As the leaves begin to change and the summer heat finally gives way to cooler fall breezes, there is a return to another great season: college athletics. The next few months will see Saturdays dominated by college football games, followed by the return of college basketball towards the end of the year. However, as student-athletes return to your TV or computer screens, there is something else that will be at the forefront of local and national media coverage. After legislation was passed last year, for the first time ever student-athletes can profit from their own name, image, and likeness in surprisingly creative and valuable ways.
June 21, 2021. This is the date that the flood gates for student-athletes to receive unprecedented amounts of money were officially opened. For decades colleges and universities across the country have leveraged sports to bring in revenue, attract attention, boost enrollment, and raise money from alumni, all while hiding behind a veil of “amateurism.” In recent years, the media rights value for college football and basketball have skyrocketed, to where universities receive millions of dollars for the rights to broadcast their sporting events. Think about this: a college athletics conference receives a whopping average of $3B in exchange for its media rights.1 How about this: A single college football head coach receives $9.5M annually.2 While the explosion of college athletics seemed to be great for everyone, it somehow left out the students that made the games so special. This changed when the Supreme Court announced its decision on June 21, 2021.
National Collegiate Athletic Association v. Alston tested the ability of the NCAA and its member universities to limit the compensation students receive for their services as an athlete.3 The plaintiffs in this case were current and former student-athletes in men’s Division I FBS football and men’s and women’s basketball.4 To set the stage, Supreme Court Justice Gorsuch began the unanimous opinion for the Supreme Court with the following statement, “From the start, American colleges and universities have had a complicated relationship with sports and money.”5
In Alston, the Supreme Court upheld a district court ruling that the NCAA rules limiting education-related compensation violated section 1 of the Sherman Act.6 Justice Kavanaugh, in his concurring opinion, helped explain the Court’s logic simply, “Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate.”7 Shortly after the Court’s decision, the NCAA voted to allow student-athletes to receive compensation in exchange for use of their name, image, and likeness (NIL). Now, it is up to the individual states and their legislatures to determine how much freedom should be given to this new industry.
Texas enacted S.B. 1385 to govern compensation and professional representation of student-athletes participating in intercollegiate athletic programs.8 In short, the Act establishes that institutions may not prohibit or prevent a student-athlete from earning compensation for the use of their name, image, or likeness when the student is not engaged in official team activities.9 1385 further clarifies that they may earn compensation from selling their autographs, something that has been a cause of concern before.10 It also sets forth that scholarships and grants are not to be considered compensation.11 However, 1385 does set some important restrictions and regulations that student-athletes must consider. Most importantly, student-athletes cannot enter into contracts where compensation is given in exchange for athletic performance (“pay for play”) or for the endorsement of alcohol, tobacco products, or sports betting.12
You may have already seen these name, image, and likeness opportunities in action. Businesses host autograph sessions and have local college athletes star in their commercials. As you flip through your social media you may have come across a student-athlete acting as a brand ambassador promoting a specific product or service. To provide you a better idea of what Alston means in a practical sense, here are just a few specific examples of recent NIL deals.
Whether you wear burnt orange and cheer on the Texas Longhorns, or maroon and whoop for the Texas A&M Aggies, there is no denying the excitement of the youthful and passionate environment that college athletics brings. Whoever you root for, the attorneys and staff here at JCA wish you an exciting and successful sports season.
This month’s blog was written by Noah Alford, who clerked with JCA this past summer. Noah’s interest in college athletics runs deep as he studied at the University of Texas at Austin and the Texas Tech School of Law.