In a stunning letter to its member schools on June 25, the National Collegiate Athletic Association said that colleges and universities must comply with NCAA policies on name, image and likeness even if those policies conflict with state laws.
Purportedly in response to recent amendments to state NIL statutes that the NCAA deems to be too permissive, the association warned directly, “If a state law permits certain institutional action and NCAA legislation prohibits the same action, institutions must follow NCAA legislation.”[1]
One must question the timing of this edict. Only recently, the NCAA announced that its Division I Board has directed its council to explore ways to assist student-athletes and their universities in navigating the muddy waters of NIL, acknowledging the complexity and outright inconsistency of the state legislative landscape.
More specifically, on Aug. 2, the association informed its member schools that a working group of its Division I council would present specific proposals in October for rules governing:
- A registration process for agents and financial advisers who negotiate NIL deals on behalf of student-athletes;
- A proposed standardized contract and uniform contract terms that would include fee structures and the specific activities for which the athlete would be compensated; and
- Disclosure requirements about NIL activities that would provide more transparency to students and universities alike.[2]
The working group is also charged with providing specific recommendations addressing concerns about the use of NIL as a recruiting tool — specifically prohibited by NIL policy and by most state statutes — and clarifying the role that universities can play in NIL activities.
The association had previously sought to pass this regulatory function on to Congress, which currently has no fewer than four bills pending in the U.S. House and Senate that would grant broad rights and protections to student-athletes, including specific regulations relating to NIL.
But the NCAA apparently felt the need to weigh in itself given reports of widespread exploitation in NIL contracts, prohibited use of NIL deals as recruiting tools, the controversial growth of collectives and other fundraising groups, and other abuses in the NIL process.
Few doubt the need for uniform regulation of NIL. There seems to be a race among the states through amendments to their original NIL laws to better position their home universities to compete for coveted athletes and not lose those recruits to other universities.
Some states, like Alabama, have jettisoned their NIL laws completely, leaving any regulation up to the schools. Others, like Texas and Connecticut, expressly prohibit the NCAA from taking punitive action against any school that complies with the state regulations. So, what is a university to do when caught between these two conflicting mandates?
This makes the NCAA’s recent directive so perplexing. Instead of applying its heavy hand again — a hand that has been consistently slapped back by the courts, legislatures and the public alike — why not let the regulatory environment play out?
From a legal perspective, the association says that since membership in its organization is voluntary, it is free to require member schools to follow its regulations even when state laws say otherwise.
But is membership in the NCAA truly voluntary for a university that wants to compete in intercollegiate athletics? Recent antitrust decisions against the NCAA — including those from the U.S. Supreme Court — might caution the association to tread lightly with that argument.
We are all now very familiar with the 2021 NCAA v. Alston case where, in a rare display of unity, the Supreme Court by a 9-0 vote unanimously struck down on antitrust grounds the NCAA’s caps on education-related expenses for student-athletes.
In so doing, the court rejected the association’s long-standing position that its regulation of financial benefits to student-athletes was necessary to preserve the “amateur” status of college sports, adding that the association had failed to explain how allowing student-athletes to receive enhanced benefits for such academic activities as graduate fellowships and study abroad programs threatened its so-called amateurism model.
The court also summarily rejected the NCAA’s argument that it was entitled to deference under the federal antitrust laws — if not immunity from them — noting that language in its 40-year-old decision that the association enjoyed ample latitude under the antitrust laws was, in context, simply a comment on the flexibility of the “rule of reason” standard for antitrust scrutiny that conferred no special protection to the organization.[3]
The court also noted that national uniformity would be promoted by congressional action on these complex competition issues in college sports.
In a blistering concurrence in Alston, Justice Brett Kavanaugh fired a warning shot squarely over the bow of the NCAA, signaling that further restraints on athlete compensation by the NCAA, including perhaps pay-for-play, might also run afoul of federal antitrust laws. As Justice Kavanaugh pointedly stated: “Price-fixing labor is price-fixing labor.”
Although the Alston decision was not about NIL, the NCAA got the court’s message loud and clear. Just a week after the decision, the association rescinded its long-standing prohibition on NIL compensation.
It is against this legal backdrop that the association’s announcement that member schools must ignore conflicting state statutes and follow NCAA rules must be evaluated.
By what authority does the NCAA, a private association and de facto monopolist in college athletics, ordain that its rules trump legitimately enacted state statutes? It may not like those state laws. Athletes and universities alike might benefit from better uniformity. But this edict puts the NCAA on a collision course with its members — with those universities and student-athletes caught in the middle.
Are these schools, many of which are public universities that receive subsidies from state budgets, to thumb their nose at the legislatures that funds their programs — the same legislatures that enacted the NIL legislation that the NCAA now demand they ignore?
The NCAA picked a fight in Alston under the federal antitrust laws, and lost — badly. Does it really want to test the boundaries of those laws, and Justice Kavanaugh’s patience, by punishing schools that comply with their own state’s statutes?
Kenneth A. Jacobsen is a practice professor of law and director of the sports law program at Temple University Beasley School of Law.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[3] NCAA v. Board of Regents.
Original article published on Law360.com
