Name, Image, and Likeness contracts (NIL) will undoubtedly change the way college athletics operates. In fact, that is about the only thing that all parties involved in this new endeavor can agree on! Today’s blog digs into what NIL means, what effects it is having on student-athletes, and where we go from here.
What is NIL?
Name, Image, and Likeness contracts refer to the ability of student-athletes to make money off of their notoriety as athletes. The NCAA had prevented this from happening until 2021. Now, for example, a student can sign a contract with Buffalo Wild Wings and serve as a paid endorser of their product, just like a professional athlete can.
There is no federal or comprehensive policy in place to govern the way NIL operates. Rather, there is a patchwork of state by state laws/guidelines that balance conflicting priorities and leave many student-athletes, universities, and other relevant parties unclear and unsure of where they stand. This is summarized neatly by a recent quote from the athletic director at the University of North Carolina, Bubba Cunningham. Cunningham said “We are still lost in the middle of the universe on this thing.”
With that as a baseline, we wanted to take a moment and dig into the way NIL is handled in North Carolina and shine a light on what student-athletes should keep in mind as they venture into this new world.
What is the relevant law for NIL in North Carolina?
- Name, image, and likeness contracts or deals can’t be an inducement for a student-athlete to enroll or stay enrolled.
- Anyone soliciting or negotiating contracts for student-athletes (or representing themselves as someone who can do that) must register with North Carolina Secretary of State as an “athlete agent” EXCEPT
- A licensed attorney can act as an athlete agent without registering if they are approached by a student athlete without advertising directly or soliciting, and if they represent no more than two student athletes.
What components must legally be in any NC contract governing Name Image, and Likeness?
- The amount and method of calculating the consideration to be paid by the student-athlete for services to be provided by the athlete agent under the contract and any other consideration the athlete agent has received or will receive from any other source for entering into the contract or for providing the services.
- The name of any person not listed in the application for registration or renewal of registration who will be compensated because the student-athlete signed the agency contract.
- A description of any expenses that the student-athlete agrees to reimburse.
- A description of the services to be provided to the student-athlete.
- The duration of the contract.
- The date of execution.
What Should a Student-Athlete Protect Themselves Against in the NIL World?
- Can a prohibited deal put your scholarship/athletic status at risk? What counts as a prohibited deal? (Tobacco, Intellectual property that is prohibited by the school, etc.)
- Student-athletes should make sure they fully understand the deliverables required in an NIL deal and perhaps whether the ask meets the payment – some companies may take advantage of the fact that this is uncharted territory and try to “lowball” student-athletes.
- Understanding exclusivity clauses – does one NIL deal preclude another?
- More broadly, it is imperative that a student-athlete understand their NIL contract and its binding components. Some early Name, Image, and Likeness contracts have even required student-athletes to repay money or entitled a group to a piece of their potential future earnings.