Amidst the seemingly ever-shifting landscape of college sports, further change just came in a big way from the Sunshine State. On June 12, 2020, Florida enacted a new law that paves the way for intercollegiate athletes at schools in Florida to receive compensation for the commercial use of their name, image and likeness rights (NIL). Following the passage of California’s “Fair Pay to Play Act” in September 2019 and a similar law in Colorado in March 2020, Florida is the third state to give college athletes the statutory opportunity to profit from the use of their NIL while retaining their athletic eligibility. Most notably, in contrast to the California and Colorado laws, which do not take effect until January 1, 2023, Florida’s law will become effective July 1, 2021, a little over one year from the date of enactment. This accelerated effective date significantly heightens the pressure on the NCAA, and perhaps even Congress, to create and implement a broad-based, universal framework for NIL-based compensation for intercollegiate athletics, as opposed to a piecemeal, disjointed state-by-state approach.
Florida’s Law – Section 1006.74 of the Florida Statutes “Intercollegiate Athlete Compensation and Rights”
In the final version of the bill signed by Florida Governor Ron DeSantis, the preamble expressly states the law’s purpose:
“[t]he Legislature finds that intercollegiate athletics provide intercollegiate athletes with significant educational opportunities. However, participation in intercollegiate athletics should not infringe upon an intercollegiate athlete’s ability to earn compensation for her or his name, image or likeness.”
The new law, Section 1006.74 of the Florida Statutes, specifically provides that an intercollegiate athlete at a school in Florida (specifically, any “postsecondary educational institution” which is broadly defined as a state university, a Florida College System institution, or a private college or university otherwise receiving aid from the state under a separate provision of the Florida Statutes) may earn compensation for his or her NIL in amounts “commensurate with the market value” of the authorized use of such athlete’s NIL. Meanwhile, other sections of the law protect this right to compensation by prohibiting schools from adopting or maintaining any contract, rule, regulation, standard or other requirement that would prevent or unduly restrict an athlete from earning compensation for his or her NIL or otherwise taking action that would affect an athlete’s receipt of grant-in-aid or athletic eligibility as a result of earning NIL-based compensation. The law also prohibits schools from preventing or unduly restricting an athlete from seeking professional representation (e.g., agents) in connection with securing NIL compensation, while also requiring that any such representation be handled only by a licensed athlete agent or an attorney in good standing with the Florida Bar.
Notably, in an effort to maintain some semblance of amateurism in intercollegiate athletics, the law prohibits schools or any other person or entity from paying NIL compensation directly to athletes in exchange for their performance or attendance at a specific school. Permissible compensation under the new law must be solely for use of the athlete’s NIL and must come from third parties unaffiliated with the school.
Given the history of illicit recruiting practices in major college sports, particularly football and men’s basketball, it remains to be seen whether this attempt to prevent schools from compensating athletes directly (or more likely, indirectly) will ultimately be successful. However, by drawing a clear line in the sand, Florida’s law should prove at least somewhat effective in preventing blatant “pay-for-play” scenarios whereby Florida schools and their supporting booster clubs could direct large cash payments to players and recruits in exchange for achievement of performance goals or commitments to attend the school, each under the guise of NIL-based compensation.
Larger Implications for NCAA and College Sports
Florida’s NIL law delivers a statutory death blow to the NCAA’s traditional prohibitions against athletes receiving any NIL compensation. For this reason, its most significant impact will likely be the renewed sense of urgency it is likely to create among the NCAA and Congress to develop a federal solution to the issue of NIL-based compensation, potentially pre-empting the Florida law, along with other existing or prospective similar laws in other states. With Florida, Colorado, and California taking the lead, there are currently more than 20 similar bills pending in other state legislatures around the country. It is clear that there is a groundswell of support at the state level to chip away at what many consider the NCAA’s archaic views on amateurism and restrictions on compensation for intercollegiate athletes.
While the pressure may be rising, it is not impossible to conceive of a broad-based federal solution being delivered in a compressed timeframe (i.e., within a year). Following California’s passage of the Fair Pay to Play Act in September 2019, the NCAA’s Board of Governors (the “NCAA BOG”) voted unanimously in October 2019 to “permit students participating in athletics the opportunity to benefit from the use of their name, image and likeness in a manner consistent with the collegiate model.” The NCAA BOG’s vote included a mandate that each of the NCAA’s three divisions consider needed modernization and updates of existing bylaws and policies within a set of principles and guidelines, which included, among others:
- “maintain[ing] the priorities of education and the college experience to provide opportunities for student-athlete success,”
- “mak[ing] clear the distinction between collegiate and professional opportunities,” and
- “reaffirm[ing] that student-athletes are students first and not employees of the university.”
Following up on this largely symbolic vote, the NCAA BOG issued a comprehensive report in April 2020 in support of further rule changes. This report contained a number of recommendations, including the modernization of bylaws and policies that would allow intercollegiate athletes to be compensated for third-party endorsements, including social media influencer activity, and for licensing their NIL rights in connection with their independent work product or other business activity, so long as any such changes occur within certain “guardrails” meant to preserve amateurism generally in intercollegiate athletics (e.g., prohibiting use of “pay-for-play” arrangements disguised as NIL compensation and not allowing schools and boosters to use NIL opportunities in connection with recruiting). The NCAA BOG also adopted a timeline that requires each of its three divisions to begin formulating new NIL-related rules immediately, which are to be voted on no later than January 31, 2021 and effective no later than the beginning of the 2021-22 academic year.
While the NCAA BOG’s April 2020 action appears to serve as a concrete step toward a universal (rather than piecemeal state law) approach, the report also noted that Congressional intervention was likely necessary if any such overarching solution is to withstand legal scrutiny. More specifically, the report notes that:
“It became apparent during the working group’s deliberations that certain potential avenues for managing the NIL issue are complicated, or precluded altogether, by the potential application of state NIL laws and/or federal antitrust law to the Association’s bylaws… Therefore, the subcommittee has put forward a number of recommendations for Board consideration in engaging with Congress, including to seek preemption of NIL laws.”
The report went further in urging the NCAA BOG to engage Congress immediately to:
“a. ensure federal preemption over state NIL law;
b. establish an antitrust exemption for the NCAA;
c. safeguard the non-employment status of student-athletes;
d. maintain the distinction between student-athletes and professional athletes; and
e. uphold the NCAA’s values including diversity, inclusion and gender equity.”
As recently as last week, Congress answered when Florida Senator Marco Rubio introduced Senate Bill 4004, the “Fairness in Collegiate Athletics Act.” The bill would require the NCAA and its member schools to establish a nationwide framework for NIL-based compensation for intercollegiate athletes, while also providing the NCAA and its member schools a safe harbor from legal challenge (including under antitrust law) on the basis of rules passed in establishing the required framework. Notably, the act requires the NCAA to establish the framework by June 30, 2021 – the day before the Florida law is to take effect. It remains to be seen whether Congress will make this college sports bill a priority during the middle of a global pandemic and in an election year to boot.
While college sports confront an uncertain future in the midst of the coronavirus pandemic, the movement to loosen restrictions on compensating intercollegiate athletes was already at high speed prior to the outbreak of the virus. Based on legislative efforts in a number of states, including Florida, the movement shows no sign of slowing, irrespective of the pandemic. Florida’s new NIL law not only makes NIL compensation for intercollegiate athletes in the state a real actuality, but also seems to have served as needed motivation for both the NCAA and Congress to develop a workable, nationwide framework for NIL-based compensation for intercollegiate athletes by the beginning of the 2020-21 academic year.