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NCAA Moves Closer to Letting Athletes Make Money on Endorsements

The NCAA’s Board of Governors on Wednesday signaled its support for rule changes that would allow student-athletes to be paid by third parties for endorsements and business ventures.

(CN) — The NCAA’s Board of Governors on Wednesday signaled its support for rule changes that would allow student-athletes to be paid by third parties for endorsements and business ventures.

The proposed rule changes were announced during a teleconference Wednesday morning, and would dramatically shift the college sports landscape by providing student-athletes with avenues to make money from endorsements, social media, personal businesses and appearances. However, the proposed rules would not allow student-athletes to use school or conference logos in sponsorship deals.

The rules pertain to student-athletes profiting from their own name, image and likeness, and do not allow or pave the way for a school to pay them directly. One of the stated goals of the rules is to keep student-athletes with that designation and cement their legal status as “non-employees” of the NCAA or their college.

The Board of Governors used a report from its legislative working group to establish the new framework, and the matter now goes to the NCAA’s three athletic divisions to further flesh out and establish compliance rules.    

“The NCAA’s work to modernize name, image and likeness continues, and we plan to make these important changes on the original timeline, no later than January 2021,” said Gene Smith, Ohio State athletics director and co-chair of the working group, in a statement. “The board’s decision today provides further guidance to each division as they create and adopt appropriate rules changes.”

This proposed framework comes on the heels of landmark legislation passed last year in California called the Fair Play to Pay Act, which would allow student-athletes to make money on endorsements. The NCAA pushed back on the law when it was signed by California Governor Gavin Newsom last September.

However, the NCAA signaled a tone shift on the issue in October, as the Board of Governors took the first step in changing their longstanding rules that prohibited student-athletes from making money on their images and likeness. The October vote began the revamping of polices.

The proposed January 2021 timeframe coincides with the NCAA’s yearly convention, which is slated to take place in Washington, D.C, that month. That gives the three divisions time to establish and refine many regulatory grey areas that still exist in the framework.

First and foremost among those concerns is exactly how college booster and sports agents will be regulated. While the established framework does not set a cap on a student-athlete’s potential endorsement earnings, the Board of Governors acknowledged that enforcement and regulation standards still need to be established.

“As we evolve, the Association will continue to identify the guardrails to further support student-athletes within the context of college sports and higher education,” said Val Ackerman, commissioner of the Big East and working group co-chair.

The purpose of these guardrails would be to prevent school boosters from using endorsements or business deals as “pre-recruitment” tools to sway a student-athlete into attending a particular school. Other guardrails might prevent a student-athlete from receiving payments from companies associated with gambling or banned substances.

The way a sports agent or adviser interacts with a student-athlete is another area in need of clearer regulation, an issue the NCAA’s three divisions will have to flesh out and finalize over the next nine months.

One proposed idea is that the NCAA could use campus compliance personnel to monitor the business actions of student-athletes. The Board of Governors also floated the idea of the formation of a third-party entity to manage and monitor compliance with its new rules.

Another sticky issue is the legal standing of these rules and how they interact with laws in the 50 states. The NCAA is hoping for congressional intervention in the form of nationwide legislation that would establish one framework for all student-athletes.

“The evolving legal and legislative landscape around these issues not only could undermine college sports as a part of higher education but also significantly limit the NCAA’s ability to meet the needs of college athletes moving forward,” said Michael V. Drake, chair of the Board of Governors and president of Ohio State University. “We must continue to engage with Congress in order to secure the appropriate legal and legislative framework to modernize our rules around name, image and likeness. We will do so in a way that underscores the Association’s mission to oversee and protect college athletics and college athletes on a national scale.”

Tim Davis, a sports law scholar and law professor at Wake Forest University, said he is not surprised that the NCAA is “suggesting that student-athletes be permitted to hire agents to assist them in profiting from athletes' NILs,” short for name, image and likeness.

“From a practical standpoint, it makes sense that athletes be permitted to do so given that many athletes will not have the business skills to adequately protect their interests,” Davis said. “Allowing student-athletes to hire agents for NIL purposes may also require the NCAA to reexamine its agent rules overall.  For example, agents who represent high-profile student-athletes for NIL purposes could have a real advantage in later signing with an athlete to represent him or her in negotiating the athlete's contract with a professional team.”

California Senator Nancy Skinner, D-Berkeley, co-author of the Fair Pay to Play Act, said in a statement Wednesday that the NCAA’s move “represents a landmark change.”

“Today, after California and states across the country put the ball in their court, the NCAA has taken a step in the right direction. College athletes are on their way to making money off their name, image, and likeness — just like all other Americans can,” she said. “A year ago, no one would have expected the NCAA to move definitively toward giving college athletes their NIL rights. California launched a tidal wave, with more than two dozen states joining the cause to give student-athletes their NIL rights.”

Smith, Drake and Ackerman were joined in Wednesday's announcement by NCAA President Mark Emmert and Nicholas Clark, a former college football player who is now the chair of the Board of Governors Student-Athlete Engagement Committee.

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