Source: NCAA group to propose possible changes to allow athlete endorsements

A working group studying the future of NCAA name, image and likeness rules plans to suggest during a Tuesday afternoon board meeting that college athletes be allowed to make money from a variety of endorsements, including advertisements and apparel contracts, according to a source familiar with the group's recommendations.

The NCAA Board of Governors appointed a working group six months ago to figure out how to give student-athletes a chance to make money while also maintaining a distinction between college sports and professional leagues. The group presented their recommendations to the Division I Council last week and was scheduled to conduct a similar presentation to the board -- which oversees all three divisions of the NCAA -- Tuesday afternoon. NCAA members will have several months to review these recommendations and add their input before the board votes on any formal proposal. The NCAA typically votes on new rules at its annual meeting in January, but the board of governors can institute new policies at other times if deemed necessary.

According to a source, the working group intends to recommend the following "possible changes:"

  • Allow student-athletes to make money by modeling apparel as long as that apparel doesn't include school logos or other "school marks."

  • Allow athletes to make money from advertisements. Athletes would be allowed to identify themselves as college athletes in advertisements, but would not be allowed to reference the school they attend or include any school marks in the advertisement.

  • Prohibit athletes from marketing products that conflict with NCAA legislation, such as gambling operations or banned substances. Individual schools would also be allowed to prohibit athletes from marketing products that do not line up with the school's values.

  • Allow athletes to hire an agent to help procure marketing opportunities, so long as that agent does not seek professional sports opportunities for the client during his or her college career.

  • Require athletes to disclose the details of all endorsement contracts to their athletic department. The working group would recommend further discussion about whether a third party should be involved in overseeing these disclosures in a way that prevents endorsement deals from becoming improper recruiting enticements.

The working group's recommendations are not guaranteed to remain the same in the nine months before NCAA leaders are expected to vote on new rules, but they would represent the most significant step forward to date in a long debate over college athlete compensation. It is a process that college administrators, critics, athletes and NCAA officials have said took too long to catch up to the modern reality of college sports. The NCAA gradually relaxed limits on what schools were allowed to provide to their athletes in response to civil lawsuits during the previous decade. The large name, image and likeness push in the past year was prompted by politicians who have created state laws challenging the NCAA's current rules.

California became the first state to pass its "Fair Pay to Play" law last September. Nancy Skinner, a Berkeley-based state senator, wrote the bill that says colleges in her state cannot punish an athlete who accepts endorsement money from a third party or hires an agent to try to profit from his or her popularity. More than two dozen other states introduced similar legislation in the wake of California's law, which is scheduled to go into effect in 2023.

The new proposals would still be more restrictive than what California's law will allow. Last October, the NCAA's Board of Governors tasked the working group, led by Ohio State athletic director Gene Smith and Big East commissioner Val Ackerman, with finding a way to open more opportunities for athletes to make money while also maintaining a clear distinction between college sports and professional leagues. NCAA President Mark Emmert said the organization hopes to work with Congress to create federal guidelines around college athletes and NIL (name, image, likeness) opportunities, eliminating the possibility of each state operating with its own rules.

NCAA leaders say it is crucial to keep the distinction between their organization and pro sports. Their amateurism status allows the NCAA to defend itself against antitrust violation lawsuits and to hang on to non-profit tax exemptions that are important to the college sports business model. This unique status has helped the NCAA carve out a niche in the eyes of federal judges who have ruled that the NCAA's caps on what an athlete can receive from his or her school violate antitrust laws, but determined the schools can continue enforcing those caps because college athletes are students and not laborers.

Neither the NCAA's proposal nor any of the state laws proposed on NIL issues allow for schools to pay student-athletes directly. Emmert and other college sports stakeholders have been clear in saying that making athletes employees of the school by paying them directly would be a non-starter.

Smith and Ackerman's working group was asked to find a solution that expands NIL rules enough to get state lawmakers to stop moving forward with legislation while also not going so far as to critically weaken their amateurism status in the eyes of the federal court.

The largest obstacle to allowing athletes to collect endorsement money in the eyes of many college sports stakeholders was figuring out how to keep boosters from using NIL contracts as a way to provide thinly veiled payments to entice recruits to attend their schools. Boosters would be allowed to take part in endorsement deals with athletes under the new proposed rule changes, according to a source, provided that the payments are not deemed an impermissible benefit.

It's not yet clear how the NCAA plans to define the line between a payment that is legitimate from a payment that would considered an illegal extra benefit. One solution proposed at previous NCAA meetings is to create a regulatory board to determine the fair value of different types of endorsements and make sure athletes stay within those bounds.

For example, the regulators might determine through market research that the fair value of an athlete appearing on a 30-second radio commercial for a local restaurant is somewhere between $5,000 and $10,000. If a restaurant owner instead offers to pay the new star quarterback at his local college $100,000 to appear in a commercial, the regulators will say that the price is clearly overvalued and intended to reward the player's athletic ability and entice future recruits. Athletes will be required to report all endorsement money they earn. A fee that exceeds the fair market value determined by regulators will be flagged as a violation of the new rules.

"How do you determine what the real marketplace is?" Emmert said after a meeting in January. "How do you manage that? How do you police that? I think the [groups working on the issue are] making some really good strides in that direction."

Emmert said in January he did not know if the NCAA would regulate that market or if it would ask a third party to be in charge of that process.

The National College Players Association, a non-profit aimed at advocating for college athletes and an outspoken critic of the NCAA, published a report earlier this year saying that the marketplace for college athletes should not be capped at all. NCPA founder Ramogi Huma believes that the NCAA and its members have a financial interest in keeping the value of endorsements as low as possible and therefore should not be in charge of regulating the market. Huma, who has been advocating for better compensation for college athletes for nearly two decades, said he has spent much of the past year helping various states draft legislation and speaking with members of Congress about the issue. He said he believes most states will continue with their legislative efforts no matter what the NCAA proposes.

"I think most are going to continue full-steam ahead, Huma said. "Even if the NCAA does everything that advocates want, states will still move forward to make sure it's cemented in law and to make sure the NCAA can't go back on things or leave any gray areas to interpret later. ... This is a make-or-break moment for the NCAA. Time is running out. On the state level, they're going to move forward."

The coronavirus pandemic has slowed the momentum of legislative debate related to paying college players, but politicians will soon decide if the NCAA has moved forward enough to maintain control over its payment rules or if the government needs to continue pressuring them to provide further opportunities for athletes. Florida's governor is expected to soon consider a bill that would go into effect in July 2021 and create similar rules to the California law. The Florida bill passed through the House and Senate earlier this year, but has been halted by the pandemic. Rep. Chip LaMarca, who introduced some of the original legislation in Florida, said he is encouraged by some of the potential changes, but wary that the NCAA will follow through.

"It is my hope that this is not another hidden ball trick allowing the NCAA to punt this issue down the field," LaMarca said. "With this global pandemic challenging our economy, now more than ever we must give flexibility to all students to both continue their education and provide for themselves and their families."

While other state and federal lawmakers decide how to proceed with their efforts, the federal courts will also have an opportunity to weigh in on how the NCAA's proposed changes impact their unique labor status. Court decisions in cases such as O'Bannon v. NCAA have opened doors for schools to offer their athletes cost-of-attendance stipends, unlimited meals and emergency funds. In the most recent federal court case related to paying college athletes -- Alston v. NCAA -- a judge decided the NCAA cannot limit any benefits athletes are allowed to receive as long as those benefits are related to education. For example, a school could purchase laptops or musical instruments for its athletes. That case is currently being appealed by both the NCAA and the plaintiffs. The appellate court is expected to publish a ruling at some point in the coming months.

The NCAA's Board of Governors meets Tuesday afternoon. Its Board of Directors meets Wednesday morning. It is not yet clear what information they will share publicly about the working group's suggestions and the discussion about those suggestions.