Cashing in on college sports

For decades, NCAA rules barred athletes from profiting off their names, images, and likenesses while still in college. That meant a Heisman Trophy candidate could not appear in a TV ad for a local car dealership. An athlete could get suspended for hawking autographed memorabilia online, as former University of Georgia football player Todd Gurley did in 2014.

But that all changed in July, when the NCAA lifted the ban in response to a court ruling. For the first time, college athletes can now earn money from endorsements and other ventures, as long as they follow a new set of NCAA rules, along with state laws. Some athletes have already signed lucrative deals with companies that hope their endorsements will score sales.

The NCAA was previously dead set against granting college athletes name, image, and likeness (NIL) rights, claiming it would blur the distinction between amateur and professional sports. Yet the organization changed its tune after years of legal battles.

The tide began turning in 2014 when former UCLA basketball star Ed O’Bannon filed a federal class-action lawsuit after seeing his likeness used in an NCAA-licensed video game well after his college days had ended. O’Bannon challenged NCAA rules allowing the organization to make money off him in perpetuity without giving him a dime.

Other college athletes, past and present, later filed their own lawsuits challenging the NCAA’s stance on athletes receiving pay to compete for their universities. Northern California’s federal district court combined those cases with O’Bannon’s, with former West Virginia University football player Shawne Alston’s name headlining the combined case.

Ultimately, the NCAA lost in two courts: the court of public opinion as well as the U.S. Supreme Court.

Sports commentators railed against a system that allowed the NCAA and its member schools to rake in billions of dollars while preventing the athletes who generated that revenue—athletes of color in particular—from receiving a slice of the pie.

Days before the NCAA issued its new NIL policy, the Supreme Court ruled 9-0 against the sports association in the Alston case. As Justice Brett Kavanaugh wrote in his concurring opinion, “Nowhere else in America can businesses get away with not paying a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. And under ordinary principles of antitrust law, it is not evident why college sports should be any different.”

The NCAA has placed some limitations on NIL agreements. For starters, they cannot be vehicles for companies to funnel money to athletes under the table: If a business hires an athlete to appear and sign autographs at its grand opening, the athlete had better do just that.

Companies also cannot use the lure of an NIL contract to persuade an athlete to sign with a particular school. The University of Oregon best exemplifies why this is important: Alumnus and Nike founder Phil Knight heavily bankrolls the school’s athletic department. Without a limitation on promises of NIL deals, the school’s ties to the athletic shoe and apparel giant would arguably give the Ducks an unfair advantage when landing top prospects.

In addition, athletes must follow the laws of the states where their schools are located. Some states have moral clauses restricting what athletes can endorse: Tennessee, Texas, and New Jersey prohibit endorsements of alcohol, gambling, tobacco, and adult entertainment. (New Jersey’s law also includes firearms and other weapons.) In Arkansas, an athlete can’t enter an NIL agreement until he or she enrolls in school.

College athletes have already begun cashing in on NIL deals. Bryce Young, the new starting quarterback at the University of Alabama, signed deals with Cash App and memorabilia and trading card companies worth more than $800,000, according to ESPN. Lesser-known names also benefit: Built Brands, a Utah-based maker of protein bars, has agreed to pay the tuition of nonscholarship football players at Brigham Young University—and the school’s athletic department helped broker the deal.

The NCAA’s NIL policy is temporary until either Congress enacts legislation regulating college sports nationwide or the NCAA adopts more permanent rules. And athletes’ ability to sign their own NIL deals may create hiccups for the universities they represent: For instance, can an athlete represent Under Armour while competing for a school whose teams are outfitted by Nike?

Still, there’s no denying that a seismic shift has occurred in college athletics: The NCAA and its member schools will still have massive paydays, but now the athletes can, too.