Here We Go Again: Insights from the 11th Congressional Hearing on NIL | Bradley Arant Boult Cummings LLP
On Thursday, January 18, 2024, the House Subcommittee on Innovation, Data, and Commerce held a hearing on collegiate name, image, and likeness (NIL). The witness list included NCAA President Charlie Baker, UCLA football player Chase Griffin, Commissioner of the Missouri Valley Conference Jeff Jackson, Arizona State University professor Victoria Jackson, Radford University volleyball player Meredith Page, and University of Michigan softball player Kaitlin “Keke” Tholl.
This marked the 11th Congressional hearing on NIL, and while the outcome remains uncertain, previous hearings suggest that significant progress towards a federal NIL law is unlikely. However, this hearing, titled “NIL Playbook: Proposal to Protect Student Athletes’ Dealmaking Rights,” stood out as it focused on a discussion draft of the “FAIR College Sports Act” presented by Rep. Gus Bilirakis of Florida.
Several key issues took center stage during the hearing, including the employment status of student-athletes, NCAA antitrust exemptions, and the involvement of schools in NIL deals. The NCAA’s desire for antitrust exemptions and opposition to classifying student-athletes as university employees, as proposed in Bilirakis’s draft bill, were evident. Interestingly, Baker’s “Project DI” proposal (discussed below) and the draft bill present contradictory ideas regarding schools’ direct involvement in NIL deals with student-athletes.
School Involvement in NIL Deals
The NCAA’s proposal to allow schools direct involvement in NIL deals raised concerns about pay-for-play restrictions. Under “Project DI,” the NCAA aims to remove current constraints, enabling schools to decide on implementing NIL programs internally. Baker emphasized that this move would enhance clarity and oversight, countering the current lack of transparency, particularly concerning collectives and NIL money distribution. In addressing gender disparities, he argued that bringing NIL deals “in house” would support Title IX and provide more opportunities for women in NIL.
Several of the witnesses highlighted issues with the current largely unregulated system, where promised NIL money from collectives often disappears upon students’ arrival at their respective schools. Baker stated that inducements and pay-for-play are challenging to monitor, leading to a call for more transparency. Baker emphasized the need for uniform contracts or standard clauses to address this, a step the NCAA has already initiated. Whether bringing NIL deals “in-house” will help to address these issues remains to be seen, but either way operating in the current system is difficult, and a new model of some form is necessary.
Employment Model
Student-athlete employee status was also the focus of some of the recent discussion on Capitol Hill, with witnesses offering differing opinions on the issue. Baker argued against an employment model for all college sports, particularly emphasizing potential harm to non-revenue and Olympic sports. Rep. Larry Bucshon of Indiana opined that “many universities would drop their entire athletic program” if student-athletes are made employees. Additionally, Baker stressed that making student-athletes employees would be detrimental to non-revenue and Olympic sports. Baker stated that if the NCAA loses the Johnson v. NCAA case, a case arguing that student-athletes should be considered employees subject to the Fair Labor Standards Act, “it would cost us about half to two-thirds of all the college sports programs around the country.” Concerns about varying state employment laws and their impact on college sports rules were also raised during the hearing. The FAIR College Sports Act draft explicitly states that student-athletes are not employees, however, as evidenced in the hearing, there is a clear party divide on this issue.
Antitrust
Questions arose about whether a federal bill should grant the NCAA antitrust exemptions. Baker emphasized the need for such exemptions in light of the recent litany of antitrust lawsuits filed against the NCAA. Baker stated several times that the NCAA needs at least some antitrust protection to prevent the NCAA from having to go to court over every NIL rule it implements. “If a member doesn’t like a rule that the membership makes, it’s a federal case, like, the next day,” Baker said.
Currently, the NCAA is embroiled in several antitrust cases, including the House case, which could potentially result in over $4 billion dollars in damages and be financially devastating to the NCAA. Additionally, on the same day as the hearing, the U.S. Department of Justice joined a multi-state antitrust lawsuit challenging the NCAA’s multi-time transfer rule that requires athletes to sit out a year before returning to competition. While the case does not involve NIL, it does signal a growing opinion that many of the NCAA’s rules violate antitrust law.
The antitrust exemption in the FAIR College Sports Act seems to be a partisan issue. Consequently, the bill is likely to encounter opposition in the Democrat-controlled Senate. Indeed, Rep. Lori Trahan of Masschusetts, who scrutinized various provisions of the FAIR College Sports Act during the hearing, issued a press release on the same day titled “Trahan Rips Republican Proposal to Limit College Athletes’ NIL Rights.” This provides additional evidence that the bill, in its current form, lacks bipartisan support.
Since the NCAA’s implementation of the interim NIL policy in July 2021, Congress has had nearly three years to pass a uniform federal NIL bill. Despite numerous attempts, none of the introduced bills have advanced beyond committee stages. The 11th Congressional hearing on NIL left many questions unanswered, but one thing was evident – there is a party divide on certain NIL issues. Consequently, the likelihood of a federal NIL law in 2024 appears to be diminishing. With “Project DI,” the NCAA is finally making efforts to address NIL in college sports. However, if the current ongoing litigation is any indication, whatever steps the NCAA takes to address NIL will likely face opposition in federal court.
