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Newsletter, Image, Likeness Special Edition: College Sports NIL Clearinghouse Act Of 2023 Should ...

Founder of HEITNERLEGAL — Sports, Entertainment, Trademarks, Copyrights, Business, Litigation, Arbitration

There is word circulating today surrounding the speculated introduction of a new federal NIL bill, which has been drafted by the office of Senator Lindsey Graham. I have gotten my hands on the 18-page piece of legislation and you can read it yourself by clicking here.

It is titled the "College Sports NIL Clearinghouse Act of 2023" and, if I were a betting man, I would wager that it has a less-than-optimal chance of ever reaching the desk of President Biden for signature.

The first 9 pages of the bill contain myriad definitions. The heart of the legislation begins thereafter by indicating that schools may not retaliate against athletes for considering or entering into NIL agreements. That checks out. It also reinforces that athletes must abide by school and team policies. Great.

Then, on page 10, we get into the prohibitions, beginning with restrictions on athletes entering into NIL agreements with entities in industries when state law prohibits colleges from entering into agreements with those entities or the NIL deal would violate the relevant school's code of conduct. Schools will be responsible to tell athletes which entities are off-limits.

But the meat and potatoes of the bill begin on page 12, when we are introduced to the concept of a new NIL Clearinghouse for the regulation of NIL agreements. Basically, schools and conferences can establish a clearinghouse, which sounds a lot like the NCAA. The NIL Clearinghouse will monitor compliance with this bill (if it becomes law), establish and enforce penalties for violations, and provide educational information regarding the legal and tax implications of entering into NIL deals.

Oh, and there's an antitrust exemption for this NIL Clearinghouse, which the NCAA has been begging for. But let's not let the public get confused. This NIL Clearinghouse created by the schools and conferences, which is basically the NCAA, is not the NCAA. Right?

This NIL Clearinghouse, which will be immune from antitrust law, will have the capacity to levy fines, impose penalties (including suspending or permanently banning athletes from participating in athletic events), and act by "commencing civil actions and seeking all appropriate legal, equitable, or other relief, including damages and injunctions." (emphasis added). It's a bigger, badder, legally immune NCAA but, again, don't worry. It's not the NCAA. Right?

Clearly, I'm not a fan of this concept and it certainly doesn't intend to protect athletes but instead is some oddly phrased backdoor for the NCAA to get what it wants through some new "NIL Clearinghouse." Fortunately, it likely has little chance of succeeding.

Also, I'm not sure why, on Page 2, there is a discussion about "certified agents" being individuals certified by the NIL Clearinghouse. Is the NIL Clearinghouse also going to be certifying and regulating sports agents and financial advisors? The legislation does not make that clear and, while I do believe agents would prefer being licensed on a national basis as opposed to the current state-by-state system, I doubt they want to be regulated by an entity that sounds like the NCAA acting under a fancier name.

Final Thoughts. That is it for this Special Edition of Newsletter, Image, Likeness. Thanks to the more than 6,380 people who subscribed to this newsletter thus far, and please feel free to share this free resource with others on LinkedIn or elsewhere.

Outside of LinkedIn, you can follow me on Twitter and Instagram. And if you ever require legal assistance, check out Heitner Legal.

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