The NCAA has ruled that college athletes can begin getting paid for the use of their name, image and likeness (NIL).
This ruling is a huge deal for college athletes, who have long suffered from being exploited for their talents and likenesses, but not having any way to profit from them. College sports can bring in as much as $14 billion annually and the NCAA has long been accused of pocketing most of those profits while leaving players destitute. For example, in 2010 the University of Michigan brought in $120 million from its football team alone, yet players still had to pay for their own jerseys. With this new ruling, student athletes will be able to benefit financially from their NIL in ways that would previously have gotten them kicked off the team or even expelled.
What does this mean for your business? If you want to stay on top of changes that are affecting the world around you (and you do), then you should care about how this ruling impacts the NCAA and its brand.
The organization's board of governors voted unanimously to allow athletes to get paid for their talents outside of traditional scholarships, beginning in January 2021.
The organization’s board of governors voted unanimously to allow athletes to get paid for their talents outside of traditional scholarships, beginning in January 2021. The decision is a win for student-athletes and represents a new way for businesses to connect with the athlete demographic. After all, there are over 400,000 NCAA athletes—and given the popularity of college sports, some businesses may do well to make connections now before those athletes become future professionals with larger sponsorships.
This change will be seen at all NCAA schools—not just the large “Power Five” conferences that often dominate media coverage of college sports. This means you can create opportunities to build relationships with potential customers from programs both big and small across America.
While this is a win for student-athletes, it also opens up new opportunities for businesses to work with NIL influencers.
NIL reform presents several opportunities for businesses. The most obvious is working with a student-athlete to promote your brand, but there are many other possibilities as well.
University contracts permitting these kinds of endorsements can be complex and will likely vary from school to school. Universities will need to carefully consider the potential conflicts of interest that could arise when students are permitted to endorse their sponsors' products or services, particularly if those products or services directly compete with university partners. There also may be issues arising from the NCAA's existing Bylaw 12.5.2.1, which prohibits institutions from "promoting or advertising the commercial ventures of student-athletes," so long as those commercial ventures relate in any way to athletics ability or reputation (for example, if an athlete signs an endorsement deal with a sneaker company).
As more information on state law developments becomes available and schools establish their own policies, businesses should start considering how they might take advantage of this new opportunity in the college sports space.
One unique aspect of this decision is that it affects schools belonging to NCAA conferences as well as some colleges not tied to any conference.
One unique aspect of this decision is that it affects schools belonging to NCAA conferences as well as some colleges not tied to any conference. There are two primary reasons for this:
First, Title IX, the landmark piece of legislation passed by Congress in 1972, created a comprehensive federal law that prohibits gender discrimination by institutions that receive federal funding. The Supreme Court has held that Title IX applies to athletic programs sponsored by educational institutions. This means schools would have had to comply with Title IX regardless of whether they were affiliated with an athletic conference or not.
Second, while the NCAA conferences are major athletic organizations and create national standards on how sports should be organized, they do not have the legal authority to regulate things beyond their own conferences. This means that individual states could enact laws regulating athlete's right to profit from their name, image and likeness within their state boundary lines and those laws would be legally enforceable even if they conflicted with what the NCAA or a particular athletic conference dictated.
Brands have always been able to partner with NCAA athletes, but the guidelines governing compensation were strict and prohibitively expensive.
The National Collegiate Athletic Association has historically been very protective of their brand, the brands of their athletes, and the brands of the universities they represent. Therefore, while brands have always been able to partner with NCAA athletes, the guidelines governing compensation were prohibitively expensive (i.e., full price sponsorships).
While there are certainly benefits to this arrangement for individuals who are fortunate enough to receive a full scholarship, a recent court ruling has opened the door for college athletes to be compensated for endorsements. The implications could be far-reaching—not only for those who have been unable to afford a college education but also for the marketing budgets of companies looking to sponsor these up-and-coming stars.
College coaches have historically been protected from criticism for unfettered endorsement deals by their contracts, which give them permission to make money as long as they promote brands approved by the school.
First, let's set the stage. College coaches have historically been protected from criticism for unfettered endorsement deals by their contracts, which give them permission to make money as long as they promote brands approved by the school. While this is undoubtedly a positive step forward in empowering college athletes, it's also important to note that such freedom could lead coaches to cross ethical lines and use their influence on athletes in unethical ways. For example, if a coach uses his power to steer players towards certain industry sponsorships due to a vested interest in those companies' success, that could potentially be considered exploitation or even abuse of players' trust.
Lastly (and most importantly), given how much coaches stand to benefit from athlete sponsorship opportunities—and given how much leverage they already have over their players—it's hard not to think about NIL-related conflicts of interest that could arise once these new rules go into effect. That said, I do believe many schools will respond appropriately by revising and clarifying their relationships with corporate sponsors so there are clear limits on what endorsements are allowed or discouraged during recruitment or competition seasons.
Businesses seeking marketing opportunities with collegiate sports will be growing significantly in number.
This relationship is likely going to be determined by a variety of factors. The first and most important factor, which will likely drive the majority of these conversations, will be value-based costs. Brands and agencies have had a system in place for years that drive all aspects of sports marketing. It’s a system that allows brands to accurately calculate ROI based on the value they bring to athletes through endorsement deals. This valuation process takes into consideration all aspects of an athlete’s marketability, including their image and likability, social media following, performance statistics and more.
As brands negotiate with college athletes for the first time ever, it’s likely that we’re going to see this concept trickle into discussions about how much money should be allocated for NIL opportunities as opposed to traditional sponsorship deals.