![\"American](\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5830\/2022\/11\/05171333\/pexels-david-morris-2190159-244x300.jpg\")
Figure 1. A student athlete's name, image, and likeness rights are a form of intellectual property that has value.[\/caption]\r\n\r\nThe National Collegiate Athletic Organization (NCAA) is the governing body for college athletics and, among other things, sets rules about who is eligible to play on intercollegiate sports teams.[footnote]Stateuniversity.com. \u201cCollege Athletics - The National Collegiate Athletic Association.\u201d Accessed December 5, 2022. https:\/\/education.stateuniversity.com\/pages\/1851\/College-Athletics-NATIONAL-COLLEGIATE-ATHLETIC-ASSOCIATION.html[\/footnote] Throughout its 115-year history, the NCAA has asserted that college students should play sports as amateurs so they should not be paid for playing sports.[footnote]Liptak, Adam, and Alan Blinder. \u201cSupreme Court Backs Payments to Student-Athletes in N.C.A.A. Case.\u201d The New York Times, June 21, 2021. https:\/\/www.nytimes.com\/2021\/06\/21\/us\/supreme-court-ncaa-student-athletes.html[\/footnote] Because of this, until recently, NCAA rules stated that college athletes could not receive scholarships or payments that exceeded their cost of attending college (tuition, books, room and board, travel expenses).[footnote](Liptak and Blinder 2021)[\/footnote]<\/p>\r\n\r\n[caption id=\"attachment_2374\" align=\"alignright\" width=\"244\"] Figure 1. A student athlete's name, image, and likeness rights are a form of intellectual property that has value.[\/caption]\r\n\r\n
College athletics generates over $18 billion in revenue colleges.[footnote]Butts, Mason. \u201cQoD: Revenue College Sports Make for Athletic Departments Each Year?.\u201d Next Gen Personal Finance.October 12, 2021. https:\/\/www.ngpf.org\/blog\/question-of-the-day\/question-of-the-day-how-much-revenue-do-college-sports-generate-for-athletic-departments-each-year\/[\/footnote] Let's drill down at look at the numbers for one school. In 2020, the football team at the University of Texas at Austin (UT Austin) generated $146.8 million in revenue.[footnote]Laky, Max. \u201cIn Defense of Texas Athletics, Football Spending.\u201d The Daily Texan, October 28, 2022. https:\/\/thedailytexan.com\/2022\/10\/28\/in-defense-of-texas-athletics-football-spending\/[\/footnote] In 2021, UT Austin hired a new football coach with a six-year contract worth $34.2 million.[footnote]Canizales, Anna. \u201c$34 Million, Private Planes, Cars and Housing Allowances: Here\u2019s How Much UT-Austin Is Paying Football Coach Steve Sarkisian.\u201d The Texas Tribune, February 22, 2021. https:\/\/www.texastribune.org\/2021\/02\/22\/steve-sarkisian-salary-ut-austin\/[\/footnote] Meanwhile, the estimated cost of attendance at UT Texas for an out-of-state student is close to $60,000 for one year.[footnote]University of Texas at Austin. \u201cCost & Tuition Rates.\u201d Accessed December 5, 2022. https:\/\/onestop.utexas.edu\/managing-costs\/cost-tuition-rates\/[\/footnote] Even though a $60,000 scholarship is quite substantial, it is far less than the college's sports related revenue and most college athletes don't even get anything close to a full scholarship. This is what led Shawne Alston, a former college football player to sue the NCAA.<\/p>\r\n
Although Alston was recruited to play football at West Virginia University, he only received a partial scholarship. Making up the difference meant taking out loans, borrowing from friends and family, and sometimes going hungry or cold because he didn't have enough money for living expenses.[footnote]Hagens Berman. \u201cNCAA Athletic Grant-in-Aid Cap Antitrust.\u201d Accessed December 5, 2022. https:\/\/www.hbsslaw.com\/cases\/ncaa-athletic-grant-in-aid-cap-antitrust[\/footnote] Alston's lawsuit was based on antitrust laws that prohibit businesses from collaborating and agreeing to pay less than the market rate. Specifically, the NCAA rules prohibited schools from offering education related compensation such as scholarships for graduate school, internships, or computer equipment.[footnote]Wright-Piersanti, Tom. \u201cChange Comes to the N.C.A.A.\u201d The New York Times, June 22, 2021, sec. Briefing. https:\/\/www.nytimes.com\/2021\/06\/22\/briefing\/ncaa-scotus-ruling.html[\/footnote] This meant that recruited athletes were limited in what they could negotiate for when deciding which school they should attend. If antitrust law prevents companies like Apple, Google, and Facebook from getting together and deciding to pay their employees less and offer fewer benefits, Alston's lawsuit argued that those laws should also apply to the big business of college athletics.<\/p>\r\n
The U.S. Supreme Court agreed and decided that the NCAA could not prohibit education-related payments.[footnote](Wright-Piersanti 2021)[\/footnote] This means that student athletes could receive benefits beyond the cost of attendance such as study abroad expenses, internships, and scholarships for graduate school. The case did not address the bigger issue of whether college athletes are fairly compensated for their time and effort playing sports. However, because the Court rejected the NCAA's argument that they should be exempt from antitrust laws because amateur college athletics is different than other businesses, this led to the NCAA announcing that they would no longer prevent college athletes from being compensated for their NIL, or name, image, and likeness rights.[footnote]NCSA College Recruiting. \u201cWhat Is NIL? NCAA Rule Explained.\u201d Accessed December 5, 2022. https:\/\/www.ncsasports.org\/name-image-likeness[\/footnote] In addition, over 20 states have adopted laws that specifically allow college athletes to benefit from NIL.[footnote]\u201cWhat Is NIL? NCAA Rule Explained.\u201d[\/footnote]<\/p>\r\n
A person's name, image, and likeness rights are a form of intellectual property that has value. If a business wants to use your name and face in an advertisement, you deserve to be fairly compensated. College athletes having control over NIL means that they can accept lucrative endorsement deals the way that professional athletes and celebrities do. For example, University of Southern California quarterback Caleb Williams signed endorsement deals with the wireless audio equipment company Beats By Dre as well as sports memorabilia company Fanatics Authentic.[footnote]Pattison, Claudette Montana. \u201cCaleb Williams Lands Third Massive NIL Deal.\u201d Sports Illustrated, February 11, 2022. https:\/\/www.si.com\/college\/usc\/football\/caleb-williams-third-nil-deal[\/footnote] Armando Bacot, a basketball player for the North Carolina Tar Heels, is reported to have a portfolio of deals worth over $500,000.[footnote]Schoenfeld, Bruce. 2023. \u201cStudent. Athlete. Mogul?\u201d The New York Times, January 24, 2023, sec. Magazine. https:\/\/www.nytimes.com\/2023\/01\/24\/magazine\/ncaa-nba-student-athlete.html[\/footnote]<\/p>\r\n
While the most lucrative deals involve football and men's basketball players, college athletes in other sports also benefit from this rule change. For example, Erin Matson, an elite field hockey player, has a sponsorship deal with a field hockey equipment brand worth $50,000 but also arranged deals with local businesses near her UNC Chapel Hill campus such as free food every day in exchange for her mentioning a restaurant on her social media accounts<\/a>; a tire shop that paid her to record a radio ad<\/a>, and a store that was selling a t-shirt that she designed<\/a>.[footnote](Schoenfeld 2023)[\/footnote] These smaller contracts with local businesses are far more common than the six-figure deals.<\/p>\r\n It's worth noting that allowing college athletes to monetize NIL rights certainly benefits them personally, athletic programs as a whole may suffer. Looking at data from 2020, only 18 athletic programs out of 229 Division-I public schools made a profit.[footnote]Hirko, Scott. \u201cI Found 18 Profitable & 211 Money-Losing NCAA Division-I Public Athletic Programs in 2020.\u201d I found 18 profitable & 211 money-losing NCAA Division-I public athletic programs in 2020, September 3, 2022. https:\/\/www.linkedin.com\/pulse\/i-found-18-profitable-211-money-losing-ncaa-public-scott-hirko-ph-d-[\/footnote] The big sponsors, businesses and individuals alike, who previously were not able to sponsor individual athletes, often made significant donations to college athletic programs. If a business decides sponsoring one athlete is better for the brand, they might decide to spend their marketing budget on a high-profile college athlete rather than donating to an athletic program.[footnote](Schoenfeld 2023)[\/footnote] This creates a lot of uncertainty for college sports because so many athletic programs rely on those donations.<\/p>\r\n As you can see from this example, the legal system is complicated but the law provides a way for individuals to challenge unfair conditions. A win within the legal system can influence more than just the issue in dispute. It can create ripple effects in business that goes far beyond the parties in the lawsuit. In this module, you'll learn more about the legal environment of business.<\/p>\r\n <\/p>","rendered":" The National Collegiate Athletic Organization (NCAA) is the governing body for college athletics and, among other things, sets rules about who is eligible to play on intercollegiate sports teams.[1]<\/sup><\/a> Throughout its 115-year history, the NCAA has asserted that college students should play sports as amateurs so they should not be paid for playing sports.[2]<\/sup><\/a> Because of this, until recently, NCAA rules stated that college athletes could not receive scholarships or payments that exceeded their cost of attending college (tuition, books, room and board, travel expenses).[3]<\/sup><\/a><\/p>\n College athletics generates over $18 billion in revenue colleges.[4]<\/sup><\/a> Let’s drill down at look at the numbers for one school. In 2020, the football team at the University of Texas at Austin (UT Austin) generated $146.8 million in revenue.[5]<\/sup><\/a> In 2021, UT Austin hired a new football coach with a six-year contract worth $34.2 million.[6]<\/sup><\/a> Meanwhile, the estimated cost of attendance at UT Texas for an out-of-state student is close to $60,000 for one year.[7]<\/sup><\/a> Even though a $60,000 scholarship is quite substantial, it is far less than the college’s sports related revenue and most college athletes don’t even get anything close to a full scholarship. This is what led Shawne Alston, a former college football player to sue the NCAA.<\/p>\n Although Alston was recruited to play football at West Virginia University, he only received a partial scholarship. Making up the difference meant taking out loans, borrowing from friends and family, and sometimes going hungry or cold because he didn’t have enough money for living expenses.[8]<\/sup><\/a> Alston’s lawsuit was based on antitrust laws that prohibit businesses from collaborating and agreeing to pay less than the market rate. Specifically, the NCAA rules prohibited schools from offering education related compensation such as scholarships for graduate school, internships, or computer equipment.[9]<\/sup><\/a> This meant that recruited athletes were limited in what they could negotiate for when deciding which school they should attend. If antitrust law prevents companies like Apple, Google, and Facebook from getting together and deciding to pay their employees less and offer fewer benefits, Alston’s lawsuit argued that those laws should also apply to the big business of college athletics.<\/p>\n The U.S. Supreme Court agreed and decided that the NCAA could not prohibit education-related payments.[10]<\/sup><\/a> This means that student athletes could receive benefits beyond the cost of attendance such as study abroad expenses, internships, and scholarships for graduate school. The case did not address the bigger issue of whether college athletes are fairly compensated for their time and effort playing sports. However, because the Court rejected the NCAA’s argument that they should be exempt from antitrust laws because amateur college athletics is different than other businesses, this led to the NCAA announcing that they would no longer prevent college athletes from being compensated for their NIL, or name, image, and likeness rights.[11]<\/sup><\/a> In addition, over 20 states have adopted laws that specifically allow college athletes to benefit from NIL.[12]<\/sup><\/a><\/p>\n A person’s name, image, and likeness rights are a form of intellectual property that has value. If a business wants to use your name and face in an advertisement, you deserve to be fairly compensated. College athletes having control over NIL means that they can accept lucrative endorsement deals the way that professional athletes and celebrities do. For example, University of Southern California quarterback Caleb Williams signed endorsement deals with the wireless audio equipment company Beats By Dre as well as sports memorabilia company Fanatics Authentic.[13]<\/sup><\/a> Armando Bacot, a basketball player for the North Carolina Tar Heels, is reported to have a portfolio of deals worth over $500,000.[14]<\/sup><\/a><\/p>\n While the most lucrative deals involve football and men’s basketball players, college athletes in other sports also benefit from this rule change. For example, Erin Matson, an elite field hockey player, has a sponsorship deal with a field hockey equipment brand worth $50,000 but also arranged deals with local businesses near her UNC Chapel Hill campus such as free food every day in exchange for her mentioning a restaurant on her social media accounts<\/a>; a tire shop that paid her to record a radio ad<\/a>, and a store that was selling a t-shirt that she designed<\/a>.[15]<\/sup><\/a> These smaller contracts with local businesses are far more common than the six-figure deals.<\/p>\n It’s worth noting that allowing college athletes to monetize NIL rights certainly benefits them personally, athletic programs as a whole may suffer. Looking at data from 2020, only 18 athletic programs out of 229 Division-I public schools made a profit.[16]<\/sup><\/a> The big sponsors, businesses and individuals alike, who previously were not able to sponsor individual athletes, often made significant donations to college athletic programs. If a business decides sponsoring one athlete is better for the brand, they might decide to spend their marketing budget on a high-profile college athlete rather than donating to an athletic program.[17]<\/sup><\/a> This creates a lot of uncertainty for college sports because so many athletic programs rely on those donations.<\/p>\n As you can see from this example, the legal system is complicated but the law provides a way for individuals to challenge unfair conditions. A win within the legal system can influence more than just the issue in dispute. It can create ripple effects in business that goes far beyond the parties in the lawsuit. In this module, you’ll learn more about the legal environment of business.<\/p>\n <\/p>\nWhat Is NIL?<\/h2>\n