Updates on the Wild World of College Athlete Compensation

written on behalf of Feigenbaum Law

One of the many areas of services offered by Feigenbaum Consulting is sports & entertainment, including acting as advisors to agents, coaches, and business managers in the sports or entertainment industries. As a result, we have been following and blogging about changes to college athletics in the United States that have come about as the result of a United States Supreme Court decision which opened the door for college athletes to be compensated beyond just scholarships. In the months following this decision, there has been rapid movement in compensation opportunities for college athletes, with some of the more common avenues being what are known as name, image, and likeness (“NIL”) deals, that allow athletes to license the use of their NIL for advertising or marketing purposes. In this week’s blog, we want to look at some recent headlines in NIL deals and how colleges, the NCAA, and brands have responded to these opportunities.

Sister soccer players are first high schoolers to score NIL deals

While the news around athlete compensation originally focused on college athletes, it didn’t take long for brands to recognize the potential value of partnering with high school students. While rare, high school athletes in the past have garnered national attention, including Lebron James and Kobe Bryant.

Just last week, ESPN reported that Nike signed two high school soccer players who happen to be sisters to what are the first high profile NIL deals. Alyssa and Gisele both play for their Los Angeles high school and have committed to playing college soccer for Stanford as well as for the US national youth team. The exact terms of the deal have not been disclosed, but we’re sure it’s the first of many deals we can expect to see involving high school athletes.

California looks to expand compensation for college athletes

The Los Angeles Times also published a story with news that could have a huge potential impact on college athlete compensation. The story noted that California was the first state to put the wheels in motion for what ultimately became the Supreme Court’s 2021 decision by enacting Senate Bill 206 in 2019. Three years later California has introduced yet another piece of legislation that could be just as ground-breaking. Bill 1401, titled the College Athlete Race and Gender Equity Act (“the Act”) will require California schools to share half of the revenues they make from football and basketball (male and female) programs with the athletes participating in those programs. Those revenues are currently kept in the hands of colleges, many of whom use them to fund sports programs that don’t generate profits. The bill is still in its early stages, and we will know later this week whether it will move onto the Senate floor or die at the hands of the appropriations committee with whom it currently sits.

This news isn’t too far removed from a February 2022 Sports Illustrated story that reported the National College Players Association had filed a complaint of unfair labour practice charges against the National Labour Relations Board, the NCAA, the Pac-12 Conference, as well as both USC and UCLA. The complaint asks for Division 1 basketball and football players to be affirmed employee status. Not long before that complaint was filed, an individual in Minnesota started a players’ association for college football and basketball players and made claims of unfair labour practices. Just as the first California bill took years to make its way to the nation’s Supreme Court and become national law, it could be a significant amount of time before anything comes of this latest piece of legislation, and that’s if it becomes law at all. Regardless of what happens in the California Senate, however, we can rest assured knowing that this is not the end of legislation and litigation involving college athlete compensation.

Are ”boosters” taking advantage of the rules to recruit players?

The news around NIL deals and compensation is coming from all of the parties involved. The NCAA has recently announced plans to crack down on how NIL deals are being used by college boosters to recruit players.

CBS published a story on the news earlier in May. The story states that the NCAA has taken issue with boosters, which it defines as “representatives of the institution’s athletic interests,” and includes anyone who has provided a donation in order to receive season tickets for college sports or has been involved in an organization that promotes college athletic programs. The CBS story reports that collectives made up of boosters, of which around 100 may exist, have been skirting rules which prohibit boosters from paying players directly in or from participating in the recruiting processes. They do this by signing players to NIL deals.

Sports Illustrated also stated that about 100 booster collectives exist and have paid out over $5 million to players under NIL deals which the NCAA is concerned acts as more of a salary for players. Many of these collectives operate sophistically and are managed by attorneys or agents who make sure that there is legal justification to keep their deals within the letter of the law, even if the NCAA feels they violate the spirit of the law. A May article published by Sports Illustrated interviewed a booster associated with the University of Florida who started a collective and donated $1 million of his own money stating that players may expect up to $100,000 to play for a school. The story also reported on LSU football player Kasyshon Boutte who required a NIL from a collective associated with the school in order to prevent him from transferring to another school.

The NCAA does not seem prepared to sit idly by, though. Just days after the CBS story was published, the organization announced it was issuing guidance to schools in the crossover between NIL deals and recruiting activities. The statement underscored that NIL deals are not meant to create contracts between players and schools, and that booster collectives were never supposed to be part of the college sports landscape. The guidance does not have any teeth, and technically booster collectives can still carry on their business so long as they don’t break any actual laws, but it’s fair to imagine this is not the last we’ll hear of this issue.

Contact Feigenbaum Consulting in Toronto for representation in entertainment or sports

At Feigenbaum Consulting, our team of professionals offers a full range of services to clients in the sports and entertainment industries including agents and coaches. We have a particularly deep well of experience in cross-border matters and financial arrangements. We take a personal approach with our clients, understanding and meeting their unique needs. Contact us online, or call us at (416) 777-8433 or toll-free at (877) 275-4792 to learn more about how we can help you or the athletes you work with.