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Should NIL Contracts Terminate Upon Completion Of Eligibility?

Darren Heitner

Founder of HEITNERLEGAL — The Sports, Entertainment, and IP Lawyer Published Apr 14, 2023


The Weekly Longer NIL Thought When Florida's NIL law became effective, on July 1, 2021, it included a clause that stated the following: "The duration of a contract for . . . compensation for the use of an intercollegiate athlete's name, image, or likeness may not extend beyond her or his participation in an athletic program at a postsecondary educational institution."

That provision and many other clauses were removed from Florida's NIL law when it was modified earlier this year. But some other states with NIL laws on the books still maintain such a restriction on the term length of college athletes' NIL deals.

We can use Texas' current NIL law as an example. It states that "a student athlete participating in an intercollege athletic program at an institution . . . may not enter into a contract for the use of the student athlete's name, image, or likeness if . . . the duration of the contract extends beyond the student athlete's participation in the intercollegiate athletic program."

Mississippi's NIL law states that "a contract for the use of a student-athlete's name, image, or likeness which is formed while the student-athlete is participating in an intercollegiate sport at a postsecondary educational institution may not extend beyond the student-athlete's participation in the sport at the institution."

Many states do not include these types of restrictions on duration in their NIL laws and there remain many states that have no NIL law in effect whatsoever, relying on the NCAA to keep its interim NIL rules as is or at least to not make the rules more restrictive.

It begs the question: Can/should NIL contracts be required to expire once athletes are no longer participating in intercollegiate sports?

Professional athletes don't have such clauses unless they are freely negotiated into these types of deals. Could you imagine the NFL requiring Tom Brady to end all of his marketing relationships the moment he retired from playing professional football? That would be unheard of. Yet, some states seem to require this, giving athletes and brands an early out from their contractual relationships. I also don't think this is easily reconcilable with the NCAA's NIL rules, which states that compensation may not be for athletic participation or achievement. By premising the validity and enforceability of an NIL contract on a college athlete's participation in an intercollegiate athletic program at an institution, isn't that clearly a form of pay-for-play?

Who is being protected by these clauses that remain in some state laws? The athletes? The brands? Collectives? Boosters? I suppose that it is determined on a case-by-case basis. But I have a hard time understanding the justification for this restriction and would implore states to consider removing it from their existing NIL laws.

Arkansas Updates Its NIL Law On April 13, Arkasas Governor Sarah Huckabee Sanders signed into law HB1649 to amend the Arkansas student-athlete publicity rights act.

  1. It redefines "student-athlete" to include individuals who have been accepted into addmission or signed a National Letter of Intent or other written agreement to enroll in an institution of higher education within the State of Arkansas as well as those already enrolled.

  2. It clarifies that these athletes shall (instead of "may") have the right to enter into NIL deals.

  3. It allows institutions of higher education, its supporting foundations, or its authorized entities to identify, create, facilitate, and otherwise enable opportunities for a student-athlete to earn compensation for the commercial use of the athlete's publiciy rights.

  4. It removes certain automatic rights for athletes to rescind NIL contracts (as discussed in the Weekly Longer NIL Thought above) but maintains a right to rescind when the athlete is no longer eligible to participate in any varsity intercollegiate athletics program at an institution of higher education.

  5. It removes a prior statement indicating that the law doesn't authorize any prospective college athlete who may attend an institution of higher education, any third party licensee, or anyone acting on behalf of the prospective college athlete to negotiate or receive compensation for the commercial use of the prospective college athlete's publicity rights before the athlete is enrolled in an institution of higher education or practice or competition in varsity intercollegiate athletics.

  6. It prohibits a person or entity from giving or promising compensation for the use of the NIL of a college athlete enrolled at an institution of higher education located in Arkansas or of a prospective college athlete who has entered into an enrollment contract with an institution of higher education located in Arkansas with the purpose of recruiting or inducing the athlete to enroll at another institution of higher education, and gives a cause of action to an institution of higher education or its supporting foundations or authorized entities and third-party licensees based on a violation of this provision.

  7. It removes liability for institutions of higher education and their employees in Arkansas for any damages related to a college athlete's ability or inability to earn compensation for the use of their NIL resulting from decisions and actions routinely taken within the course of their employment in intercollegiate athletics.

The third bullet point above, which I purposefully put in bold, jumps out at me. This appears to directly conflict with the NCAA's interim NIL policy. In the NCAA's October 26, 2022 updated guidance, the Association stated that it is impermissible for institutions to (i) communicate with NIL entities regarding specific athletes' requests/demands for compensation or to encourage NIL entities to fulfill requests; and (ii) help secure and negotiate deals on behalf of athletes. Try reconciling that with what is stated in Arkansas' revised NIL law. Furthermore, the revised law leaves an important provision, which says that the NCAA can't penalize an athlete for receiving NIL compensation nor penalize an institution of higher education based on an athlete's receipt of compensation, untouched. Is Arkansas now the most NIL-friendly state?

Penn State Collective Receives Massive Cash Infusion. Lions Legacy Club secured a 2-year, 7-figure commitment from West Shore Home and MITER Brands. The companies are run by B.J. Werzyn and Matt DeSoto, respectively. “As a business leader, I focus on building scalable and sustainable programs,” Werzyn said. "As an alumnus, Penn State football and its future success is near and dear to me. Lions Legacy, working in concert with Penn State athletics and following NCAA guidelines, delivers a scalable NIL model that creates business marketing programs with football student-athletes. I am thrilled to team up with MITER Brands to expand on our NIL work.”

New Florida Collective Launches. It's called Florida Victorious, it takes over for the prior Gator Collective (which is to thank for the use of the word "collective" in the NIL space as it was the first entity to use the term) and it has announced agreements with 64 football players at the University of Florida. The Gator Collective's founder, Eddie Rojas, will no longer lead the organization. Instead, it will be run by CEO Nate Barbera. Notable members of the Advisory Board include Anthony Richardson, Hugh Hathcock, Patric Young, and Lawrence "Trey" Burton III. Florida Victorious is a for-profit entity while a separate nonprofit entity called Fast Foundation will remain, but rebranded as Florida Victorious Foundation.

Maryland Athletic Director Has A Message For Fans Damon Evans recently stated, "And I want our fans to hear, NIL is significantly important. We need our fans, our donors to support our NIL collectives and to support our student-athletes." Athletic directors remain vigilant in supporting NIL and collectives since the NCAA issued its October 2022 guidance.

Georgia Establishes An In-House NIL Dept. Maybe this will become a trend. The University of Georgia is dedicating in-house resources to build out an NIL department to be led by Tanner Potts with assistance from Altius Sports Partnerships, which will hire and support an athlete marketing manager.

The Cavinder Twins Ride Off Into The Sunset. Haley and Hanna Cavinder announced that they will not take their fifth year of eligibility and will instead start a new chapter in their lives. The announcement shouldn't slow them down when it comes to NIL deals even though they will no longer be considered college athletes, at least based on the amount of deal flow I've looked at since their joint announcement alone. On April 13, they traveled to New York to sit on The Today Show and said they think they will be prime examples to show people what you can do after college with NIL experience. I agree! UConn's Adama Sanogo Has Deal With Sunoco. Coming off a National Championship, the big man has figured out a way to get involved in NIL even though there are limitations on what he can do given his F-1 visa status. That didn't prevent Sanogo from doing a deal with Sunoco, with a video that appears to have been filmed outside the U.S.

LSU Basketball Stars Capitalize Off Their Win. Angel Reese and Flau'jae Johnson signed with Campus Ink to sell jerseys at a retail price of $89.99 and the athletes earn from $8 to $15 per jersey sold.

Syracuse Loses NIL Support From Prominent Booser Adam Weitsman says he will no longer provide NIL deals to Syracuse athletes but will continue to abide by the agreements he already has in place with players at the school. Weitsman believes Syracuse's chancellor didn't like the way he was publicly discussing NIL, which caused a rift between Weistman and Syracuse. “I love the program. I love everybody that works there. I just think it was different personalities,” said Weitsman. “I’m just going to peacefully go off into the sunset.”

Lincoln Riley Shares Some Thoughts On NIL "It's probably even more substantial than what I thought it could be," said Riley. "As it's evolved, I think what we've seen is, as a lot of coaches have said, we have rules that are not being enforced. One of two things is going to happen: we're either going to start enforcing the rules that are there or we're going to create new rules. I don't know which one is going to happen. I can't predict that. One of the two will happen and needs to happen."

South Dakota Could Become The 26th (+ D.C.) State To Allow HS NIL.

Final Thoughts That is it for Vol. 23 of Newsletter, Image, Likeness. Thanks to the more than 6,000 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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