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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

On July 1, 2021, the National Collegiate Athletic Association (NCAA) officially changed its rules prohibiting college athletes from receiving benefits from their name, image, and likeness. This is arguably the most significant day in the history of the NCAA as this landmark decision represents a monumental shift in the NCAA’s policies surrounding amateurism of athletes.

As we previously discussed, in 2019, California was the first state to allow collegiate student athletes to benefit financially from the use of their name and likeness and to enter into licensing contracts by passing Senate Bill 206, a bill known nationally as the Fair Pay to Play Act. At the time of passage of this bill, the NCAA had vowed to vigorously oppose the legislation in a letter to California Governor Gavin Newsom, and threatened to make all 58 of California’s NCAA schools ineligible to participate in NCAA competitions because they would allegedly have an unfair recruiting advantage.

Despite the NCAA’s threats, more than a dozen states followed California’s lead and passed their own similar legislation allowing college athletes to make money from their name, image, and likeness, which ratcheted up pressure on the NCAA to make changes to its policy. The momentum for change reached a fever pitch in June of this year when the US Supreme Court in a 9-0 decision ruled against the NCAA by finding that NCAA restrictions on “education-related benefits” for college athletes violated antitrust laws.

Faced with multiple states passing legislation to allow for athletes to be compensated through business and sponsorship deals and the recent SCOTUS decision, the NCAA has now formally reversed course on its opposition. As reported by ESPN, NCAA President Mark Emmert said in a statement, “This is an important day for college athletes since they all are now able to take advantage of name, image and likeness opportunities.” Emmert continued, “With the variety of state laws adopted across the country, we will continue to work with Congress to develop a solution that will provide clarity on a national level.”

The new rules open the door for college athletes to sign with agents or other legal representatives to assist in obtaining endorsement or licensing deals as well as allow them to create their own businesses or participate in advertising campaigns, among a host of other potential business ventures that are now approved by the NCAA. It appears that now is the time to start preparing templates for student athlete license and promotional agreements as it is certain that a wave of NCAA athletes will seize on opportunities to monetize their name, image, and likeness.