In May, Governor Brian Kemp signed House Bill 617, which will take effect July 1, 2021. With this, Georgia has joined several other states with Name, Image, and Likeness (“NIL”) laws that expired on This Date. Georgian law allows student athletes, like others around the country, to benefit from their name, image and likeness through sponsorship, endorsements, personal appearances, autographs and social media marketing.
However, the Georgian NIL law contains some unique provisions. For example, the Georgian NIL statute allows universities to choose an option that requires student-athletes to share up to 75% of an athlete’s NIL compensation. These shared (or “pooled”) funds would be placed in an escrow account that would be entrusted to the school’s sports director as a trustee. Student-athletes would then be entitled to their pro-rata portion of the pooled funds for one year after the student graduates. Despite the availability of this option, the University of Georgia has already expressed its disinterest in requiring Bulldog athletes to pool any individual compensation, and other universities in Georgia are expected to follow suit. In addition to the pooling option, the law also requires universities to offer at least five (5) hours of financial literacy and other life skills coaching to all student athletes in the student’s first and third year of study.
Legal information for athletes
As brands and companies begin to hire student athletes to get paid as speakers and brand ambassadors, athletes should consider a wide range of legal concerns that may arise from such engagements. For example, brands want to enter into a formal contract that not only sets out the athlete’s service-related obligations and the financial terms of the deal, but also likely includes branded concepts such as (1) industry and territorial exclusivity, (2) intellectual property, control and use, and (3) Conduct restrictions (sometimes known as a “moral clause”). While all of these terms and conditions are common in advertising contracts, the scope of these terms is often subject to rigorous negotiation and should be carefully examined before accepting any commitment.
Importantly, student athletes also need to be aware of the robust regulatory framework for celebrity support and consumer advertising campaigns. In recent years, federal and state regulators have paid increased attention to consumer advertising campaigns and the parties involved in such activities. To ensure consumers are not misled or misled by their favorite sports personalities, regulators will be sure to monitor the activities of college stars as they enter the advertising market. In such cases, the responsibility for compliance with the law rests with both the advertiser and the student-athlete. Therefore, the commitments and the associated compliance protocols are important concepts that the parties must also consider in the final contracts.
In practice, legal risks and financial burdens can be attributed to the terms of the contract, but the potential immaterial damage to one’s own name and reputation is not so easily averted. In fact, the bad press associated with “false and fraudulent” advertising is likely to be an annoying distraction for a young athlete, if not a significant blemish on an aspiring star’s public reputation. It is clear that the proliferation of NIL laws in favor of student athletes will prove to be a financial boon for the college athletes who do business, but with such fortunes comes additional responsibility. First, all sponsorship partnerships and compensation agreements should be carefully examined and reviewed. In addition, athletes and their families should seek the advice of experienced counselors before accepting and signing formal agreements.
What’s next?
Looking ahead, student athletes and universities should continue to monitor developments on NIL issues at the national or state level. In June 2021, for example, the Supreme Court issued an important ruling that will have a significant impact on both universities and student athletes. In the National Collegiate Athletic Association v. Shawne Alston, the court unanimously ruled against the NCAA, ruling that student athletes were eligible for additional educational benefits, including graduate school scholarships, internships, or computer equipment. Although the decision was narrow, the opinion will open the door for universities and the NCAA to significant additional litigation, including whether or not student athletes should be compensated. The court’s ruling appears to be a signal that the court sees the NCAA as a monopoly fixing prices and that the court will be inclined to support payments to student athletes in the future. This would include endorsements and direct remuneration for services.
Also, given the diversity and inconsistency of state-level laws, it is possible that Congress could pass a federal version of NIL legislation that anticipates various state laws, including the new Georgia law. Therefore, student athletes and universities, along with the brands they want to target, should continue to closely monitor congress developments on this important topic.
