The laws and policies governing intercollegiate athletics have historically prohibited student athletes from receiving compensation for their name, image, and likeness (“NIL”). However, in the wake of the U.S. Supreme Court’s decision in NCAA v. Alston, the National Collegiate Athletic Association (“NCAA”) and various states have changed course and now allow student athletes, educational institutions, and local communities to benefit from a student athlete’s talent and fame. West Webb is devoted to offering comprehensive legal services to student athletes, businesses, and educational institutions venturing into the dynamic landscape of NIL law.
What You Need to Know
- Recent changes in Texas law allow student athletes to benefit from their name, image, and likeness.
- Educational institutions can take advantage of Texas NIL law to attract and retain talented student athletes to the university’s athletic programs.
- Local businesses and individuals can partner with student athletes to promote their goods and services.
How We Got Here
The laws and policies governing intercollegiate athletics have historically prohibited student athletes from receiving compensation for their participation in activities and business opportunities outside of their school-funded scholarships. “Name” refers to the use of a student athlete’s name or nickname, while “image” refers to the identifiable factors and characteristics that make the player unique. Similarly, “likeness” refers to the person’s graphic representation. The NCAA’s NIL restrictions prevented well-recognized student athletes from, among other things, selling autographs, endorsing products, or selling jerseys, yet allowed the NCAA to profit off the popularity and success of student athletes. However, this all changed after the U.S. Supreme Court’s June 2021 decision in NCAA v. Alston.
In Alston, the U.S. Supreme Court upheld a district court’s ruling that stated the NCAA’s limitations on education-related compensation violated the federal antitrust laws by unreasonably restraining competition among educational institutions. Less than two weeks after the Court’s unanimous Alston opinion, the NCAA and various states, including Texas, now allow for student athletes to build their personal brand and take advantage of their on-field success and notoriety. For example, more than 10,000 college football players recently allowed EA Sports to feature their name, image, and likeness in the EA Sports College Football 25 video game in exchange for financial compensation and a free copy of the game.
Summary of the Laws
Texas has joined over 30 states and the District of Columbia in passing comprehensive NIL legislation, allowing student athletes to earn compensation from their NIL. However, there are many restrictions and potential pitfalls for student athletes, educational institutions, and sponsors.
Texas law generally allows student athletes to earn compensation for their NIL so long as: (1) it is not in exchange for athletic performance or agreement to attend the educational institution; (2) the transaction complies with institutional policy and state law; and (3) the transaction does not relate to alcohol, tobacco, anabolic steroids, sports betting, casino gambling, illegal firearms, or sexually oriented businesses. Furthermore, student athletes must disclose all NIL contracts to their educational institution and, upon approval, must complete a university course related to financial literacy, time management, and life skills.
Educational institutions can greatly benefit from Texas NIL law, which now allows these institutions to attract and retain premier talent for their athletic programs. However, the Texas Legislature has placed specific restrictions on them doing so. For example, educational institutions cannot provide or solicit a prospective student athlete with NIL compensation. Educational institutions are further prohibited from hindering a student athlete’s participation in a university program based on their NIL activities or hiring of legal counsel. Educational institutions also serve as oversight for a student athlete’s NIL compliance by screening all proposed NIL contracts and providing financial literacy and life skills resources.
Individuals, businesses, and other sponsors often wish to partner with student athletes to promote their business or to incentivize student athletes to remain with a university’s athletic program. Texas law generally allows sponsors to do so but prohibits transactions with prospective student athletes.
However, the Texas Legislature is currently considering H.B. 126, a law that, if passed and signed into law, would revise Texas NIL law in two major ways. First, H.B. 126 will repeal and remove the current prohibitions against educational institutions from entering into NIL agreements with and offering admission to prospective student athletes. Second, H.B. 126 will allow educational institutions to enter into NIL agreements with student athletes directly for their on-the-field and off-the-field successes. H.B. 126 passed the Texas House of Representatives with overwhelming support and, as of the writing of this article, remains with the Texas Senate.
How West Webb Can Help
Although the new laws and policies surrounding NIL have greatly expanded the opportunities available for student athletes, educational institutions, and sponsors, they have created a complex legal environment for compliance with federal and state law, NCAA regulations, and educational institution policies. Therefore, full-service law firms like West Webb can step in to assist by:
- Drafting, reviewing, and negotiating contracts related to NIL opportunities
- Ensuring compliance with school, state, and NCAA policies
- Registering and protecting intellectual property rights
- Resolving NIL-related disputes
- Hosting educational workshops
Whether you are a student athlete, educational institution, booster club, or a local business, reach out to West Webb to help you navigate the complex legal landscape of NIL law. For further information, please contact Asher K. Gregg at asher.gregg@westwebblaw.com or Jay Rudinger at jay.rudinger@westwebblaw.com.