Change Or Be Changed: A Proposal for the NCAA to Combat Corruption and Unfairness by Proactively Reforming Its Regulation of Athlete Publicity Rights
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This Article addresses the black market for college athlete services that results from the NCAA’s restrictions on athlete compensation based on the purported need to preserve amateurism. Specifically, this Article focuses on the NCAA’s name, image, and likeness (NIL) restrictions that prevent college athletes from making use of their own reputations for commercial purpose. The Article examines the relevant litigation on the subject of athlete publicity rights and amateurism and concludes that the NCAA’s NIL restrictions serve no legitimate purpose. The NCAA is in the process of changing its NIL rules to afford athletes more freedom to benefit from the commercial use of their NILs. The specific rules that formulate the NCAA’s new policy have not yet been revealed and probably have not yet been developed. Proposed within this Article is a modest suggestion that the NCAA address the recent scandals involving corruption of its amateur model for intercollegiate athletics by removing its restrictions on athlete NIL use. The proposal in this Article includes specific suggestions for how the NCAA should lift the restrictions. Our proposal is also a response to recent litigation and proposed legislation on the subject of amateurism and college athlete NIL restrictions. The NCAA is in a precarious position in that its NIL restrictions are now exposed and vulnerable to antitrust challenge. We suggest for the NCAA to break trend and take a proactive approach to addressing corruption and unfairness by adopting our proposal for materially changing the way it regulates athlete NIL use.
In the opening minutes of a college basketball game against archrival North Carolina, Zion Williamson from Duke University, the future number one pick in the 2019 National Basketball Association (NBA) draft, sprained his right knee after his shoe “broke.” Fortunately, the shoe’s failure only resulted in a knee sprain rather than a career-threatening injury. Williamson wore Nikes because Duke has a multimillion-dollar deal with the shoe manufacturer that requires the school’s college athletes to wear Nike apparel during competitions. Williamson earns nothing from his school’s arrangement with Nike because the National Collegiate Athletic Association (NCAA) prohibits college athletes like Williamson from profiting from the commercial use of their names, images, and likenesses (NILs). The NCAA’s NIL restrictions are part of its amateurism model for intercollegiate athletics—a model that purports to protect college athletes from commercial exploitation.
Instead of protecting its athletes, the NCAA’s NIL restrictions actually facilitate exploitation by preventing college athletes from receiving their fair share from the multi-billion dollar industry of intercollegiate athletics. The NCAA is even in on the exploitation with its $8 billion media deal with CBS and Turner Broadcasting for media rights to the Division I Men’s Basketball Tournament. The “gross commercialization” of intercollegiate sports has substantially intensified the demand for schools to recruit the best talent to their respective campuses. The NCAA’s amateurism model, however, manipulates the market for college athlete services by capping the amounts that college athletes can receive to an amount that is supposed to reflect the cost it takes to attend their universities. As a result, a black market for athlete services developed in which NCAA member institutions and their business partners seduce college athletes to their schools with payments and other benefits that are exchanged in violation of NCAA rules.
To address the black market for college athlete services the Department of Justice (DOJ) launched an investigation into the corruption in college basketball that led to the arrest of ten individuals on claims of fraud and corruption. The list of those arrested included the names of four basketball coaches at Division I NCAA programs and a senior executive at Adidas. In commenting on the results of the investigation, acting U.S. Attorney Joon H. Kim stated, “[t]he picture of college basketball painted by the charges is not a pretty one—coaches at some of the nation’s top programs taking cash bribes, managers and advisors circling blue-chip prospects like coyotes, and employees of a global sportswear company funneling cash to families of high school recruits.”
In response to the DOJ’s investigation, the NCAA created the Commission on College Basketball (hereinafter referred to as the “Commission”) to investigate fraud in college basketball and deliver a report with recommendations for what the NCAA should do to address corruption. Former United States Secretary of State Dr. Condoleezza Rice led the Commission, and in her remarks on its recommendations, she noted her personal hope that student-athletes would be permitted “more room” by the NCAA to use their NILs. Dr. Rice’s hope echoes sentiments and suggestions asserted by Professor Gabe Feldman in the White Paper he proposed to the Knight Commission on Intercollegiate Athletics.
Professor Feldman presented his proposal to the Knight Commission in 2016, and in it, he suggested for the NCAA to permit student-athletes to use their NILs for “non-game related” commercial activities. Professor Feldman suggested relaxing NIL rules as a means to relieve some of the perceived “exploitative, unethical, unfair, inequitable, and unnecessary” rules that have invited criticism and litigation directed at the NCAA from student-athletes and those who defend their rights. Two years after the release of the White Paper, the NCAA did something unexpected by relaxing its NIL restrictions to permit a waiver so that Notre Dame women’s basketball player Arike Ogunbowale could participate on the popular reality show “Dancing With The Stars” (DWTS). The Ogunbowale waiver provision was so unprecedented that it seemingly signaled a possible willingness from the NCAA to either grant more waivers or possibly even change its NIL policy to reflect what Professor Feldman first proposed in his groundbreaking White Paper. Some pundits have asserted that Professor Feldman’s proposal, if adopted, could serve as a less restrictive alternative that would allow reviewing courts to preserve the “revered tradition of amateurism” while also reducing its anti-competitive effect.
Unfortunately, the NCAA has not been proactive in expanding athlete rights within its regulation of intercollegiate athletics. As a result, external pressures in the form of litigation and legislation have forced the NCAA to adjust its policies. This pressure is evident by the recent unanimous passing of the California Fair Pay to Play Act, a law that makes it illegal for a university to revoke an athletic scholarship or eligibility for benefiting from one’s NIL. And California is not alone because similar legislation has been proposed in states that include Washington, South Carolina, and New York. Legislation is also pending in Congress that, if passed, would affect the NCAA’s regulation of college athlete NILs. In response to these legislative acts, the NCAA has since announced that it will develop a new NIL policy. This may seem like a big win for college athletes, but the shape of that policy will not be known until the new NIL rules are released in 2021. In its announcement, however, the NCAA stated that its new policy will comply with its model for amateur athletics.
In addition to the NIL legislation at the state and federal levels, the NCAA’s amateurism rules were found to violate antitrust law in two recent federal district court decisions. While the NCAA may desire to develop NIL rules that perpetuate the current model, the NCAA must instead accept that the deference once afforded to its amateurism model by legislators, courts, and the general public has eroded. Yet, the NCAA still stands behind its amateurism rules, and until the NCAA’s new NIL policy is released in advance of its 2021 implementation, we have no way of knowing just how much freedom college athletes will be afforded by the NCAA for the commercial use of their own identities.
This article serves the important purpose of examining the extent of NCAA’s NIL restrictions, legal challenges to those restrictions, as well as proposals for changing them ahead of 2021. The results of our examination led us to conclude that the window for compromise has passed, and the only way to confront corruption in college sports is to remove the NCAA’s restrictions on athlete compensation that prevent them from profiting off of the commercial use of their NILs. We found that modest changes to the NCAA’s amateurism model that relax current standards for NIL use will benefit only a limited number of college athletes and will not remove corruption from the billion-dollar industry of intercollegiate sports. Furthermore, we advise against a case-by-case use of waivers to allow for more NIL use like Ogunbowale’s because it is untenable to consistently enforce a policy that permits some “non-game related” commercial use by athletes of their own NILs. Our investigation led us to conclude that expanded use by the NCAA of NIL waivers would result in arbitrary and confusing standards that generate, rather than correct, unfairness.
Part I of this article examines the corruption in college athletics and recent investigation, as well as the NCAA’s response. Part II briefly reviews the history of the legal challenges against the NCAA. Part III reviews the publicity rights of college athletes. Part IV assesses current proposals to alter the NCAA rules. Part V discusses the current proposal limitations, including college athlete “star power” and NCAA oversight ability. Part VI calls for meaningful change to the NCAA rules and proposes to remove the NIL restrictions completely. Part VII concludes by emphasizing the benefits of allowing college athletes a free market to be compensated for their NIL.
Ironically, the NCAA was first formed to combat perceived corruption in college football that cost the lives of athletes by making football more dangerous than necessary. In an attempt to capitalize off of consumer interest in college football, many of the first universities to field squads skirted what few rules existed by hiring “ringers” to pretend to be students and play on teams alongside legitimate students. The ringers were recruited to campus through offers of food, trips, and money. The ringers were far more physical than their fellow (student) competitors, and the inclusion of these professional players made college football dangerous to the point that then President Theodore Roosevelt threatened the schools to either address the situation or expect government intervention. In response to the President’s mandate, the organization that would grow into what we now recognize as the NCAA was formed.
Initially, the NCAA was created as an attempt to bring public respectability and safety to the industry of college athletics. One of the NCAA’s earliest initiatives for making college sports safer and more respectable involved the implementation of the requirements that athletes must be enrolled as students and may not receive any form of compensation from the school. With this move, the NCAA defined its products as “amateur” and for those who participate “in competitive physical sports only for the pleasure, and the physical, mental, moral, and social benefits directly derived therefrom.” The creation of the NCAA, however, legitimized college football for consumers around the country, which resulted in commercialization of the game by schools that built large stadia on their campuses to attract more fans and their money. Schools needed to keep those new stadia filled with consumers and to do this some ignored the NCAA’s amateurism rules and paid the best students to play for their teams. In its nascence, the NCAA lacked the punitive power to enforce its amateurism rules against cheating institutions. In 1929, the Carnegie Commission created a report on the landscape of college athletics and determined that three-quarters of the 112 universities studied were in violation of the NCAA rules. The Carnegie Commission determined that “the heart of the problem facing college sports was commercialization.”
The commercialization of college football intensified despite the fact that the U.S. was going through its Great Depression, and some athletes were well compensated for playing college football. In response to what it identified as “corruption,” the NCAA adopted the “Sanity Code,” which provided the NCAA with the authority to sanction schools or terminate membership based on rule violations. The Sanity Code also restricted financial aid to athletes by requiring them to go through “normal channels” that non-athletes were compelled to follow. These new rules led to other problems in the NCAA, when five University of Kentucky basketball players were convicted of point fixing. Judge Streit, who presided over the point fixing case, wrote in his opinion that the University of Kentucky athletics program was “the acme of commercialism and overemphasis, [including] undeniable evidence of covert subsidization of players, ruthless exploitation of athletes, cribbing on examinations, illegal recruiting, a reckless disregard for players’ physical welfare, matriculation of unqualified students, demoralization [corruption] of the athletes by the coaches, the alumni, and the townspeople.”
Unable to rid corruption from college sports, the NCAA’s Sanity Code did not last two years, before being replaced with a new amateurism model for college athletics that permitted schools to provide scholarships in exchange for athletic participation. The modern era of college athletics brought with it new technological advancements like radio and television, and the NCAA capitalized by leveraging the sale of media rights to its products. Initially, however, not all member institutions were in favor of increased commercialization, and the NCAA addressed concerns by imposing limits on the number of televised broadcasts for college football and the number of times that schools could appear on national television. In 1984, the limits on broadcasts were removed by the Supreme Court’s decision in NCAA v. Board of Regents of the University of Oklahoma (Board of Regents). During the three decades following the Court’s decision in Board of Regents, the industry of big-time intercollegiate sports ballooned into a billion-dollar business.
The tremendous commercialization of intercollegiate sports coupled with caps on athlete compensation resulted in the inflation of an “arms race” in which schools invested substantially in facilities and on coaching salaries as means for attracting the best talent. NCAA amateurism rules prohibit schools from spending more on a student athlete than what it costs to attend a university, so the schools had to spend on something else in order to attract the students away from rival institutions. When all other forms of spending failed in this regard, coaches and others who were involved with and facilitated the programs were left with only one other recruiting lure—pay students under the table in violation of NCAA rules.
The black market for college athlete services is, perhaps, best evidenced by recent investigations surrounding men’s basketball programs at major NCAA institutions. For example, the 2013 national championship won by the University of Louisville’s men’s basketball team has been sullied by reports that escorts were hired by coaches to seduce recruits to campus from 2010-2014. In 2010, the University of North Carolina (“UNC”) was also subject to an investigation surrounding their use of fake classes—for 18 years—to ensure that college athletes would remain eligible to participate in their sports. During this span of time, UNC won three college basketball national championships. Most recently, the NCAA handed down sanctions against the University of Missouri (“Mizzou”) and their athletic program, because they allegedly employed a tutor to complete the majority of work for several of their athletes. This finding followed a 2016 investigation that also found several impermissible benefits provided to Mizzou basketball players.
The corruption problem in college basketball reached a tipping point in 2017 when the Federal Bureau of Investigation (“FBI”) announced arrests of individuals for allegedly making payments to high-school basketball recruits. Some of those arrested were college coaches, but representatives from Adidas were also arrested for participating in student payment so that athletes would select schools with licensing arrangements with Adidas. Product brands like Adidas, Nike, and Under Armour have all contracted with NCAA member institutions to outfit athletes and coaches with gear. The product brands pay the schools and the coaches per these arrangements, but the athletes are not permitted to profit off of the deals due to the NCAA’s amateurism rules. Allegedly, Adidas representatives participated in illicit payments to sway recruits to “Adidas schools” as a means for building relationships with college players that could result in licensing deals with those same players when they turned professional.
As the FBI’s investigation unfolded, it became apparent that the underlying issues were not limited to Adidas-related schools. The FBI was involved in phone calls and meetings where money was swapped between parties and intended for the parents of recruits. The phone calls often mentioned the bidding war that was proceeding between rival companies for certain high-profile recruits and even mentioned parents of recruits wanting to be paid. Christian Dawkins, a former athlete agent who was indicted by the FBI for his role in the scheme, was recorded on one call as saying “[y]ou can make millions off of one kid.” With so much to be made from potential licensing deals, payments to students were often in the six-figure range and came with the promise that the high school recruit would attend a certain university to play their college basketball career. In describing the FBI’s findings, acting Manhattan U.S. Attorney Joon H. Kim said,
The picture of college basketball painted by the charges is not a pretty one—coaches at some of the nation’s top programs taking cash bribes, managers and advisors circling blue-chip prospects like coyotes, and employees of a global sportswear company funneling cash to families of high school recruits. For the ten charged men, the madness of college basketball went well beyond the Big Dance in March. Month after month, the defendants allegedly exploited the hoop dreams of student-athletes around the country, treating them as little more than opportunities to enrich themselves through bribery and fraud schemes. The defendants’ alleged criminal conduct not only sullied the spirit of amateur athletics, but showed contempt for the thousands of players and coaches who follow the rules, and play the game the right way.
During the trial, however, it became clear that the corruption and exploitation extended beyond Adidas and its licensing partner institutions to include coaches and Amateur Athletic Union (AAU) teams and high schools. For example, Brian Bowen Sr., the father of a recruit, testified that an AAU coach paid him for his son, Brian Bowen Jr., to play for the high school team. The trial ended with a guilty verdict on all counts being handed down for all three defendants. Afterward, United States Attorney Robert S. Khuzami released a statement: “Today’s convictions expose an underground culture of illicit payments, deception and corruption in the world of college basketball. . . .These defendants now stand convicted of not simply flouting the rules but breaking the law for their own personal gain.”
In response to the DOJ’s investigation, the NCAA formed the Commission on College Basketball (hereinafter referred to as the “Commission”) to independently assess the current landscape of collegiate athletics—specifically basketball. Beyond addressing the deep-seated corruption and exploitation that has been present in college basketball for years, the Commission, led by Former United States Secretary of State Dr. Condoleezza Rice, was tasked with evaluating the relationship between the NCAA national offices, member institutions, student-athletes, and coaches with outside entities as well as the NCAA’s relationship with the NBA.
Following its investigation, the Commission issued a report to NCAA President Mark Emmert stating that, “[t]he levels of corruption and deception are now at a point that they threaten the very survival of the college game as we know it.”  In addition to issues they were tasked with evaluating, the Commission brought to attention the legal challenges the NCAA was in the midst of facing regarding the use of college athlete NILs. They felt that the NCAA’s amateurism rules should be cleared up or removed completely due to their confusing nature. However, the existence of pending cases that challenged the legality of the NCAA’s amateurism led the Commission to caution against drastic change to the amateurism rules and the suggestion for the NCAA to focus on other ways for addressing the charges of “player exploitation.”
In her own report, Dr. Rice, provided the following personal statement: “[I]t is hard for the public, and frankly for me, to understand what can be allowed within the college model—for the life of me I don’t understand the difference between Olympic payments and participation in Dancing with the Stars—and what can’t be allowed without opening the door to professionalizing college basketball.”  Dr. Rice’s comments evidence the complicated state of intercollegiate athletics for sports that have been commercialized to the point of corruption. It is important to also note that her comments were made in response to the DOJ’s investigation of the corruption in college basketball that consisted of little more than conduct that violated NCAA policies. In essence, the DOJ weaponized the FBI to enforce the NCAA’s amateurism rules—the very same rules that have and continued to be challenged based on antitrust law.
The NCAA is battle-tested when it comes to defending its amateurism rules in litigation. For the most part, the Sherman Antitrust Act has provided the foothold for plaintiffs challenging the NCAA’s amateurism restrictions on the basis that they impose unreasonable restraints on trade. Yet it wasn’t until the 1980s that an antitrust attack on the NCAA’s version of amateurism reached the appellate level. Until then, district courts rejected plaintiff claims on the basis that the NCAA’s version of amateur athletics did not involve interstate commerce, meaning that any and all NCAA’s rules were found to fall outside of the Sherman Act’s reach. First, Section A is going to look at how the NCAA’s treatment under antitrust changed dramatically with the Court’s decision in Board of Regents. Then, Section B will go over each of the plaintiffs’ claims in O’Bannon, the first case to overcome the procompetitive presumption of validity that the NCAA had been afforded in courts. Next, Section C will review In re National Collegiate Athletic Association Athletic Grant-in-Aid Cap Antitrust Litigation, the most recent successful antitrust challenge against the NCAA. Finally, Section D narrows in on how these cases demonstrate that amateurism is not the primary driver of consumer interest in college athletics and why a change in approach is needed.
The plaintiffs in Board of Regents, the Universities of Oklahoma and Georgia, brought the case on behalf of the members of the College Football Alliance, based on their desire to lift limits on college football broadcasts that were imposed by the NCAA. The plaintiffs alleged that the NCAA’s broadcast restrictions were anticompetitive and therefore violated the Sherman Antitrust Act. Ultimately, the Court agreed with the plaintiffs and found that the NCAA’s restrictions operated as an illegal restraint on trade within the live television broadcast market for college football. The Court’s decision was the first to recognize that the NCAA engaged in commercial activity and was also the first to subject any NCAA regulations to antitrust scrutiny.
Justice John Paul Stevens wrote for the majority in Board of Regents, and in the opinion he recognized that horizontal price fixing and output limitations like those created in the NCAA’s television plan are “ordinarily condemned” under antitrust law as “illegal per se.” Yet, Justice Stevens likened the NCAA markets to that of a professional sports league (i.e., a joint venture) and in doing so he noted that league-wide rules require some horizontal restraints to the create the product. To better elaborate his argument, Justice Stevens provided examples of the “myriad of rules” that defined the competition marketed by the NCAA. First up, Justice Stevens pointed to the constitutive rules for play (e.g., size of the field, number of players on a team). Next, Justice Stevens identified the NCAA’s particular brand of football as having an academic tradition that differentiated it from professional sports. He found that the academic tradition consisted of rules needed to preserve the “character and quality” of the NCAA’s products. For Justice Stevens, the “academic tradition” consisted of rules that students attend class and that they “not be paid.”
On that point, Justice Stevens, in dictum, used the NCAA’s amateurism rules as an analogy for the type of horizontal activity that can produce a net procompetitive effect by widening consumer choice through the creation of an amateur option for football consumption. Justice Stevens’ dicta in Board of Regents included the statement that “[t]here can be no question but that [the NCAA] needs ample latitude [to regulate amateurism], or that preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act.”
In the wake of Board of Regents, a line of cases followed that challenged the NCAA’s amateurism rules in the Third, Fifth, Sixth, and Seventh Circuits. The decisions from those four circuits can be read together as crafting a procompetitive presumption (quasi-exemption) that fortifies NCAA amateurism rules from rule of reason review on the basis that they serve a procompetitive purpose in preserving the nature and character of the NCAA’s intercollegiate products. The procompetitive presumption of validity for NCAA amateurism restrictions held firm, for the most part, until O’Bannon v. NCAA.
The first case to overcome the procompetitive presumption of validity that courts afforded the NCAA’s regulation of amateurism was brought by Ed O’Bannon, a former All-American University of California Los Angeles collegiate basketball player. O’Bannon filed his action on behalf of a class of current and former student-athletes and against the NCAA and Collegiate Licensing Company (CLC) after he recognized the unauthorized use of his depiction in the Electronic Arts (EA) video game March Madness. O’Bannon alleged that the NCAA rules governing amateurism were an illegal restraint of trade under Section 1 of the Sherman Act, 15 U.S.C. § 1, as they prevented student-athletes from being compensated for use of their NIL in the video games produced by EA and television broadcasts.
At the district court level, Judge Claudia Ann Wilken rejected the idea that Board of Regents insulated the NCAA’s rules from the rule of reason and found that the NCAA’s regulation of student-athlete NILs violated antitrust by restricting athlete compensation more than what was needed to preserve consumer interest in amateurism. Actually, Judge Wilken was skeptical of the degree of interest in amateurism that the NCAA assigned to its consumers. Although skeptical, Judge Wilken accepted the preservation of amateurism as one of two procompetitive justifications. Further, Judge Wilken accepted two less restrictive alternatives in: (1) allowing student-athletes to receive stipends equal to the full cost of attendance, and (2) allowing schools to hold a portion of their NIL licensing revenue, $5,000 per student-athlete, in trust, to be distributed after graduation. On appeal to the Ninth Circuit, the NCAA alleged plaintiffs’ Sherman Act claim failed on the merits, but also argued that (1) NCAA v. Board of Regents amateurism rules are “valid as a matter of law,” (2) the compensation rules at issue are not governed by the Sherman Act because they do not regulate commercial activity, and (3) the plaintiffs did not have standing under the Sherman Act.
The NCAA argued that Justice Stevens’ dicta in Board of Regents built around its amateurism rules a procompetitive presumption of validity that effectively rendered them as quasi-exempt under antitrust law, but the Ninth Circuit disagreed. The Ninth Circuit correctly interpreted Justice Stevens’ dicta as explaining why the NCAA rules should be analyzed under the rule of reason scrutiny.
In reaching this conclusion, the Ninth Circuit diverged from the way its sister circuits interpreted Board of Regents. The court in O’Bannon specifically took time to distinguish its approach from the Seventh Circuit’s in Agnew v. NCAA. The Ninth Circuit found that the Seventh Circuit in Agnew read Board of Regents too broadly by determining that when an NCAA rule is clearly designed to protect amateurism it should be “presumed procompetitive.” The Ninth Circuit stated that it was a “dubious” proposition to interpret Board of Regents as a decision that “blessed” NCAA rules by removing them from antitrust scrutiny. The Ninth Circuit paid deferential respect to Justice Stevens’ dicta in Board of Regents, but held that the NCAA amateurism rule’s validity must be proven, not presumed. In making that ruling, the Ninth Circuit became the first to subject the NCAA’s regulation of amateurism to rule of reason review.
Beyond asserting the procompetitive presumption of validity based on Board of Regents, the NCAA had two other rationalizations as to why the rules restricting NIL compensation should be validated by the court without resort to rule of reason review. First, the NCAA claimed that the compensation rules did not regulate commercial activity, treating them as “eligibility rules.” In addressing this defense, the Ninth Circuit referenced Agnew for correctly finding that it is undeniable that college programs expect an economic gain by recruiting high school athletes and thus these rules “clearly regulate the terms of commercial transactions between athletic recruits and their chosen schools.” Important in this analysis is the fact that the Ninth Circuit rejected the use of a creative wordplay (“eligibility rules”) to circumvent antitrust law.
Second, the NCAA asserted that the plaintiffs lacked standing because they failed to show an “antitrust” injury—an injury that antitrust laws were designed to prevent from occurring. Agreeing with the district court, the Ninth Circuit confirmed that the plaintiffs incurred injury by not being able to negotiate their compensation in a free market for their services. The court in O’Bannon rightly recognized that, if it were not for the restrictions, the schools and their business partners (e.g., EA) would negotiate directly with the student-athletes for use of their NILs.
In O’Bannon, the Ninth Circuit acknowledged that the NCAA’s amateurism rules fixed the price for athlete services within a relevant college education market. At the district court level, Judge Wilken found an additional market for student-athlete NILs, but the Ninth Circuit ignored that market and instead focused all of its analysis on the education market. In regards to that market, the Ninth Circuit looked to the evidence in the record regarding the competition for student services. The Ninth Circuit, however, did not view the schools as buyers, but instead treated them as sellers of educational services in the marketplace for potential college athletes. While the Ninth Circuit warrants accolades for being the first to find a relevant market for college athletes, it also deserves demerits for pushing past Judge Wilken’s recognition of a relevant market for athlete NILs. However, the court in this case was charged with conducting an examination of the NCAA’s compensation limits and did not need to address the legality of the NCAA’s rules that restrict the use of athlete NILs.
The Ninth Circuit rejected a reading of Board of Regents that provided the NCAA with a quasi-exemption in the way of a procompetitive presumption of validity for its amateurism rules. However, the court in O’Bannon had no problem citing to Justice Stevens’ dicta in Board of Regents in finding a procompetitive justification in the preservation of amateurism. The Ninth Circuit had no market-based evidence in the record to support its finding that consumer interest in intercollegiate athletics demanded the existence of rules that prohibit college athletes from being adequately compensated for their efforts. Nevertheless, the Ninth Circuit found a “concrete procompetitive effect” in preserving the NCAA’s version of amateurism based on the concept’s appeal to consumers. That effect provided the Ninth Circuit with a basis for agreeing with the district court’s decision that preservation of amateurism and the integration of athletics and academics justified some restraints imposed by the NCAA’s amateurism model.
There are two critical points worth noting in the Ninth Circuit’s reasoning that preserving amateurism and athlete integration produce net procompetitive effects when balanced against the economic harms resulting from the NCAA’s amateurism restraints. The first involves the fact that in reaching this conclusion the Ninth Circuit dismissed Judge Wilken’s skepticism regarding the degree of interest consumers place on the role of amateurism in making the NCAA’s products. In her opinion, Judge Wilken questioned whether amateurism acted as a primary driver of consumer interest and instead found that what attracts consumers to college sports were aspects unrelated to amateurism, “such as loyalty to their alma mater or affinity for the school in their region of the country.” Yet, the only mention from the majority of Judge Wilken’s skepticism came in the comment that she “probably underestimated the NCAA’s commitment to amateurism.” There is no questioning that the NCAA is committed to preserving an appearance of amateurism in its products, but the frequency of rule violations and scandals involving breaches of the amateurism model by member institutions, their business partners, and the athletes unquestionably undermines the value of amateurism in intercollegiate athletics.
The other point worth noting involves the notion that the nature of intercollegiate athletics is preserved by NCAA rules that restrict athlete compensation and the use of their NILs as means for facilitating athlete integration into their academic communities. As with the mission of preserving amateurism, there is also no market-based evidence for the notion that integrating athletes into classrooms serves as a core component of the NCAA’s products and is justified by compensation limits and NIL restrictions. In actuality, the athlete integration justification defies common sense and contradicts the Ninth Circuit’s own reasoning in O’Bannon.
In regards to the conflict with common sense, the Ninth Circuit ignored examples involving former college athletes like Johnny Manziel who had to stop attending live classes because of his celebrity, which was built as a college athlete. The NCAA permits college athlete NIL use in commercial broadcasts that are viewed by millions of people around the world. Further, the NCAA allows member institutions to market college athletes for prestigious awards like the Heisman Trophy. If athlete integration were a sincere and paramount concern for the NCAA, it would not participate in or tolerate the business of promoting and profiting off of the use of college athletes’ NILs in the media. Turning back to the example of Johnny Manziel, the NCAA’s only concern regarding their “integration” resulted not from his removal from classroom settings, but from Manziel’s alleged involvement in the selling of his autographs.
The Ninth Circuit was also inconsistent in its justification of athlete integration in O’Bannon. The NCAA argued that any relaxing of its amateurism rules would deprive college athletes of choice by removing an amateur and educational option for their athletic pursuits. The majority in O’Bannon rejected the NCAA’s reasoning and instead found that abandonment or loosening of NCAA compensation limits might actually enhance academic opportunities for college athletes by affording them the resources to stay in school longer.
The court’s recognition on that point is important because the reasoning should extend to include the reality that not all students come from the same economic settings. Some students come from wealth and privilege while others grew up in depressed economic conditions. This reality exists even when there are no athletes in the classroom. Restricting financial resources for college athletes does not make them like everybody else; it actually makes them very different from other students who are permitted to use any celebrity built into their reputations to their advantage. Similarly, the schools and the NCAA already make commercial use of athlete NILs, so how could additional use by the athletes impair their integration? If anything, a relaxed NIL regime that permits college athletes to profit from their identities may afford athletes the opportunity to extend their college education. Unfortunately, the Ninth Circuit’s inconsistencies on the integration justification were overshadowed by the flaws in the court’s findings following its application of the less restrictive alternative test.
The Ninth Circuit confirmed that the district court did not err in allowing grants-in-aid up to the full cost of attendance, as it would be substantially less restrictive. Quoting from Mark Emmert, President of the NCAA, these payments would be allowed without violating NCAA amateurism principles because they would cover “legitimate costs” to attend school. Further, none of the evidence on the record showed that this higher payment would alter consumer interest in the NCAA product, or impede the integration of student-athletes into their academic communities. However, the Ninth Circuit felt the district court erred when it relied on the opinion of NCAA’s witness, a former television executive, Neal Pilson. The NCAA proffered up Pilson as an expert on consumer interest in college athletics and his “expertise” led him to suggest that consumers would not be bothered if student-athletes were compensated $5,000 a year. The court disagreed with that testimony and considered it to be nothing more than an “offhand comment.” Instead, the Ninth Circuit viewed any payment not tethered to educational expenses as a “quantum leap.”
The finding that cost-of-attendance stipends are a less restrictive means based on their purported tether to education is in error. The majority in O’Bannon warned that paying athletes “any” amount of money that is not tethered to educational expenses would impair consumer interest in the NCAA’s products. Yet, the cost-of-attendance payments are not connected to the educational expenses required by the school. Instead, they are estimates by each institution that include various expenses one may incur while attending a university. The member institutions do not control the use of cost-of-attendance stipends by athletes, who can spend the money as they see fit. Since 2015, college athletes have been paid cost-of-attendance stipends that make them nothing more than “poorly-paid professionals.” The fact that the word “attendance” is used by the matrix for estimating the amount schools provide does not transform the compensation into an education-related expense. In this regard, the use of terminology to tether the payments to education is no different from the NCAA’s classification of its regulations as “eligibility rules.” Accordingly, if the Ninth Circuit’s reasoning on consumer interest in O’Bannon held true, consumers would have lost interest in the NCAA’s products, but that has not happened. Instead, another set of antitrust actions resulted from O’Bannon in Alston v. NCAA and Jenkins v. NCAA, which were consolidated into In re National Collegiate Athletic Association Athletic Grant-In-Aid Cap Antitrust Litigation (Grant-in-Aid). On March 8, 2019, on the brink of “March Madness,” Judge Wilken delivered her decision in Grant-in-Aid, which was her second ruling against the NCAA’s amateurism rules.
C. In re National Collegiate Athletic Association Athletic Grant-In-Aid Cap Antitrust Litigation (Grant-in-Aid)
Grant-in-Aid involved an antitrust action brought by and on behalf of current and former student-athletes who played Division I football, as well as men’s and women’s college basketball, against the NCAA and eleven of their conferences. The claims in Grant-in-Aid alleged that the defendants violated the Sherman Act through the imposition of a cap on athlete compensation. In their complaint, the plaintiffs alleged that the cap on their compensation was set well below what they would otherwise receive in exchange for their athletic participation from an unrestrained market. Their claims built on Judge Wilken’s and the Ninth Circuit’s rulings in O’Bannon.
Similarly, the NCAA’s defense in Grant-in-Aid also tracked the findings in O’Bannon by asserting that the caps on athlete compensation served the procompetitive purposes of preserving consumer interest in amateurism and promoting athletes’ integration into their educational communities. In her district court decision, Judge Wilken recognized that extending compensation to cover the cost-of-attendance did not impair consumer demand for the NCAA’s intercollegiate products. Furthermore, she recognized that the commercial deals brokered by the NCAA since 2015 have been some of the most valuable and long-term deals ever leveraged for media rights in college sports. Judge Wilken accepted the testimony of plaintiffs’ expert Dr. Daniel Rascher that the NCAA’s compensation rules did not serve the purpose of preserving amateurism. He cited to his own studies for the position that consumer demand in college sports is not influenced by caps on athlete compensation. Judge Wilken also determined that the NCAA failed to proffer credible evidence for the position that the caps were needed to maintain consumer interest in its products. Additionally, Judge Wilken found that the caps did not integrate student-athletes into their educational communities.
The court in Grant-in-Aid did recognize the role of amateurism in protecting the distinction between college and professional athletics. Yet, the court did not accept that caps imposed by the NCAA were necessary. Instead, Judge Wilken held that the goals of protecting amateurism and academic integration could be done through less restrictive means. Siding with the plaintiffs’ proposal, the court found that limits could be imposed on non-educational expenses, but not educational-related expenses that were paid out by the schools. Accordingly, the court removed the NCAA’s ability to limit athlete compensation and left to the athletic conferences the responsibility to set their own limits, so long as those limits were not created in collaboration with other conferences.
Judge Wilken’s decision effectively stripped the NCAA of its power to limit athlete compensation for costs tethered to athlete education.  In making this determination, Judge Wilken borrowed the “tether” terminology used by the Ninth Circuit in O’Bannon, but this time the term worked against the NCAA’s interests in maintaining control over athlete compensation. While there was nothing in the Grant-in-Aid decision that directly speaks to the NCAA’s ability to restrict athlete NIL use, the decision serves as another in a series of serious paper cuts that have hurt the NCAA’s ability to restrict athlete compensation. Since the NCAA can no longer cap athlete compensation from its members, how can it restrict athlete compensation from those willing to sponsor athletes for the use of their NILs?
In O’Bannon, the Ninth Circuit deviated from the district court when it ruled that the NCAA’s amateurism rules serve the procompetitive purpose of preserving the popularity of collegiate athletics. In making this ruling, the Ninth Circuit circles back to Board of Regents and Justice Stevens’ statement that amateurism is required for collegiate athletics to be successful. However, in O’Bannon the Ninth Circuit viewed amateurism as a procompetitive purpose in their analysis, instead of being valid as a rule of law. In making their opinion, the district court did not believe that amateurism was the primary driver for collegiate athletics success; instead they theorized that other factors such as “loyalty to their alma mater or affinity for the school in their region of the country” were more indicative of success.
Since O’Bannon allowed for stipends unrelated to educational expenses to be paid to student-athletes, experts have been able to study whether a relationship between payments to student-athletes and college athletics popularity exists. By evaluating live game attendance and television attendance before and after stipend payments in the amount of cost of attendance began, researchers determined there was no relationship between stipend payments to student-athletes and the popularity of the institutions. Instead, the data pointed to team performance as the main driver of popularity in game attendance. This study demonstrates that the Ninth Circuit in O’Bannon was incorrect, and payments to the student-athletes for their NILs would not irreparably harm the NCAA.
While the Ninth Circuit said payments unrelated to education would ignore what makes the NCAA what it is today—amateurs participating in a sport while earning an education—they did not evaluate which payments would comprise the cost of attendance. Schools are able to use the cost of attendance payments as a recruiting tool, raising them as needed. Without oversight of the composition of the cost-of-attendance payments, the NCAA allows for payments to be made to players for their on-field performance. This creates a further imbalance between the member institutions, since universities with higher revenues are able to offer greater cost-of-attendance payments. The knowledge of how the cost of attendance payments are being exploited by member institutions, and the proof that they have not decreased collegiate athletics popularity, show that the O’Bannon court was incorrect in saying that allowing payments to college athletes would be a “quantum leap” in removing amateurism from the NCAA.
Compensating college athletes for their NILs would be within the current scope of how amateurism is currently defined since the payments would not come from the member institutions. Given this fact, alteration or removal of the NIL restrictions seems like the logical solution to remove the current recruiting black market.
Ed O’Bannon wasn’t the only former college athlete to challenge the legal use of athlete NILs in EA’s NCAA-based sport video games. Two former NCAA quarterbacks, Sam Keller and Ryan Hart, both filed actions around the same time as O’Bannon, except that they based their claims on the right of publicity. Keller filed his action in a Ninth Circuit jurisdiction, and his case was eventually consolidated with O’Bannon’s, creating In re NCAA Student-Athlete Name & Likeness Licensing Litigation (Name & Likeness). Hart’s case was filed in a Third Circuit jurisdiction. The Name & Likeness and Hart cases were nearly identical in both the claims that were made and in the way the courts resolved them.
In both Name & Likeness and Hart, former student-athletes asserted their right to manage their celebrity and control the commercial use of their identities through legal actions, claiming they owned a right of publicity. Derived from the right of privacy, the right of publicity recognizes and protects an individual’s economic interest in their NIL. Grounded in state common law doctrine and reinforced by legislation in twenty-two states, the right of publicity is now recognized as an independent right. The right of publicity was first conceptualized as an independent right in Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc., a case in which two chewing gum manufacturers fought over the use of a professional baseball player’s likeness. The court in Haelan constructed the right of publicity on its finding that celebrities should have the right to control the commercial use of their identities. This independent right of publicity was confirmed in the Supreme Court’s decision in Zacchini v. Scripps-Howard Broadcasting, which was also the first case to test this new right against the First Amendment. The court in Zacchini acknowledged an inherent tension between the First Amendment and the right of publicity, given that the latter often infringes upon expressions covered by the former. The Zacchini court held that the state’s right for celebrities to protect the use of their identities must be balanced against the First Amendment; however, the court left open the means for balancing these competing interests.
The transformative test evaluates the value associated with a good and the source from which it is derived. A perfect example of value derivation analysis can be found in No Doubt v. Activision Publishing, Inc., a case involving the unauthorized use of NILs belonging to a rock band (No Doubt) and its members. Initially, the band agreed to the use of their NILs in the game, but later retracted that authorization when they learned that their avatars were playing songs by other artists. The game producer defendant argued that the use of No Doubt within the video game was transformative, and protectable under the First Amendment as an artistic work, because those who played the game could alter the avatars and manipulate the music they played. The Court determined that since No Doubt was a band that sang and played instruments, the avatars in the video game were exactly replicating No Doubt’s real life activities. Thus, the defendants featured the band in its game in the same setting from which the band derived its fame. The court added that the alterations that game players could make to the avatars did not add enough transformative expression to qualify for First Amendment protection. Both the Ninth Circuit in Name & Likeness and the Third Circuit in Hart relied heavily on the facts and reasoning in No Doubt in resolving their respective cases.
The controversy at the center of both Name & Likeness and Hart involved a franchise of video games (NCAA Football and NCAA Basketball) that began in 1998 and continued until the conclusion of the two cases. The sport video games (SVGs) were produced to replicate the sports of men’s basketball and football in a video game. Within the games were replications of stadia, mascots, and fight songs from real NCAA sports teams. The problem with the SVGs was that in EA’s attempt to make sure that the games replicated real-life NCAA games, EA also incorporated the identities of active NCAA players. These identities were reflected in the jersey numbers, skill sets, and just about all noticeable physical characteristics. Players could even activate a feature hidden within the game by uploading player rosters. Real rosters could be found in a file-sharing forum and once uploaded, the game announcers would say the names of specific players. In its initial answer, EA asserted an affirmative defense to Keller’s complaint with the assertion that the NCAA had granted EA the licensed right to use athlete NILs in the games. Keller’s complaint was amended to answer EA’s affirmative defense that it did not really use player NILs. Meanwhile, the NCAA managed to get itself dismissed from the Name & Likeness case, leaving its business partners EA and CLC left to defend the obvious use of player NILs in their games. In fact, the district court in Name & Likeness rejected EA’s claim that it did not use player NILs when it dismissed EA’s motion for judgment on the pleadings.
Both the Name & Likeness and Hart cases reached their respective Circuits on appeals that focused on whether the incorporation of college athlete NILs into EA’s NCAA SVGs was transformative enough for First Amendment protection. The Ninth Circuit in Name & Likeness and the Third Circuit in Hart both found that EA intended to mimic student-athletes’ appearances within the video game so that they could be identified. Following the reasoning in No Doubt, both Circuit Courts found that college athlete NILs were replicated in the SVGs in the exact sports settings for which athletes were known. Both Circuit Courts determined that the ability to transform an avatar that is purposely created to display a player’s likeness is insufficient to be considered transformative. Addressing the transformative nature of game altering features, the Third Circuit in Hart found that where “unaltered likeness is central to the core of the game experience, we are disinclined to credit users’ ability to alter the digital avatars in our application of the transformative use test to this case.”
The Name & Likeness and Hart decisions serve as important warnings for those who partner with the NCAA in commercial use of college athlete NILs. The NCAA was well aware that its business partner, EA, made use of college athlete likeness in its products. In fact, NCAA member institutions provided EA with athlete biographical information and images for incorporation into the games. If not for Name & Likeness and Hart, the NCAA likely would have continued its relationship with EA, and SVGs production would be ongoing today. Still, the plaintiffs in Name & Likeness and Hart should not be credited with killing the highly-successful NCAA Basketball and Football SVGs. That dishonor belongs to the NCAA, its members, and their conferences, because EA expressed its desire to continue production and compensate the college athletes for the use of their NILs. Instead, the game fell victim to NCAA bylaw section 18.104.22.168, which prohibits athletes from receiving compensation for third parties’ use of their likeness in commercial products. The sincerity of that bylaw and its function are undermined, however, by the recognition that commercial broadcasts of NCAA-sponsored events are, in fact, products that make use of college athlete NILs. Once that fact is acknowledged, we are left with the realization that the NCAA’s NIL restrictions seemingly exist only to prevent college athletes from profiting off of the use of their NILs.
The hypocrisy and unfairness produced of the NCAA’s NIL restrictions is not lost on some influential lawmakers, who have proposed federal and state legislation that aims to protect college athletes’ publicity rights.  Most recently, California state lawmakers unanimously passed the Fair Pay to Play Act, which will come into effect on January 1, 2023. The Fair Pay to Play Act makes it illegal for a college or university to remove an athlete’s scholarship—or declare them ineligible—if they make any money off of their NIL. Further, U.S. Rep. Mark Walker of North Carolina introduced a bill in the House of Representatives on March 14, 2019 that, if passed, would modify the definition of Qualified Amateur Sports Organizations within the Internal Revenue Code as a means for pressuring the NCAA to lift its restrictions on college athlete NILs. In defense of his bill, Rep. Walker stated that “[s]igning on with a university, if you’re a student-athlete, should not be [a] moratorium on your rights as an individual. This is the time and the moment to be able to push back and defend the rights of these young adults.” Walker, who was a college athlete and is now vice chair of the Republican House conference, added that his bill would not force the NCAA or its members to compensate college athletes for their NIL use, but instead seeks to lift restrictions on college athlete use of their own NILs. Bills proffered in South Carolina and New York follow the reasoning found in Rep. Walker’s bill by making it illegal under state law for schools to revoke scholarships of college athletes who collect income from their NILs. In Washington state, another bill is pending that would allow student-athletes to earn compensation for their NILs and permit them to retain the services of sports agents. The Washington bill would add a new section to chapter 19.86 Revised Code of Washington (“RCW”)—Unfair Business Practices. The existence of these legislative acts demonstrates the vulnerability of the NCAA’s NIL restrictions and reflect the reality that the NCAA should change its rules or risk legal intervention. The next section addresses proposals for change that the NCAA should strongly consider before it is legislatively forced to change.
This section addresses a previous proposal that the NCAA might refer to when creating its new NIL policy through the process of rule creation. While there is no way of knowing exactly what the NCAA will roll out when it unveils the new and improved approach to regulating college athlete NILs, the policies covered in this section represent realistic options that the NCAA may adopt, either in whole or in part.
In 2016, Professor Gabe Feldman proffered his White Paper, a seminal and (at the time) pioneering proposal for changing the NCAA’s NIL rules, to the Knight Commission of Athletics. Professor Feldman’s thoughtful proposal sought to balance college athlete interest in controlling the use of their NILs with the NCAA’s interest in preserving its amateurism model for intercollegiate athletics.
While acknowledging the NCAA’s interest in maintaining the (illusory) line between professional and amateur athletics and the argument that paying athletes would alter the nature of the NCAA’s products, Professor Feldman distinguished game-related NIL use from college-athlete use of their NILs. Professor Feldman suggested lifting NIL restrictions for non-game related activities as a means for preserving the purported line of demarcation between amateur and professional sports within the NCAA. Professor Feldman believed that an approach that relaxed NCAA NIL rules so that college athletes had the freedom to commodify and market their reputations would not offend the revered tradition of amateurism so long as the athletes are not paid directly by the schools for their athletic performance and remain enrolled as students in pursuit of a “legitimate college education.”
Regarding the NCAA’s claims that its NIL restrictions further its educational mission, Professor Feldman asserted that education would not be compromised by his proposal. Instead, college athletes should be permitted to benefit from participating in the same commercial markets to which all other students have access. Professor Feldman was right in his observation that there is no real nexus between NIL restrictions and college athlete education. Otherwise, why wouldn’t similar restrictions exist for all students attending NCAA institutions? The NCAA’s claim that its rules prevent the creation of a social wedge between athletes and other students is not supported by relevant literature or by common sense. If anything, a wedge exists as a result of the disparate treatment of college athletes that results from NCAA rules that distinguish athletes from other members of the student body.
Commercial exploitation of college athletes is a purported concern of the NCAA. However, the sincerity of that concern is belied by the NCAA’s own profiteering from the commercial use of college athlete NILs in building the billion-dollar industry of intercollegiate athletics. As Professor Feldman wrote:
The NCAA has long conceded that commercialization and amateurism can co-exist, just not with respect to student-athletes. The perceived—and actual—unfairness in this arrangement grows with each new television deal, coaching contract, and facility renovation, while the selective and blanket restrictions on student-athletes are maintained.
This imbalance is intensified by the fact that most college athletes do not go onto lucrative careers in professional sports, and this limits their ability to profit off of their NILs once they are no longer competing on their collegiate teams. Professor Feldman recognized the urgency for college athletes to capitalize on their opportunities as college athletes and suggested that relaxing NIL rules might reduce some of the demand that results in the black market for college athlete services. He added that with less need to monitor for NIL infractions, the NCAA and its members could focus more on working with college athletes in their efforts to grow their personal brands in a way that assists them when their college careers come to a close.
Defenders of the NCAA’s NIL limits often defend them on the basis that relaxing the rules would open the door to a flood of attacks on amateurism principles. However, Professor Feldman believes this is an ill-advised argument, as legal attacks on the NCAA are more likely when there are blanket restrictions. The decisions in both O’Bannon and Grant-in-Aid demonstrate that courts, within the Ninth Circuit at least, are willing to subject the NCAA’s regulation of college athletes to rule of reason review. The existence of blanket NIL restrictions invites college athletes to challenge the reasonableness of those restrictions and the existence of less restrictive alternatives to them. To this end, Professor Feldman smartly recognized that efforts from the NCAA to assist athletes in the use of their NILs might actually prevent lawsuits rather than create more. He stated that, “[u]ntil the rights of student-athletes are better protected or respected, it appears inevitable that they and others will continue to seek judicial or legislative alternatives that present a greater threat to the NCAA’s amateurism foundation.”
Professor Feldman’s proposal would have allowed for college athletes to earn compensation related to use of their non-game related NILs. In order for this to occur, he laid out specific measures that the NCAA should take to ensure that college athletes were acting within the NCAA’s educational mission and other core goals. One of the more basic components of his proposal required college athletes to seek out permission before representing the institution in any advertisements. Feldman grounded this requirement in contract law and the need for a license in order to display a member institution’s trademarks.
Next, Professor Feldman suggested that the NCAA and its member institutions should be notified of all NIL agreements and have final approval. In addition, he recommended that the NCAA should not allow the institutions to provide any assistance in finding NIL agreements for their athletes. Constraining institutions from assisting with sponsorship deals seemed to be an attempt to ensure that the institutions were not compensating college athletes for their on-field production. Professor Feldman also added a requirement for college athletes to be in good academic standing as a condition to permitted NIL use. By adding an academic eligibility component Professor Feldman infused within his proposal a measure for motivating athlete success in the classroom.
Next, Professor Feldman addressed the oversight of the potential NIL agreements by proposing that the NCAA form a NIL committee to govern the approval process. The proposed committee would be responsible for creating objective standards to evaluate the agreements. Suggested considerations for the committee included determining an appropriate level of compensation, the appropriateness of required activities under the NIL agreement, the character and integrity of third-parties who want to use college athlete NILs, demands made on athlete involvement, and any educational benefits that flow from the NIL agreement. Professor Feldman also suggested that the NCAA adopt a standard NIL agreement form for college athletes and a group licensing agreement. The standard NIL forms would be provided by institutions and used by college athletes to ensure that agreements adhered to the NCAA’s missions and that there would be minimal interference with the student-athlete’s educational pursuits. The standard NIL would also include a “reverse moral clause,” allowing the athlete to terminate a contract if the company were subject to an event that created a negative public perception.
Turning next to Feldman’s proposal of a model group licensing agreement, he suggested that this document would need to allow for the institution to use the non-game related NILs of all college athletes in groups for commercial products like SVGs. The oversight and standard form agreements would provide the NCAA control over most aspects of the group licensing agreements. The NCAA would be able to limit who could sign group licensing deals and the composition of those contractual arrangements so that the organization could maintain its interest in protecting athlete education.
In order to ensure that all of the above could be accomplished in accordance with the NCAA’s mission, Professor Feldman suggested that the NCAA and its members set forth guidelines before NIL agreements were effectuated. He found that oversight might include reasonable restrictions in the form of a “singing period” for NIL agreements and for requirements that third parties register with the NCAA prior to engaging with college athletes for the use of their NILs. He also suggested the possibility of creating a trust fund for college athletes that would hold monies mined from NIL use until the athlete graduates or terminates their eligibility.
Finally, Professor Feldman suggested that the NCAA should allow college athletes to hire an agent to handle the fundamentals that come along with pursuing, evaluating, and negotiating the NIL agreements. Depending on how the NCAA would alter the bylaws regarding agents, this may be the only role the agent would be allowed to take on for the college athletes.
Professor Feldman’s proposal was made in 2016, but his suggestions seemingly fit comments made by Dr. Rice in her personal statements on the Commission’s final report. Dr. Rice stated that she personally believed that college athletes should be permitted more flexibility to build their brand while not losing the opportunity to play at the collegiate level. Professor Feldman’s proposal balanced the line of maintaining hard limits against game related compensation while also permitting athletes to benefit from the commercial value that is inherent to their identities. In this regard, Dr. Rice’s statements in her report echo what Professor Feldman proposed in his White Paper. While the authors of this article applaud both Professor Feldman and Dr. Rice and urge the NCAA to adopt the suggestions made in the White Paper, we do so with a cautioned recognition that the proposal is not a cure for the NCAA’s corruption problem.
It’s probable that the White Paper represented the best possible proposal that could have been put forth by Professor Feldman under the circumstances. The proposals within the White Paper were judicious in their care for advancing college athlete rights in ways that did not threaten the NCAA’s amateurism model. The Knight Commission did not embrace Professor Feldman’s proposal for a legitimate reason—it did not go far enough in regards to protecting the NIL interests of all college athletes. Before addressing that point, it is important to note that the NCAA indicated that it might be willing to relax its NIL restrictions, to some degree, with the way it handled the waiver request for Ogunbowale to appear on DWTS. The NCAA’s reasoning in permitting her appearance on the hit reality show reflected a possible shift in policy to afford waivers to allow college athletes to utilize their NILs in ways similar to those Professor Feldman proposed in his White Paper. Professor Feldman also proposed a case-by-case approach to permitting college athletes to use their waivers and an NIL Committee for deciding cases and factors for consideration. The Ogunbowale example, however, also evidences enforcement problems with a relaxation of policy that would permit waivers for NIL use on a case-by-case basis. The possibility of enforcement problems become more pronounced when the Ogunbowale example is juxtaposed with another example, that of Donald De La Haye. The University of Central Florida (UCF) enforced NCAA NIL restrictions to pressure former college athlete Donald De La Haye to either suspend a YouTube channel he created and profited from or end his involvement on the football team.
On March 30, 2018, the University of Notre Dame trailed the favored University of Connecticut in the final seconds of overtime in their NCAA Women’s Basketball Final Four game. As time ran out, Arike Ogunbowale made an 18-foot step-back jumper to win the game. Two days later, in the NCAA Women’s Basketball Championship game, Ogunbowale repeated the feat with another heroic winning shot as time expired, this time 23-feet from the basket, in the corner. Almost instantaneously, Ogunbowale rose to superstar status with opportunities to hang out with celebrity athletes like Kobe Bryant and appear as Ellen DeGeneres’ guest on her talk show. As part of her newfound fame, Ogunbowale received an invitation to participate on the athlete edition of DWTS.
DWTS is a ballroom dancing competition involving “stars” in the form of celebrities from film, television, and music industries such as Melissa Joan Hart, Steve-O, and Master P. The show has a record of casting “stars” who were/are celebrity athletes, such as former heavyweight boxing champion Evander Holyfield and Olympic gold medal winning figure skater Kristi Yamaguchi. Participants are paid for appearing on DWTS on a sliding scale with everyone making (at least) $125,000 and all having the potential to earn more with weekly payments made depending how far they advance in the competition.
Merely by agreeing to participate on the show, Ogunbowale should have been set to earn $125,000, and this is where the NCAA’s enforcement dilemma began. Without a waiver, Ogunbowale’s involvement on DWTS would have violated the NCAA’s bylaw that prohibits athletes from financially benefitting from their “publicity, reputation, fame or personal following that he or she has obtained because of athletics ability.” By granting Ogunbowale a waiver, the NCAA allowed her to appear on DWTS and keep what she earned because those payments resulted from her dancing abilities—not her basketball skills. In effect, the Ogunbowale waiver process played out just as Professor Feldman would have envisioned if the proposals in his White Paper had become policy within the NCAA.
The waiver by the NCAA allowed Ogunbowale to bypass bylaw 12.4.1, which states that athlete “compensation may not include any remuneration for value or utility that the student-athlete may have for the employer because of the publicity, reputation, fame or personal following that he or she has obtained because of athletics ability.” The NCAA permitted the waiver in this case because it determined that Ogunbowale’s invitation to participate on DWTS did not result from her athletic ability. That determination is undermined by Ogunbowale’s profile on the DWTS website:
Arike Ogunbowale is a junior at Notre Dame and member of the women’s basketball team, who recently won the 2018 NCAA Division I Women’s Basketball Tournament. She was also named the tournament’s Most Valuable Player this year. During her college career, Ogunbowale has earned multiple honors, including: Naismith Trophy Top-30, NCAA Regional Most Outstanding Performer, NCAA All-Regional Team, WBCA All-Region Team, ACC All-Tournament First-Team, EspnW National Player of the Week (11/21/16), Preseason WNIT Tournament MVP and ACC Player of the Week (11/14/16). She is a five-time USA Basketball medalist with four gold and one silver. Ogunbowale graduated from Divine Savior Holy Angels High School in Milwaukee, WI, where she scored 2,240 points in her career, making her sixth on the Wisconsin all-time scoring list. She is the youngest of three children in an athletically talented family. Her older brother Dare was a running back at the University of Wisconsin, her mother Yolanda was a softball pitcher at DePaul University and her father Gregory played soccer and rugby. Her first name means “something that you see and you cherish” in her father’s native Nigeria.
It’s evident from Ogunbowale’s profile that DWTS intended to build off of the college athlete’s accomplishments as a basketball player at Notre Dame. If Ogunbowale had not sunk those game-winning baskets in the Tournament, she likely would not have been involved in that season of DWTS. And it is in this recognition that a serious enforcement problem is revealed with any waiver process that decides athlete NIL use on a case-by-case basis and requires that the use not be linked to athletic success. Such an approach will result in arbitrary and capricious enforcement decisions similar to UCF’s with Donald De La Haye’s request to continue production of a YouTube channel that he started before he ever set foot on a collegiate field.
YouTube is an online platform of user-created videos that are uploaded and shared with the world. The users can follow one another and the most popular users are paid based on ads, chosen by YouTube, that are displayed on or during their videos—this is also called “monetizing.” Under the user name Deestroying, De La Haye started a channel by uploading videos at the same time he was preparing to launch his academic and athletic career at UCF as a freshman kicker for their Division I college football team. During his freshman campaign at UCF, De La Haye appeared in ten games and was used mostly for kickoffs. De La Haye averaged 61.6 yards for the 33 kicks he made that season, and he also made one extra point attempt. In his sophomore season, De La Haye returned to UCF and once again was used as a kickoff specialist. At no point in time did De La Haye’s performance as a kickoff specialist for UCF make him a local, regional, or national celebrity.
De La Haye managed to grow his YouTube channel to attract an impressive amount of subscribers (a little more than 50,000) who likely followed him for reasons that had absolutely nothing to do with UCF football. Yet on June 10, 2017, De La Haye surprised his subscribers with a new post to the channel titled “Quit College Sports or Quit YouTube?” In the video, De La Haye announced that his channel was under investigation for potentially violating NCAA rules due to his making a modest amount of money off of the YouTube channel. De La Haye stated in the video that he was scheduled to meet with UCF and the NCAA to find a way to continue to produce videos without forfeiting his NCAA eligibility. About a month later, UCF submitted a request for an NIL waiver on behalf of De La Haye that sought permission for the athlete with his channel on YouTube. The NCAA approved the waiver, but did so with restrictions. In a video posted to his channel, De La Haye read the conditions for his waiver:
Institution had to submit waiver on your behalf asking for release of the legislation. NCAA approved the waiver in which you can use his picture, name, and likeness to continue your self-employment business, however it is with conditions: videos cannot reference your status as a student athlete, nothing UCF related—gear, facilities, other student athlete . . . videos cannot depict your football or athletic skills or abilities, including anything specific to the sport of football—pass a football, kick a football, talk about quarterbacks . . . videos that do not satisfy these conditions will have to be removed from the monetized account and the funds generated from these videos will have to be donated to a charity of your choice.
This waiver by the NCAA granted De La Haye permission to continue to make the videos as long as he did not mention or refer to his athletic status, thereby following NCAA bylaw 22.214.171.124 and bylaw 12.4.4. De La Haye did not initially sign the proposed waiver, but instead propositioned an amendment asking to be allowed to continue posting videos as he was, but demonetize them so that he would not generate any revenue from them. Through communication with the UCF compliance office he was notified that his amendment was denied and the waiver conditions would not change. In an official statement, the NCAA said, “De La Haye could continue to profit from any of his video activity as long as it was not based on his athletics reputation, prestige or ability.”
On July 31, 2017, UCF released a statement regarding De La Haye’s eligibility. UCF wrote that the waiver the NCAA approved, regarding De La Haye, allowed him to continue to “create videos that referenced his status as a student-athlete or depict his football skill or ability if they were posted to a non-monetized account.” However, UCF said, “De La Haye chose not to accept the conditions of the waiver and has therefore been ruled ineligible to compete in NCAA-sanctioned competition. UCF Athletics wishes him the best in his future endeavors.” UCF took action to suspend De La Haye prior to the NCAA, so to ensure that there would not be repercussions against UCF for allowing a non-sanctioned player to participate. The NCAA released a statement, through Twitter, the same day, that affirmed UCF’s statement and added that “although Donald De La Haye has chosen not to compete any longer as a UCF student-athlete, he could have continued playing football for the university and earn money from non-athletic YouTube videos, based on a waiver the NCAA granted on July 14.”
Later that same day, De La Haye responded with a new video titled “I lost my full D1 scholarship because of my Youtube [sic] channel..[sic],” in which he spoke about the decision by the NCAA and mentioned how UCF and the NCAA requested for him to remove his videos and demonetize the account in order to stay eligible. Since he was ruled ineligible, De La Haye lost the scholarship that covered his tuition at UCF. In the description box of the video, De La Haye opened a GoFundMe account and asked for those who could to donate so that he could afford to finish his degree: “I am passionate about youtube [sic] and still will work relentlessly to get my degree but I don’t have the funds necessary to do so. Please help out, even if its [sic] just $1!” Shortly after the decision to rule De La Haye ineligible became public, his YouTube channel subscriber count jumped to over 89,000.
The NCAA determined that De La Haye violated bylaw 12.4.4, which provides that a college athlete “may establish his or her own business, provided the student-athlete’s name, photograph, appearance or athletics reputation are not used to promote the business.” This bylaw falls underneath the overarching rule 126.96.36.199: “compensation may not include any remuneration for value or utility that the student-athlete may have for the employer because of the publicity, reputation, fame or personal following that he or she has obtained because of athletics ability.”
However, it seems very improbable and illogical that De La Haye’s status as a backup kicker at a struggling football program that rarely played on national television served as the driver for attracting more than 50,000 subscribers to his YouTube channel. In fact, the conclusion that De La Haye’s following grew out of his NCAA athletic involvement seems as arbitrary as the conclusion reached by the NCAA in Ogunbowale’s case. Recall that the NCAA determined that Ogunbowale’s opportunity to appear on DWTS had nothing to do with her sinking last-second baskets to win her school a national championship on national television just a week or so before she received her invitation to join the show. The Ogunbowale and De La Haye cases demonstrate that the “based on athletics” standard for resolving NIL waivers is impossible to apply consistently and will lead to arbitrary applications. Unlike De La Haye at UCF, Ogunbowale did not have a platform for fame prior to her athletic performances at Notre Dame. Yet, she was permitted a waiver that allowed DWTS to promote the fact that she was a college basketball star whereas De La Haye couldn’t even mention his status as a student at UCF. These two cases highlight the problems with discerning stardom and its source when it comes to college athletes. Underscored by the Ogunbowale example is also the reality that most college athletes are not celebrities and have little reputational value built into their NILs unless they do something extraordinary while representing their schools in a competitive play.
A “celebrity” is someone who is well-known/famous within a relevant community, and their reputation provides them with the potential to serve as brand endorsers—those who leverage their NILs in the promotion and advertisement for commercial product brands. Brands build off of celebrity endorsements by “cutting through the clutter” and in constructing a link between the brand and the endorser that creates a path in the minds of consumers through which positive meanings associated with the endorser transfer to the product brand. The literature is uniform in the finding that brands can benefit from celebrity endorsements by improving their brand image in ways that positively influence consumer purchase behaviors. Professional athletes are often used as endorsers because they are among the most recognizable, revered, and imitated celebrities. Athletes are also viewed as highly attractive and considered as experts by consumers, which are two major factors for brands in selecting endorsers.
However, landing a lucrative endorsement deal is not easy for most professional athletes because only the most influential members of society are capable of promoting a product brand based on their “source credibility.” Source credibility is linked to the athlete’s fame and reputation. Researchers have conceptualized the core component for determining whether an athlete has the source credibility needed to cut through the marketing clutter and have identified this construct as “star power.”
“Star power” is the ability and unique characteristics that make an individual a credible source of consumer confidence. The characteristics found to influence star power include: (a) professional trustworthiness, (b) likeability in personality, (c) athletic expertise, (d) social attractiveness, and (e) style. Most professional athletes do not possess enough of the attributes needed to qualify as “stars,” even if they are well respected and compensated for playing their respective sports. This reality is reflected in the difficulty that athletes have in securing major endorsement deals. For example, the National Football League is the most popular professional sports league in the U.S., but even most of its athletes struggle in attracting major endorsement contracts.  Currently, there are 1,696 professional football players across the 32 active rosters in the NFL. Of these players, it is estimated that (at most) three to five players per team earn six-figures from endorsement deals, which means that roughly 10%, or about 160 players, are able to earn more than $100,000 off of the field. Out of those 160 players, 32 are quarterbacks for their teams, and this leaves about 128 position players, or four per team, with the capability to earn a decent amount of money from sponsorship deals.
The endorsement constraints for NFL players demonstrate how difficult it is even for professional athletes to cultivate enough “star power” to attract a major endorsement deal. The monetization of reputational value requires the work of industry professionals who specialize in placing athletes in the right marketing position. Professional athletes within the NFL have access to branding experts, and even most of them are unable to land lucrative deals. College athletes face even more complications in terms of cultivating the level of reputational value needed to secure a national or international endorsement deal.
Whereas the NFL provided the basis for the example for how difficult it is to secure major media deals for professionals, its college counterpart (the most popular NCAA sport) will serve as the example for why it is more difficult for college athletes. Currently, there are 73,063 college football athletes governed by the NCAA. The overwhelming majority lack any meaningful star power in their personal reputations. For evidence on this point, Dr. Thilo Kunkel looked to social media and evaluated the number of followers for college athletes as an indicator for fame. Dr. Kunkel and his research team collected and analyzed data from more than 4,000 Division I college football athletes and found that: (a) only 8.3% had more than 10,000 followers, (b) 1.9% had more than 50,000 followers, and (c) only .025% had 100,000 followers or more. Based on those findings, Dr. Kunkel determined that less than 1.9% of college athletes currently have enough star power to earn a national endorsement deal.
The NCAA was correct when it claimed in Name & Likeness that the majority of its athletes are not celebrities. Yet, some athletes do have the potential to secure a national marketing deal, and many others could probably land a local or regional sponsorship relationship (e.g., local grocery store or car dealership). This potential is reflected in the number of local or regional endorsement deals that college coaches enjoy, even for smaller programs. Any marketability, however, would more than likely be linked to the athlete’s athletic accomplishments. The irony inherent in the Ogunbowale/De La Haye determinations is that De La Haye was unique in that he built a following despite the fact that he wasn’t a very successful and high-profile college athlete. Yet, the NCAA restricted his references to UCF in his own, personal creations while tolerating the very direct reference to Ogunbowale’s athletic accomplishments by DWTS.
The lack of star power in intercollegiate athletics signifies that there is minimal value in college athletes’ likeness, especially on an individual level, which would effectively offset the demand to accept impermissible payment from boosters, agents, and appeal companies. Furthermore, the Ogunbowale and De La Haye examples demonstrate the administrative nightmare of distinguishing demand for athlete publicity that is not linked to NCAA competition. What the NCAA needs right now is a full overhaul of the NIL restrictions—this is the only way that they will be able to combat the illegal activity and ensure that all athletes are treated fairly and without bias when it comes to earning compensation for their NIL. The meaningful change that is required is a complete removal of restrictions on compensation surrounding the use of an athlete’s NILs. Neither of those justifications or the reasoning supporting them apply to restraints that prevent college athletes from using their own NILs however they like.
There is no reason in law or common sense for the NCAA’s NIL restrictions, which are ripe for judicial review following the decisions in both Grant-in-Aid and O’Bannon. Both decisions found procompetitive justifications for protecting the NCAA’s amateurism model. In Grant-in-Aid, the NCAA’s restrictions that capped compensation were found to violate antitrust law while in O’Bannon, the Ninth Circuit held that the NCAA’s limits were necessary to preserve consumer interest in its products. Both decisions also found justification for NCAA rules that facilitate athlete integration into their classroom settings.
First, there can be no credible claim that the NIL restrictions are needed to preserve consumer interest in the NCAA’s version of intercollegiate athletics. The NCAA has never, ever, proffered evidence that college athlete publicity impairs consumer interest in its products. Actually, the NCAA and its members already publicize college athletes and market their NILs in commercial broadcasts, advertisements, and through other types of promotions. Accordingly, the NCAA and its members use college athlete NILs to attract consumers to their events. Thus, any assertion that the NCAA’s NIL rules are needed to preserve consumer interest is intellectually dishonest. Second, the commercialization of college athlete NILs by the NCAA and its members also negates any argument from them that college athlete use of their own NILs will impair their academic integration. Most college athletes lack the star power needed to land major endorsements and the NCAA and its members already commercialize athlete NILs. Therefore, the procompetitive justifications recognized by the courts in Grant-in-Aid and O’Bannon do not provide basis for the NCAA’s NIL restrictions, and the lack of a procompetitive purpose for them make the rules ripe for rule of reason scrutiny if/when challenged.
Like Professor Feldman, we propose a model that would permit college athletes to earn compensation from their use of their own NILs. The value inherent to their NILs belong to the college athletes, and it stems from reputations that they cultivated through their own hard work and accomplishments. Similar to what was proposed in the White Paper, our proposal would constrain the institutions from assisting in locating sponsorships for college athletes. To offset that restriction, we would demand that the NCAA lift its regulation on athlete interaction with agent representatives. The college athletes should be free to market themselves for sponsorships, but there is no legitimate reason for why the schools should participate in the process, and their involvement could create a possibility for abuse. Similarly, agent involvement in this could result in abuse, so the NCAA should create an agency certification process that ensures that only reputable agents represent NCAA athletes. In this regard, the process would not be much different from what exists within the professional sports leagues. College athletes should be part of this process and representation at the table in deciding the constraints imposed on those who represent them.
We also build off of Professor Feldman’s proposal by requiring athletes to seek out permission from their schools and the NCAA before representing the institution or the NCAA in any advertisements. This requirement would reflect what exists within professional sports and is grounded in the institution and the NCAA’s right to control the use of their intellectual property (trademarks). Instead of the standardized NIL form suggested by Feldman, we propose that the NCAA create a model NIL agreement that satisfies its requirements as well as those of its member institutions. The reason for this is not to limit college athletes in their efforts to secure marketing deals and use their NILs as they see fit, but to protect them by incorporating clauses like a “reverse moral clause” that permits athletes to terminate endorsement relationships with controversial brands. Finally, our compromised proposal includes Professor Feldman’s academic eligibility requirement so long as the same requirement exists for their continued involvement in commercial use of their NILs by the member institutions. The anticompetitive nature of this restraint is moderated by the school’s interest in making sure that athletes are also students who are in good academic standing. The eligibility restraint also serves an important purpose of promoting athlete success in the classroom.
Our compromised proposal, however, deviates from what Professor Feldman suggested on some key issues. First, our proposal does not include the “non-game related” constraint on college athlete NIL use. The Ogunbowale and De La Haye examples demonstrate the arbitrariness of this requirement because there is no way to consistently discern whether the sponsorship stems from the athlete’s involvement in NCAA athletics or is based on the athlete’s own good will. Additionally, there is no legitimate basis for imposing a “non-game related” requirement because the NCAA and its members already use college athlete NILs in “game-related” uses. The NCAA and its members should not be able to do with college athlete NILs what the athletes may not.
What we propose also does not adopt Professor Feldman’s call for oversight in the form of an approval process from either the NCAA or its members prior to athlete NIL use. The only interest that either the NCAA or its members have in regard to its athletes and how they choose to use their NILs involves the use of intellectual property belonging to either the NCAA or its members. There is already recourse for member institutions in the case that an athlete is involved with a controversial brand to protect against the transfer of negative information from the brand to the school. That protection is found in the fact that the school does not have to renew the athlete’s scholarship at the close of the academic year. Our proposal also deviates from Professor Feldman’s in that it does not include a group licensing component. College athletes deserve their fair share of the monies mined by the NCAA and its members from media right management. Thus, our proposal is a compromise because it does not call for group licensing that shares revenues from extant and future media deals with the athletes. We advocate for and support college athlete efforts to demand fair compensation from the NCAA and its members. However, lifting the NIL restrictions would be a modest step in the right direction.
Drastic changes to the NCAA’s NIL policy are on the way, and the NCAA needs them to protect its underlying mission. Currently, there is an illegal money laundering scheme occurring behind doors because the NCAA is restricting college athletes from the ability to receive compensation from their NILs. Right of publicity cases, such as Name & Likeness, make it clear that the athletes own their NILs. However, outdated NCAA bylaws prevent college athletes from profiting from their reputations. If college athletes were able to benefit from their own use of NILs, secret deals with companies would no longer be necessary. Instead, athletes would be able to be directly compensated from the apparel company for their NILs.
Lifting the NIL restrictions may also help further the educational mission of the NCAA. In 2017, only 82% of college basketball and 78% of college football athletes received their degree, and the average athlete graduation rate was 87% (the highest recorded average graduation rate). The difference could be traced back to the high number of college athletes attempting to turn professional in order to legally earn money for their NILs. If the restriction were removed, it provides an opportunity for college athletes who are not quite ready for the professional leagues to stay in college while also providing for themselves and their families. No athlete should be economically pressured to leave school early when that pressure could be relieved to a significant degree by the athlete’s use of their own brand equity. Another educational benefit would result from the athlete’s involvement with sponsor brands. College athletes would gain first-hand experience and knowledge of complex contract negotiations and the life lessons learned from entering commercial markets.
For those reasons we conclude that the NCAA should abandon the idea of instituting a modest change to its NIL policy and instead adopt what we propose in this article. We believe that our proposal draws the best aspects from Professor Feldman’s (at the time) innovative proposal, but is different in how it expands what is permitted to comport with the recent decisions in Grant-in-Aid and O’Bannon and what has been proposed in recent legislation at state and federal levels. The NCAA no longer enjoys the substantial deference once afforded to it by the courts, lawmakers, and the general public. The deference that once fortified the NCAA’s amateurism model from scrutiny has eroded to the point that material change to college athlete regulations is inevitable. The NCAA must now choose whether it wants to lead in the creation of change to its regulation of college athletes, or be led.