Recently I have been reading A Whole Different Ball Game by Marvin Miller, the father of the Major League Baseball Players Association (“MLBPA”). This memoir is an eye-opening perspective of the MLBPA’s inception. In the chapter titled “Card Wars,” Miller dives into the battle over major leaguers’ name, image, and likeness (“NIL”) rights between the MLBPA and Topps—the latter had an outright monopoly on the right to sell players’ names and pictures either alone or with confectionary products (trading cards).
Topps later lost their monopoly in Fleer Corp. v. Topps Chewing Gum, Inc.,[1] but the reason behind the feud with the MLBPA was the standard form contract players signed with Topps for the usage of their NIL. The contract precluded players from granting the right to sell their NIL to any other entity, which did not expire until after five years in the majors—meaning a player could be under a perpetual contract with Topps if they never attained five years of MLB service.[2] More importantly for the players association, the contract also provided grossly inadequate compensation for the right to sell a player’s NIL. For signing the contract, players were given $5 and another $125 a year for each year played at the major league level, and Topps paid no royalties and provided no other benefits, all despite Topps’ annual revenue being in the millions.[3]
Why do I bring this up? As I read this chapter, I could not stop thinking about the similarities the MLBPA was facing here in its early days of representing MLB ballplayers to what college athletes have to be concerned about now signing NIL deals. The key issues for all student-athletes are (1) receiving appropriate compensation for their services and the right for a business to profit off their NIL, and (2) most importantly, ensuring whatever rights are granted are limited in time, in scope, and to the services bargained for.
Appropriate Compensation
Determining the proper value a student-athlete brings to the table for a company seeking to profit from using their NIL is an extremely important step to an NIL deal. There are many things that go into calculating a student-athlete’s value for a particular NIL deal, but the general idea this article focuses on is making sure the payment system provided in the contract corresponds to whatever projected revenue the business will receive using the student-athletes' NIL. When Marvin Miller renegotiated the Topps contract, the result was a double in the yearly pay and royalties of eight percent on sales up to $4 million and ten percent on sales above. As compared to the original deal, this pay scheme was much more consistent with the value Topps was getting from the players. Therefore, when best-representing student-athletes interests, it is wise to spot the payment provision and ensure a proper valuation method has been used in determining the payment scheme. An understanding of how much the business will profit from the deal is necessary for this to happen.
Limited Grant of Rights
The crucial aspect of every NIL deal is understanding what limitations are attached to the granting of NIL rights. Rights need to be limited in time—be it the duration of the season, all years of NCAA eligibility, or just for as long as the services require. The reason rights need to be limited in time is so that there exists no perpetual right of the business to use a student-athlete’s NIL. The usage rights should only last as long as the student-athlete is compensated for services because this shorter term provides the greatest opportunity for the student-athlete to renegotiate the terms of the deal. For example, if a student-athlete signs a deal before their season and continues to have a stellar performance, his NIL value has now risen due to his increased popularity within the sport. A good representative may use those factors to renegotiate a deal with the same company but worth more than the first.
A limitation in scope builds off a limit to the term, because the royalties a student-athlete receives, however, need to last in perpetuity, otherwise, the business will eventually make 100 percent profits once services expire (this is why some state NIL laws prohibit deals lasting longer than eligibility). This limitation also matters because the ownership and use of any property that is produced as a result of the services provided by the business, i.e., photos or signed memorabilia, must be outlined in the contract. Lastly, the rights need to be limited to the services provided by the student-athlete as indicated in the contract. A student-athlete does not want to run into a situation where they sign a deal that gives a business the uncontrolled right to use their NIL for any other reason, which would essentially bar that student-athlete from selling their NIL to anyone else because the first business has full authority over their NIL. This is the problem the players ran into with Topps.
Forward Thinking
It is interesting to see that the struggles student-athletes deal with in the NIL space are vividly similar to those of the major league baseball players in the 1960s. The MLBPA-Topps controversy sheds light on the most important features of NIL deals for college athletes—adequate compensation and structured granting of NIL rights. The MLBPA countered Topps with a group licensing program that has since grown into a multi-million-dollar market for major league players and soon, potentially for minor leaguers. Thus, as a final note that I do not intend to discuss, it is worth thinking about how a group licensing program would change the NIL market. Ideally, though, there would have to be some sort of student-athletes union for this to be effective.
Jared Yaggie is a 2L at the University of Cincinnati College of Law. You can connect with him via LinkedIn or on Twitter @JaredYaggie.
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