How Will NCAA's New Policy on Endorsements By Athletes Play Out

"This will certainly create new compliance issues for universities," attorney Irwin Raij told Entertainment Law & Finance's ALM sibling publication Corporate Counsel. Raij co-chairs the sports industry group at O'Melveny & Myers in New York. "But the implementation will be key. How do we define the compliance, and will it be simple or complex?"

For example, Raij said it wasn't clear if the NCAA will allow players to hire a lawyer or sports agent to help negotiate deals. "Will endorsements be managed through the university with a revenue sharing concept?" he asked.

In a question-answer segment on its website, the NCAA said the 1,100 member schools in its three divisions would provide feedback and updated recommendations to the NCAA by April. The organization said it would then develop rules and guidelines to take effect by 2021.

Professor Matthew Mitten, executive director of the National Sports Law Institute at Marquette University Law School in Milwaukee, said: "Right now it's a wait-and-see game for university general counsel" as well as for outside counsel. Mitten said once the rules come out, general counsel must see that there is adequate training of all involved — athletes, coaches, businesses, alumni and others — along with monitoring of the process.

It will essentially be a new regulatory system that could vary for each division, he said. "If general counsel want to be forward thinking about the policing and monitoring issues, they can provide comments to whatever committees are working on this and get them to take the comments into consideration when rules are drafted," Mitten added.

He noted the NCAA has always insisted that college athletes are amateurs and that its new policy announcement stated the organization still wants to keep a clear distinction between the two.

"It's going to be really tricky to come up with rules that fit within the NCAA principles," Mitten said.

Christine Helwick, former general counsel for the California State University system and now of counsel with Hirschfeld Kraemer in San Francisco, CA, agreed that it's too early to gauge the complete impact on general counsel. "Thus far, they have provided only concepts, not regulations," she said.

The NCAA announcement came amid a flurry of state legislative and court initiatives. While several states are considering legalizing college student endorsements, California signed its measure into law in September (see, https://lat.ms/2QwVif0).

The sports organization opposes the California law and other potential state and federal legislation on the subject. It wants to regulate college sports nationally to "ensure the uniformity of rules and a level playing field for student-athletes," the NCAA said on its website. It said, "The NCAA is closely monitoring the approaches taken by state governments and the U.S. Congress and is considering all potential next steps."

The NCAA is also battling in an antitrust lawsuit by former players who seek to eliminate rules against paying college athletes for their performance. The organization is appealing a March ruling in favor of the athletes by U.S. District Judge Claudia Wilken of the Northern District of California. In re National Collegiate Athletic Association Grant-In-Aid Cap Antitrust Litigation, 375 F. Supp. 3d 1058 (2019). Beth Wilkinson of Wilkinson Walsh + Eskovitz represented the NCAA at trial. The appeal is before the U.S. Court of Appeals for the Ninth Circuit.

Three nonprofit organizations and three college professors have filed a friend of the court brief supporting the athletes, alleging that the NCAA "has colluded to restrain intercollegiate competition for their athletic services and deprived them of the right to earn a competitive income for their hard work and talent."

The brief was filed by the Open Markets Institute, Change To Win and the National Employment Law Project; and educators Marshall Steinbaum, assistant professor of economics at the University of Utah; Sanjukta Paul, assistant professor of labor and antitrust law at Wayne State University; and Veena Dubal, associate professor of law at the University of California, Hastings College of Law, whose work focuses on workers who are denied traditional employee rights.

"For far too long, the NCAA has robbed college athletes of competitive compensation for their skills and talent … transferring income from a group of largely African American college athletes to mostly white administrators and coaches," said an emailed statement from Sandeep Vaheesan, legal director of Open Markets Institute.

The NCAA has argued against paying athletes, saying that "college sports have a unique place in the landscape of athletic competition and have enabled tens of thousands of student-athletes to earn their college degrees debt-free each year."

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Sue Reisinger is a Senior Reporter at ALM. Based in Florida, she covers general counsel and white collar crime. She can be reached at [email protected].