The “Protecting Athletes, Schools, and Sports Act of 2023” is draft legislation that includes new restrictions and benefits for student-athletes and booster collectives that would change the landscape of the issue of name, image, and likeness (NIL) rights in the NCAA.
Expected to be proposed by Senators Tommy Tuberville (R-Ala.) and Joe Manchin (D-W.Va.), the draft legislation is not yet complete and may undergo changes as the senators receive feedback from college leaders and others.
Uniform Standard Contract
In its current form, the draft legislation specifies that a student-athlete must enter a contract to reap NIL benefits. The contract must be signed by each party, outline the scope of work to be performed, state the timeline for the performance of such work, state the compensation to be provided, and describe the duration of the contract. It also must conform with the standard contract template to be developed by the NCAA. No later than 30 days after entering a NIL contract, a student-athlete must disclose the contract’s details to the institution in which the student-athlete is enrolled.
Significantly, a student-athlete would only be able to enter a NIL contract after they have completed at least one semester of course work. This restriction limits concerns over boosters and collectives engaging with student-athletes prior to enrollment. Further, it is unlawful for a booster or third party to directly or indirectly provide or offer to provide funds to induce a student-athlete to enroll in, transfer from, or remain at a specific institution.
Institutions can restrict athletes from entering into NIL contracts with certain persons or entities, including: adult entertainment, sexually suggestive, or sex-oriented products; alcohol products; casino and gambling products; tobacco and marijuana products; pharmaceuticals; any dangerous or controlled substances; drug paraphernalia; weapons, including firearms or ammunition; or any other product prohibited in NCAA competition. If a student-athlete is so restricted, the institutions also cannot enter a contract with those persons or entities.
Agents, third parties (including collectives), and individuals and boosters involved with representing or engaging in a NIL contract with a student-athlete must register with the NCAA and disclose the details of the contract. The NCAA is required to establish registration processes for such parties.
Medical Trust, Other Protections
Further, the draft legislation establishes a medical trust that requires organizers of any revenue-generating collegiate-level tournament or playoff to deposit not less than one percent of annual proceeds into a trust fund to be managed by the NCAA. The trust is intended to cover the costs of any out-of-pocket medical expenses relating to injury or illness sustained as a result of participation in intercollegiate athletics. The trust also would cover immediate family travel when a student-athlete is a dependent.
The draft provides for educational and financial literacy resources and scholarship protections for student-athletes engaged in a NIL contract.
Under the draft legislation, the NCAA will have the authority to conduct investigations and audits to assess compliance with the legislation. The NCAA will also be required to establish a dispute resolution process for student-athletes who assert a violation. Any violation of the legislation would be considered a violation of the Federal Trade Commission Act.
Even in its draft form, this legislation shows the NCAA will have significant oversight over NIL agreements. Student-athletes will not have full authority to contract as they please. Jackson Lewis attorneys will continue to monitor the draft legislation and any law governing NIL. In the meantime, both educational institutions and businesses looking to utilize NIL of student-athletes should be prepared to be subject to NCAA regulating the terms of these agreements.
The Jackson Lewis Collegiate and Professional Sports Industry group is well-versed in NCAA issues and continues to analyze ongoing developments in the area. Please contact a Jackson Lewis attorney with any questions regarding NCAA and any other collegiate and professional sports developments.