Four Takeaways from the NCAA's Latest NIL Guidance

This iteration of the NCAA’s guidance follows the NCAA’s May 9, 2022 guidelines (“the May guidance”) addressing the rise of Collectives and foreshadowing potential areas of enforcement, including Collectives offering NIL deals as recruiting inducements for prospective student athletes to attend specific institutions. The October guidance, however, focuses on the permissible and impermissible actions that an institution might take involving student athletes and/or Collectives in this ever-evolving space. In a nutshell, the NCAA’s position is that an institution may be involved as a facilitator in NIL activities, but that is it.

The October guidance lists specific examples of permissible and impermissible conduct under the NCAA bylaws, seeking to provide additional context to its Interim NIL Policy adopted July 1, 2021, separating its guidance into four sections: Institutional Education and Monitoring; Institutional Support for Student-Athlete NIL Activity; Institutional Support for NIL Entity/Collective; and Negotiating, Revenue Sharing and Compensating. See below for one takeaway from each of the NCAA’s enumerated categories.

1. Stating the Obvious. The NCAA began by informing its members that it is permissible to educate students on NIL. It is telling that the NCAA felt it needed to clarify that an educational institution was allowed to educate its students on NIL. The NCAA’s inclusion of what appears on its face to be uncontroversial institutional conduct displays the lack of clarity in the NIL space.

2. Institutions may engage with Student Athletes as a facilitator, but not as a substantive representative. The October guidance explained that institutions may engage with NIL entities (e.g., Collectives) when such engagement is limited to informing student athletes of an NIL entity’s existence. Institutions may “[p]rovide information . . . about opportunities that institution has become aware of,” provide “contact information and other directory information to NIL entity,” introduce athletes to NIL entity representatives, and arrange space for an NIL entity and a student athlete to meet on campus.

However, institutions may not take a substantive role in NIL negotiations, access, or services. The institution’s role as a facilitator must not extend into “[c]ommunicat[ions] with NIL entit[ies] regarding specific student athlete request[s]” or demands for compensation. Further, institutions may not allow support services for student athletes to reach a substantive level of value beyond the value generally available to the institution’s students (i.e, “develop[ing] promotional materials”). For example, an institution cannot provide a “graphics designer, tax preparation, [and/or] contract review” to student athletes that is not generally available to all students.

3. Institutions may not fund Collectives or commingle employees with Collectives. While an institution may allow a staff member to “assist[] NIL entit[ies] in raising money for [an] NIL entity” by appearing at fundraisers or donating autographed items, it may not allow an athletics department “staff member [to be] employed by NIL entity” and it may not “donate[] cash to the entity.”

4. Negotiating, revenue sharing and compensating is prohibited. The NCAA provided a laundry list of prohibited activities under the umbrella of “Negotiating, Revenue Sharing and Compensating” without enumerating any permissible activities.¹ The NCAA’s stance on this is clear — institutions may not be financially involved in NIL transactions with student athletes.

The October guidance stresses the distinction between an institution’s permissible role as a facilitator in NIL activities and its impermissible role as a substantive representative of a student athlete or NIL entity. While institutions welcome any clarification the NCAA provides, its latest guidance still leaves myriad unanswered questions. Institutions and Collectives should consider engaging competent counsel to aid in tailoring the NCAA’s general guidance to the organizations’ unique scenarios.

¹ The list includes “athletics department staff member[s]” representing enrolled student athletes, institutions or conferences sharing revenue with student athletes, and staff members using separately owned businesses to provide a student athlete with an NIL deal, among others.