Closing the gaps: Why federal NIL legislation is crucial for protecting all student-athletes
Written by Jake Isakoff
In recent years, the rise of Name, Image, and Likeness (NIL) rights has transformed the collegiate sports world, allowing student-athletes to monetize their personal brands. This shift has been seen as a long-overdue recognition of the economic value that athletes bring to their schools and the broader sports world. However, despite the progress NIL rights represent, there remains significant legal gaps and inequities in the current regulatory framework. A particular concern is the patchwork of state laws and lack of federal oversight, which create disparities in both opportunity and protection, especially for athletes from underrepresented backgrounds and those participating in non-revenue sports.
Since the NCAA’s decision in 2021 to allow athletes to profit from their NIL rights, numerous states have enacted their own NIL legislation. This state-by-state approach has resulted in a fragmented legal landscape where the rights and protections available to athletes vary widely depending on where they attend school. States like California, with its Fair Pay to Play Act, have taken a progressive stance, allowing athletes to sign endorsement deals and profit from their own NIL rights without jeopardizing their college eligibility. Meanwhile, other states impose stricter limitations on how athletes can exercise their NIL rights, such as limiting endorsement categories, restricting partnerships with certain industries, or requiring disclosure and oversight by universities to maintain compliance with state-specific guidelines.
This lack of uniformity creates several legal challenges. First, athletes in different states face unequal opportunities to capitalize on their NIL rights. Those in states with more favorable NIL laws may have access to more lucrative endorsement deals and sponsorships, while athletes in states with restrictive laws may find themselves at a competitive disadvantage. Take the case of the University of Alabama, where state NIL laws provide significant flexibility for student-athletes to pursue endorsement deals. Alabama’s relatively permissive NIL framework has allowed athletes like Bryce Young, the former Alabama quarterback, to reportedly secure nearly $1 million in NIL deals while he was still in college. In contrast, athletes at universities in states with more restrictive laws, such as New York before its 2022 amendments, faced considerable limitations in accessing similar opportunities. New York initially prohibited athletes from using university logos or facilities in their NIL deals, which significantly hindered their ability to attract sponsorships. This disparity illustrates how athletes in more restrictive states may miss out on profitable opportunities simply due to their geographic location, exacerbating inequities across collegiate sports and further highlighting the need for a uniform federal standard.
Moreover, the absence of consistent legal standards opens the door to exploitative contracts, especially for athletes who may lack the resources or legal knowledge to navigate complex endorsement agreements. These athletes may not have the same bargaining power or access to legal counsel as their counterparts in high-revenue sports like football or basketball, leaving them vulnerable to contracts that undervalue their NIL rights or impose unfair restrictions. Sports like gymnastics, swimming, or track and field often lack the same financial backing and visibility as football or basketball, which can put their athletes in a disadvantaged position when negotiating NIL deals. A striking example of this is the case of Sedona Prince, a former Oregon Ducks basketball player, who gained national attention after exposing the inequities between the men’s and women’s NCAA basketball tournaments. Although Prince used her NIL rights to capitalize on this exposure through social media endorsements, her case highlights a broader issue: athletes in women’s sports, and particularly those in less-prominent programs, often face limited NIL opportunities and may be pressured to accept subpar contracts due to the smaller pool of sponsors and legal resources available to them. This disparity is particularly pronounced for athletes from underrepresented racial and socioeconomic backgrounds as well, who may not have access to the legal counsel necessary to protect their interests. This imbalance is further underscored by recent legal actions, discussed next, that aim to address inequities, but fall short of providing comprehensive protection for all athletes.
The settlement in the NIL class action involving the NCAA, Alston v. NCAA, and similar cases, highlights the vulnerability of student-athletes in the current system. In 2021, Shawne Alston, a former West Virginia University football player, led a pivotal lawsuit challenging the NCAA’s restrictions on education-related benefits, arguing that these limits unfairly restrained student-athletes’ financial and educational opportunities. The settlement resolved multiple class-action claims brought by student-athletes alleging that such restrictions on compensation violated antitrust law by hindering athletes’ ability to benefit financially from their own names, images, and likenesses. The legal reasoning hinged on the argument that the NCAA’s restrictions constituted an unreasonable restraint on trade under the Sherman Act, given that athletes’ economic opportunities were restricted to maintain a notion of “amateurism” that was no longer justifiable. Moving forward, as more courts recognize the imbalance of power, this ruling may pave the way for further challenges against the NCAA and other sports organizations, potentially shifting how athletes are compensated and broadening their rights in sponsorship and employment contexts. However, while the settlement is a step forward, it still does not address the underlying issue of disparate bargaining power between athletes and schools or third-party sponsors.
With this in mind, another critical aspect of the NIL debate intersects with employment and labor law. The question of whether student-athletes should be considered employees of their universities has gained increasing attention in recent years, especially in light of cases like Johnson v. NCAA, where athletes argued for employee status and the associated rights under the Fair Labor Standards Act (FLSA). If student-athletes were classified as employees, they would be entitled to protections such as minimum wage, overtime pay, and the right to collectively bargain. This shift could significantly impact NIL contracts by giving athletes greater leverage in negotiations and ensuring that they receive fair compensation for their services.
However, the legal classification of student-athletes remains a contentious issue. The NCAA has long argued that athletes are amateurs, not employees, and that granting them employee status would undermine the integrity of collegiate sports. But as NIL deals become more prevalent and the financial stakes grow higher, the line between amateurism and employment continues to blur. Federal NIL legislation could clarify the employment status of athletes and provide a more structured framework for determining their rights and protections under labor law.
In general, the current patchwork of state NIL laws and the lack of a cohesive federal framework creates uncertainty not only for athletes but also for schools, sponsors, and other stakeholders. Federal NIL legislation is urgently needed to establish uniform protections for all athletes, regardless of their state of residence or the sport they play. Such legislation should include provisions that set minimum standards for NIL contracts to ensure that athletes receive fair compensation and are protected from exploitative terms, provide legal resources for athletes, particularly those from underrepresented backgrounds, to help them negotiate and understand the terms of their NIL agreements, clarify the employment status of student-athletes and provide clear guidance on their rights under labor and employment law, and ensure equitable access to NIL opportunities by addressing the disparities between athletes in revenue-generating sports and those in non-revenue sports.
Recent case law, including the aforementioned settlements, underscores the need for consistent legal standards. While these cases represent important milestones in the fight for athlete rights, they do not go far enough in addressing the systemic inequities that persist in the NIL space. Thus, while NIL rights have empowered athletes to profit from their personal brands, the current regulatory landscape leaves significant gaps in protection and fairness. Without federal oversight, athletes from underrepresented backgrounds and non-revenue sports are at risk of being left behind. Federal NIL legislation is essential to promote fair market practices, ensure uniform protections, and provide equitable access to NIL opportunities for all athletes. By establishing a cohesive legal framework, the NCAA can ensure that the benefits of NIL rights are distributed more equitably across the collegiate sports landscape.
