable state law, the student-athlete would technically violate NCAA rules.
There has been some advocacy for federal regulations and guidance regarding NIL. However, the current landscape of NIL laws differs for each state. This can cause additional hurdles in monitoring and staying up to date with the rules that each state imposes on NIL. Nevertheless, it is important for student-athletes and their representation to remain well-versed in the NIL state laws. This is especially important for a student-athlete who transfers from a previous state to another state.
In New York, the state law requires college student-athletes to “disclose the contract in advance of executing it to an official of the college.” On the other hand, the Legislature in Florida law “amended existing NIL laws in February 2023 to remove a similar disclosure requirement prior to executing a NIL contract.”
A student-athlete in New York violates New York law if they fail to disclose a NIL contract before the contract’s execution. Since this type of NIL deal violates applicable state law, the NIL deal would also violate the NCAA policy and put a student’s NCAA eligibility on the line.
On the contrary, a Florida athlete would not risk their NCAA eligibility by failing to disclose the NIL deal in advance because they would still be in compliance with Florida law.
In Virginia, a new NIL law will become effective on July 1. This law, H.B. 1505, will increase NIL opportunities for student-athletes and make it legal for Virginia schools to directly compensate student-athletes for NIL deals. This Virginia law will ensure that “[n]o athletic association … shall prevent an institution from compensating a student-athlete for the use of his name, image, or likeness.”
Virginia is currently the only state that allows schools “to engage in NIL deals directly with students.” A student-athlete in Virginia can be paid directly by their school for a NIL deal and also keep their NCAA eligibility. However, student-athletes at schools outside of Virginia would violate applicable state law and risk their NCAA eligibility.
It is essential to constantly review and learn the various state laws to protect a client’s NCAA eligibility.
A student-athlete’s lawyer should be competent about many issues when reviewing and negotiating NIL contracts.
One issue that is likely a top priority is safeguarding a NIL client’s NCAA eligibility.
Lawyers should ensure that a NIL deal’s contract and structure “do not reflect a payment in exchange for services or a pay-for-play model and instead are payment in exchange for NIL rights.”
Lawyers should also stay up to date on the evolving NIL landscape at both the federal and state levels to make sure NIL deals are in accordance with applicable laws.
This article is for general information purposes and is not intended to be and should not be taken as legal advice.