The NCAA & Intellectual Property: The State of Play on NIL Reform

What is NIL, and how did we get here?

Defining NIL

NIL (Name/Image/Likeness) is shorthand for a student-athlete’s intellectual property rights (their name, image, and likeness).

A Brief History of How We Got Here

It is important to put the current conversation about NIL reform in context. The NCAA was founded after a White House meeting in which Teddy Roosevelt met Ivy League football coaches and administrators to push them into adopting rules to make football safer. (There had been a rash of student deaths and injuries playing the unregulated new game.) The newly minted organization, which became the NCAA in 1910, was founded on three major principles: mandatory football helmets, adopting Harvard’s rules rather than Yale’s (including the invention of the forward pass), and a strict ban on recruiting or offering any financial compensation to student-athletes. It is important to note the NCAA did not develop enforcement mechanisms until the 1950s. These enforcement mechanisms were adopted alongside the recognition that schools COULD provide “athletically related financial aid” known as athletic scholarships.

Fast forward to 2009 when a former UCLA basketball player, Ed O’Bannon, sued the NCAA (along with EA Sports and the Collegiate Licensing Company) for using his likeness in a video game without credit or permission. It was clear that the NCAA’s legal position in this case was exceptionally weak and that continuing to monetize student-athlete’s intellectual property without compensation was becoming untenable. In fact, EA Sports and CLC settled the lawsuit and paid out $40 million to be distributed to the student-athletes whose likenesses had been used without permission, but the NCAA took the case to trial and lost; this established a legal precedent that it could not monetize student-athlete’s intellectual property without consent, providing a roadmap for more class action lawsuits based on antitrust law. The NCAA has lost several subsequent challenges and is currently enjoined from enforcing bylaws limiting NIL payments and on transfer limitations.

NIL reform has also been adopted by individual states. Many states passed legislation to mandate students at the college (and in many states the high school level) be able to freely profit from their intellectual property (see Figures 1 and 2).

The State of Play Today

What has developed is a three-tiered NIL system. The top tier impacts students who develop significant commercial value and can monetize that value individually.

The most broadly influential tier on the college side is made up of NIL “collectives.” These collectives are independent entities that come together to support athletics at a specific college. They offer prospective students compensation as an inducement to attend and/or to remain at the school and are responsible for the majority of NIL value right now.

There is also a low-value/exploitative tier of NIL. This tier includes companies that purchase intellectual property for minimal payments, barter, or just the promise of possible payment. Their business model involves small-scale investment, inducing students to give up their intellectual property without understanding its value.

Advising Students

In this environment, it is very important for students who DO monetize their NIL rights in high school to make sure their contracts sunset prior to their enrollment in college so they have maximum ability to negotiate with the college collectives. Once the collective deal (and athletic scholarship) is secured, THEN the student can monetize their rights with additional deals. It is also critical to have all contracts reviewed by a competent and knowledgeable intellectual property attorney. Most schools with significant NIL collectives can make these experts available to their students at minimal/no cost.

For students who are NOT looking at NIL deals based on their athletic profile or social media influence, there is a significant space for entrepreneurship and creativity to build value. Advisors should be encouraging students to explore this space even for athletes who are not attracting elite offers!

I believe that IECs should advocate for colleges to support and enhance the value of their student’s intellectual property. This would push more students into top-tier business agreements and generate more value for everyone. It is critical that colleges develop workable rules for the second tier “collectives.” An unregulated arms race is inevitably going to exploit some students; making sure that the benefits are spread more widely and in a way that is congruent with the college’s educational mission is broadly good policy that could gain support across stakeholders. Finally, it is in everyone’s interest to protect student-athletes from exploitation by the lowest tier of actors in the NIL space. All these issues require legislative action and lobbying at both the state and federal levels. While I personally feel this is the right approach, there is no shortage of opinions about the best path forward.

Policy Possibilities

The current patchwork of state laws, temporary restraining orders, and legal opinions makes action via the NCAA legislative process problematic. Coming to grips with this new legal and commercial landscape will require all the stakeholders involved in intercollegiate athletics to collaborate in developing a new framework that can be adopted as federal legislation and executive branch regulation. From the NCAA’s perspective, the best-case scenario is legislation that provides the NCAA an exemption from antitrust law. But it could also mean federal legislation setting a framework for the compensation of student-athletes and/or empowering the NCAA to enforce member adopted legislation within certain defined parameters. NCAA member schools and executive leadership, especially among the College Football Playoff schools has an outsized influence to set the tone of this debate and needs to engage with this process in a strategic way with a unified agenda. This agenda has not been communicated either by college presidents or the NCAA executive staff, and we have not seen a clear process involving all stakeholders yet outlined.

In the absence of clear leadership from the NCAA, we have a variety of efforts at influencing policy coming from different actors. There is a highly publicized effort to unionize student-athletes with the idea that the NCAA would come to a collective bargaining agreement with some kind of NCAA Players Association. But this approach has several serious problems, including serial failure in court. Just this week, a highly publicized effort to re-classify student-athletes at Dartmouth as “employees” featuring the Dartmouth basketball team was challenged by the university and is currently under review by the NLRB. There are also a variety of lobbying efforts at the state level, but no state action solves the problem of a national organization needing national policy to provide clarity to its members.

Dave Morris, MEd, IECA (WA), College Athletic Advisor, can be reached at [email protected].

IECA Returns to Capitol Hill for Our Second Annual DC Advocacy Day

On March 4-5, 2024, 15 IECA members descended on Capitol Hill for the second annual IECA DC Advocacy Day. We held 33 meetings with elected officials and their legislative aides from the US House of Representatives and Senate, introducing (or re-introducing) IECA to offices representing California, Colorado, Illinois, Louisiana, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Texas, Virginia, and Vermont. The event kicked off with a meeting with Bernie Sander’s (VT) office, who is the chair of the Senate Committee on Health, Education, Labor, and Pensions (HELP).

DC Advocacy Chair Steven Mercer commented, “It was a great opportunity to learn more about the Understanding the True Cost of College Act and the College Transparency Act. Not many people get a chance to do this, as it’s rare for committee staff to meet with constituents. However, IECA has a close relationship with this committee since [CEO] Mark Sklarow was recently invited to give congressional testimony. This has allowed us to continue building close relationships with policymakers in Washington DC, which ultimately benefits the students, families we work with, and members of IECA.”

Whitney Bruce, Vice Chair of the Government Relations Committee, continued, “Our conversations in legislators’ offices were powerful and affirming. While we went there to advocate for issues that matter to us as we serve our clients, the power of the legislation we were discussing is in its benefit to those students and families who don’t have the benefit of our expertise.”

The purpose of Advocacy Day is to advocate for issues important to our profession and the students and families with whom we work. The issues we addressed this year included the following.

Introduction of IECA

We introduced IECA as the premier association within our profession, requiring our members to adhere to the highest standards of expertise and ethical integrity. We encouraged the offices to look to us for our expertise in education and adolescent development, and to partner with us in the development of legislation and policymaking to support and protect students and families in their educational journey.

Transparency in Higher Education

Understanding the True Cost of College Act. This act requires standard terminology and a universal format to assist students and their families, colleges and universities, and secondary school and postsecondary counselors to make informed decisions about the real cost of college and reverse the trend of taking on staggering student debt. Financial aid transparency is a step toward greater access and opportunity for all students.

College Transparency Act. This bipartisan bill ensures greater transparency regarding student outcomes at postsecondary institutions, providing information for evaluating which school to attend. The current system is overly burdensome; the new system will give students a clear understanding of their return on investment. The data will include information on student outcomes, including enrollment, graduation rates, and post-college earnings across colleges and majors.

We thanked those senators and congressmen who have already co-sponsored these bills and asked for support from those who have not done so.

Adolescent Mental Health

Given the adolescent mental health crisis, IECA supports legislation to address the following:

  • Increasing the availability of mental health support for adolescents within and beyond school
  • Providing critical oversight and standards for residential therapeutic schools and programs
  • Ensuring parity of mental and physical health coverage by insurers

While there is currently no legislation facing Congress on these issues, we positioned ourselves as experts and asked for a “seat at the table” in the development of future legislation. We were joined by Kyle Matous, our new lobbyist from Advocacy Associates. As a previous Chief of Staff on the Hill, and most recently as the Director of Government Relations for Bono’s ONE Campaign, Matous is incredibly well-connected. Until our return next March, he will be our “boots on the ground” presence. He acknowledged that while we may not see any quick movement on the two transparency bills given the current state of Congress, the consistent emphasis on our issues is the best way to ensure change in the future.

“I got to meet the same staffer from Senator John Cornyn’s office that I met last year; she remembered my name, my title within IECA, and my business/location. We discussed the two bills and the adolescent mental health issues in much depth and how IECA can be involved in future legislation or hearings. It was like American Democracy 101 with my senator’s office. We positioned ourselves as the expert in the field of educational consulting, advocating for the students and families we serve, as well as the interest of those who do not have access to our services.” —Ibrahim Firat, President, IECA

Actions You Can Take

As an IECA member, you may ask, “What can I do?” We encourage you to write to your elected representatives and ask them to co-sponsor the Understanding the True Cost of College Act (H.R. 1198, S. 528) and the College Transparency Act (H.R. 2957, S. 1349), both of which are bipartisan and bicameral. And according to Mark Sklarow, “Next year, we will have new tools built into our website that will facilitate direct communication between IECA members and their elected representatives.”

A huge thank you to Steven Mercer, Chair of the DC Advocacy Day Committee, and committee members Cheryl Chamberlain and Jeana Kawamura, for planning this event, which was filled with great conversation with congressional staff about our important work as champions for our students and their families.

By Linda Daley, 2023-2024 Chair, IECA Government Relations Committee

IECA Advocates for Standardizing College Financial Aid Offers

IECA supports standardizing college financial aid offers. The Understanding the True Cost of College Act introduced by Young Kim (R-CA) and Raja Krishnamoorthi (D-IL) and by Senator Chuck Grassley (R-IA) requires standard terminology and offer formats to assist colleges and universities, students and their families, secondary school and postsecondary counselors, and nonprofit consumer groups. IECA believes that financial aid transparency is a step toward greater access and opportunity for all students. We back legislation that provides financial aid clarity.

The call to standardize financial aid offers is not new. Mark Kantrowitz wrote about this topic in a 2007 article in Inside Higher Ed. In 2012 and 2013, a group of bipartisan senators introduced legislation to standardize student aid offers. Those senators included Tom Harkin, Marco Rubio, and Charles Grassley. Senator Grassley introduced Understanding the True Cost of College Act in 2019 with Tina Smith (D-MN) and Joni Ernst (R-IA).

There are other bills and a recently created task force to study the issue. IECA would like to see all higher education institutions use the same template so that students can easily compare offers. The Government Accountability Office (GAO) reported in early December 2022, after studying a sample of offers from 176 colleges and universities, that most were not using the recommended template from the Department of Education. The GAO recommends that Congress pass legislation that would include best practices for colleges regarding financial aid offers. Young Kim’s office has said that her legislation will be reintroduced this spring.

IECA believes it is time to require standardization. To join this effort, contact your representatives and let them know that financial aid transparency is an important issue to our college-going community and it is time to move forward by reintroducing and approving the True Cost of College Act.

IECA Presents to US Senate Committee on Health, Education, Labor & Pensions

On October 19, 2022, IECA members Bar Clarke,  Karen Mabie, Heidi Molbak, and Jesse Quam joined CEO Mark Sklarow in presenting to the senior staff of the Senate Committee that oversees a wide area of legislative responsibility. The US Senate Committee on Health, Education, Labor and Pensions (HELP) requested IECA’s input as it explores adolescents and mental health, with a particular focus on health and safety of teens in therapeutic residential programs. Staff leaders representing Senator Patty Murray (WA) and IECA’s legislative counsel, Craig Saperstein of Pillsbury Law, also participated in the meeting.

At the outset, IECA had the chance to explain the Association’s work, our criteria for membership, and earning designations in therapeutic placements. IECA’s Principles of Good Practice, our Standards of Excellence and training new independent educational consultants (IECs) through our Summer Training Institute were all explored by the Committee staff. They seemed particularly interested in our prohibition against accepting kickbacks or expensive gifts as well as the role IECs play beyond student placement including after-care, family dynamics, and communication with parties during treatment periods.

In response to questions about campus visits, IECA members noted that being able to visit a campus and speak with students was incredibly valuable, and that the online Member Network allows IECA members to find trusted colleagues who may have a recent experience with a program. Mark Sklarow cautioned that while IECA members can visit programs, these are planned and controlled, and that state government and credentialing organization hold greater authority in evaluative visits which can be unscheduled and more invasive.

The Senate Committee staffers seemed interested to learn that IECs are, at times, brought on to assist a school district in finding residential care when local options have been exhausted. Likewise, referrals from psychologists and other professionals were discussed.

Bringing up the “horror stories” at programs that surfaced in the news recently, the IECA team offered several insights. They noted that many of these stories relate to instances more than two decades old, which was followed by a period of dramatic change and improvement in program staff training, new policies to safeguard children, and the like. Additionally, we noted that many of the stories specifically relate to publicly financed programs, not those privately held. Even so, the IECA team was clear that IECA supports new legislation that can assure the safety and care of teens, including extensive staff training on therapeutic holds and isolation, record-keeping, improved communication between teens and parents, and recognition of client rights.

IECA also addressed the work of some unaffiliated consultants who act as program recruiters or agents, accepting kickbacks (while masquerading as IECs), and indicated that such actions hurt the professional reputation of legitimate IECs. IECA endorsed mental health parity and expressed concern that those who go too far to attack all therapeutic schools and programs run the risk of stigmatizing adolescents seeking mental health care.

IECA and our Therapeutic and Government Relations Committees anticipate providing additional input to the Senate Committee in the new legislative year.

Change in Status: An Update on the Legislation in California to Register All IECs

By Mark H. Sklarow, CEO, Independent Educational Consultants Association
 
The proposed law to register Independent Educational Consultants, which passed the Senate and Assembly Committees on Business and Commerce, now sits in the Appropriations Committee’s “Suspense File.”
 
The Suspense File is where bills go that are expected to cost taxpayers money that has not been budgeted. By assigning this bill (AB-1312) to the Appropriation’s Committee’s Suspense File, the state is acknowledging that a bill that was meant to be revenue neutral will, if passed, cost the state of California money.
 
The California government has estimated that implementation will cost the state between $12 and $25 million in the first three years! In theory, the next step is for the Appropriations Committee to weigh the benefits vs the cost.
 
In their research, the California government relied heavily on data supplied to them by IECA. Based on this research, our position, and the anticipated cost, they seem likely to conclude that the registry’s cost greatly outweighs any perceived benefit.
 
Moreover, the Suspense File is where California legislature sends bills—hundreds annually—to die. Often these are bills that sound good to voters but have hidden costs and difficulties. This view—that California was getting into more than they realized—is what IECA was advising in part (our argument was that they would either need to rely on us or spend considerable sums vetting IECs on their own).
 
Be aware that the bill could be resurrected. IECA will keep an eye on it and update with any additional information as it becomes available.