NCAA Men's Basketball Regional - Sacramento, California (2007). Sacramento Bee Photograph by Jose Luis Villegas

Background

On September 30, 2019 governor Gavin Newsom of California signed the Fair Pay For Play Act into law allowing student-athletes to receive compensation for their Name, Image and Likeness (NIL), hire agents, and sign endorsement deals. While the Fair Pay For Play act doesn’t take effect until 2023, the move guaranteed student-athletes in California the right to receive compensation for NIL, and all but forced the NCAA to respond as other states started going down the same path as California (Florida, New Jersey, etc.).

On October 29, 2019, the NCAA Board of Governors voted unanimously to allow student-athletes to be compensated for the use of their NIL once the three NCAA divisions (Divisions I, II, and III) establish their own rules on how to govern such opportunities.

This idea of paying student-athletes has been part of the national discourse for quite some time.  In recent years, however, the O’Bannon vs. NCAA case,as well as Northwestern University student-athletes’ attempt to unionize have brought the discussion of compensating athletes into the forefront of athlete equality.

The discussions surrounding student-athlete compensation were the same then as they are now: what structure can be established that is equitable, repeatable and applicable for all colleges and universities in Divisions I, II and III in order to compensate student-athletes.

The Issue

All the conversations around structure miss one commonly overlooked aspect in the center of this dialogue: the student-athlete.

The focus of discussions relating to NIL compensation has been based on (1) whether student-athletes should receive compensation at all; and (2) if the decision is that student-athletes should receive NIL compensation, then what is the appropriate structure to allow for that to happen.

It is not clear what rules the different divisions of the NCAA will create regarding the management and oversight of NIL compensation.  What is clear, however, is that student-athletes will receive compensation related to their NIL. Knowing this fact requires us to ensure that we do not overlook the student-athlete and that we are preparing them for the realities and the practical requirements of a new system that allows them to receive NIL compensation.

Regardless of the structure created, student-athletes, and their families, must receive real-world practical education.

A Potential Solution

Student-athletes, and their families, must be trained in certain professional life skills that will be needed to help navigate this new world of student-athlete compensation.  In whatever platform such a class is delivered to the student-athlete (traditional classroom, online, as part of athletic department programming), the parents must have online access to this training, as well.  This training for all parties must occur to ensure informed decision-making and the protection of student-athletes. 

Areas of Focus include:

    • Decision-Making
    • Intellectual Property Protections
    • Financial Management
    • Taxes
    • Financial Aid and Cost Benefit Analysis
    • Relationship Management
    • Selecting an Agent
    • The Role of an Independent Attorney

A curriculum developed and focused on the practical application of these life skills as opposed to the traditional academic model will help make these areas real to student-athletes and their families in ways that they can apply the learning directly to their lived experience.

Decision-Making
A personal decision-making process is the foundation upon which all other life skills conversations can occur, and is often overlooked. Elite student-athletes are used to making split-second decisions in their sport, but what isn’t taught is how to slow down their decision making and go through an intentional and systematic process for off-the-court or field decisions; and with NIL compensation available, there will be plenty of decisions to be made.

Intellectual Property Protections
The cornerstone of the Name, Image and Likeness conversation is the fact that these identifying aspects of an individual’s identity are owned by the individual.  In order to protect those rights, including licensing those rights to others, might require some trademark other intellectual property protections.

Financial Management
While many schools have started talking about financial literacy, it is that much more important for student-athletes receiving compensation to understand the basic fundamentals of saving, budgeting, and overall personal financial management. 

Taxes
Now that student-athletes will start receiving compensation for NIL, tax planning may become necessary.  While it is not clear whether the NCAA will allow for players to receive compensation directly or if it will be deferred in a trust, taxes will be an issue that will have to be understood and addressed. 

Financial Aid and Cost Benefit Analysis
One issue to be discussed is understanding how financial aid might be affected by student-athletes who receive NIL compensation.  For example, receiving a certain amount of NIL compensation might have an impact on whether a student-athlete receiving a Pell Grant remains eligible for such aid.  Student-athletes, and their families, need to be educated on how to conduct an educated analysis of these types of issues.

Relationship Management
Managing personal relationships includes guidance on responding to financial asks, the use of legal structures to protect the athlete in response to financial asks, and also educating the team of advisors around the player on how to manage various requests.  This is one of the most emotional challenges athletes at all levels face on a regular basis.  Understanding how to say no, and learning the right way to yes, are paramount for student-athletes receiving NIL compensation.

Selecting an Agent
It is not an easy process for a student-athlete to select an agent as they are transitioning from college sports to professional sports.  Hiring an agent to assist in NIL deals as a college student athlete will be similarly, or potentially even more, complex.  Understanding the due diligence required in hiring an agent for marketing representation, especially for a student-athlete who has never been employed before, is a critical learning requirement.

The Role of an Independent Attorney
While the focus of student-athletes receiving NIL compensation has been on the agents they will hire to find these marketing deals, it is critical to understand the role and importance of having independent counsel reviewing any marketing deals.  As there are concerns of advisors taking advantage of student-athletes, an independent attorney will help ensure a student-athlete is protected through the process.  Student-athletes should learn how to use a non-agent attorney to protect themselves in these situations.

Conclusion

These topics must be presented in a real and actionable way that empowers and equips the student-athlete and their family to understand what is happening around them and make informed decisions that will ultimately protect them. This can be achieved by ensuring that:

    1. the curriculum has been developed by professionals engaged in this space with athletes;
    2. the curriculum is reinforced by the college/university athletic department student athlete development advisors; and
    3. parents have access to the curriculum to learn and engage in this conversation understanding all that will be required and expected of the student-athlete as he or she receives NIL compensation.

The NCAA‘s approval of developing a structure for NIL compensation is a monumental step forward in the rights of student-athletes. While the various three divisions wrestle with developing the structures to be created to effectuate these newly earned rights, we must focus on how we ensure the professional development, education and protection of student athletes.

For more information on curricula to address the needs of student-athletes, please contact Anomaly Sports Group at info@anomalysportsgroup.com.

Luke Fedlam, President of Anomaly Sports Group, is a former Division I athlete and U.S. Army veteran, who began his career in finance and now leads one of the Midwest’s premier sports law practices as a non-agent sports attorney at Porter Wright. Stemming from his experience working with athlete-clients, he established Anomaly to help develop and provide critical professional development and life skills training – bringing a well-rounded perspective to the challenges athletes face outside their sport at any phase of their career. 

Luke is passionate about transforming his daily work with athletes, families and advisors into educational programs for athletes at all levels. His work with his clients – from student athletes transitioning into professional sports, professional athletes navigating life on and off the playing field, to retiring athletes creating the game plan for their life after sports – gives Anomaly a unique perspective that remains timely and impactful.

Luke Fedlam
President, Anomaly Sports Group
lfedlam@anomalysportsgroup.com
614-227-1938