Is the NIL Hype Real? You Bet
Updated: Jul 19, 2021
It’s only been approximately two weeks since NCAA Student Athletes (“Athlete”) have been permitted to monetize their Name, Image, and Likeness (“NIL”) and although the “Wild, Wild West” has quickly turned into an overused cliché it has lived up to the hysteria that the majority of stakeholders believed it to be. The NIL era is only in its infancy and has already been bountiful in providing us with a bevy of legal issues to consider in sports including contracts, intellectual property, and state law violations.
Big or small, a contract is a legally binding agreement whether established in writing or as a verbal agreement (emails or DMs count) promising to perform an act or service in return for consideration regardless of the form of compensation. From free merch in exchange for a tagged post to a Boost Mobile endorsement in Times Square, a deal is a deal and there have been a lots of them! We’ve seen the paid sponsorship posts on social media, as well as the appearances and camps but what most of us don’t see behind the scenes are the terms that are agreed upon which raises some fundamental questions.
Do both parties, especially those unrepresented 17-21 year old Athletes, understand what they are agreeing to? Do they know what they are prohibited from doing? Do both parties comprehend the risk and liability if either party breaches the contract? Undeniably, my younger self was not reading the fine print on agreements nor would I have appreciated the gravity of what may result from a breach a contract. Nonetheless, we’ve seen a lot of paid partnership and sponsorship deals.
A prevalent story that has landed on the front page of sports law raised the legal warning flag when hundreds (if not, thousands) of Athletes licensed their NIL rights in perpetuity to Yoke Gaming with a lot of slack on how, when, and what purpose or manner the company may use the media. Keep in mind, the Athletes are not allowed to “capture, record, use, publish, distribute, display, post or share any portion of the Video Game Experience.” For transparency, I have not read the full terms of agreement, but it’s apparent from the sports law community that the consideration exchanged for the Athletes’ intellectual property was … less than optimal. Granted we give technology companies our personal data every day to when we agree to terms that we don’t read but something about these particular NIL deals for the use of exploiting royalty-free media didn’t sit well with me.
Another topic starter that has taken the NIL era by storm involves Barstool Athlete’s last-minute venture to join the NIL train and sign players in exchange for free merchandise. The moment Dave Portnoy, Founder of Barstool Sports, held his emergency conference, the alarms began to sound on whether the Barstool name is too closely associated to Penn National Gaming, a casino and gambling company, which happens to own a 36% stake in Barstool Sports. This became an issue because certain state laws that govern NIL prohibit Athletes from endorsing or entering into agreements with companies that are associated with gambling, tobacco, alcohol, and others. The answer to this law school hypothetical likely falls under the safe harbor umbrella of “it depends” which is fair considering there is still no permanent NCAA NIL guidance (shocker!), various state NIL laws in effect, and individual university or college NIL policies that all have their own guidelines.
Despite the looming questions, the benefit of allowing Athletes to exercise their right to monetize their NIL is here to stay and it’s been long overdue. Considering everything that has unfolded, it’s safe to say that ambiguities and conflict are part of the growing pains that were expected and despite it only being two weeks, it’s difficult to picture a world without the NIL era.