NCAA Player Likeness Ruling Opens Up Pandora’s Box For Stakeholders

    • The NCAA decision came just weeks after the state of California passed a law requiring universities to allow athletes to profit from their likeness.
    • The non-profit organization has a lot of variables to consider going forward, in order to keep recruiting a level playing field and student-athletes’ interest on education.

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The NCAA allowing student-athletes to cash in on the use of their name, image, and likeness is a rule change generations in the making; made possible by months of mounting social and political pressure on the collegiate sports regulator.

Its top governing board’s unanimous decision this week – granting student-athletes permission to find endorsement deals – now calls on each of the NCAA’s three divisions to create new guidelines by no later than January 2021 around how players can maximize their earning potential while in school.

No specifics about what those regulations will look like were disclosed in the NCAA’s public statement. However, the organization did suggest that new rules should be transparent to the athlete, keep player recruitment at a level playing field, and encourage student-athletes to value education first before business.

“The NCAA’s announcement was vague, but it had to be because they haven’t reached any conclusions,” said Len Elmore, former NBA player, sports broadcaster, and now a professor at Columbia University’s Sports Management Program. “Yet they did realize they had to do something. Name, image, and likeness, unlike athletic performance, is your natural property right.”

The NCAA’s decision comes just weeks after the state of California passed a law requiring its universities to allow college athletes to profit from their name, image, and likeness. That law, signed on Lebron James’ HBO show “The Shop” is set to take effect in 2023. Other states, including New York and Florida, have openly discussed following in California’s footsteps. 

The NCAA has a lot of variables to consider going forward. The non-profit will want athletes to be able to endorse different products and services, but there will likely be a lot of prohibition, according to Elmore. Such rules would exist to keep student-athletes from accepting money from anyone tied to a university, such as boosters paying student-athletes to publicly support a local car dealership.

Varying state laws and tax codes in the U.S. further complicate matters for the NCAA. Players in the state of California can legally endorse marijuana dispensaries, according to 2016 legislation making the drug legal in the state. But a student-athlete in Florida will benefit from paying less in taxes for their marketing deals. 

“What’s hard for the NCAA is determining what products and services will be allowed,” said Elmore. “You could end up with student-athletes going to a school for the money, and not for educational or athletic reasons.”

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Only a select group of student-athletes will likely benefit from the NCAA’s new ruling -– primarily football and basketball players, whose sports bring in the most revenue for the non-profit organization and TV networks. And even then, it will come down to supply and demand, experts said.

“It’s not clear what the NCAA will do, but I would be shocked if it doesn’t include a provision similar to California that athletes cannot endorse companies that rival contracts already signed by universities, in order to stop the gravy train,” said Steven Bank, professor of business law at the UCLA School of Law. 

UCLA, as an example, signed an exclusive $280 million deal in 2016 with Under Armour, which prohibits its athletes from wearing any other branded apparel. 

Bank likens California’s existing law and what the NCAA might do to an “Olympic-sized loophole.” A previous iteration of Rule 40 of the Olympic Charter prohibited competitors from allowing their name or image to be used for advertising purposes during the Olympic Games – thereby limiting the earning potential of athletes during the month-long event. 

“Endorsements are substantially more beneficial when you wear a product while the TV cameras are on,” said Bank. “Colleges could conceivably find a sponsor for everything and athletes won’t benefit as much.”

Though the NCAA’s decision doesn’t change much now, what it does accomplish is chilling the efforts of legislators keen on passing their own version of California’s Fair Pay to Play Act, he added. 

“Even if they are in favor of it, the NCAA is worried about multiple states with different standards,”Bank said. They want a uniform rule across all leagues and conferences.” 

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The NCAA eclipsed $1 billion in revenue in its 2017-2018 fiscal year, according to its last reported financials. More than three-quarters of that revenue derived from marketing and TV rights for men’s college basketball games, its website says

Funds are then distributed to individual schools and conferences based on more than one-dozen criteria. These include a team’s performance in the NCAA Tournament, scholarship funds, and the organizing of conference championship tournaments, among other initiatives.

Beginning next year, the NCAA will additionally allocate a portion of its revenue to schools with the best student-athlete academic performance. 

The NCAA declined to comment on this story.