In the News
The College Athlete Economic Freedom Act Proposed In Congress Is A Step Forward On NIL Rights
Washington, February 7, 2021
by Andrew Zimbalist
The College Athlete Economic Freedom Act, proposed in Congress by Senator Chris Murphy (D-CT) and Representative Lori Trahan (D-MA), pertains directly to name, image and likeness (NIL) rights for college athletes. It goes well beyond existing proposed legislation at the federal and state level—and the proposed new NCAA rules—in giving athletes broad rights, including virtually unrestricted access to earning NIL income in individual and group NIL agreements.
Indeed, there are no guardrails to constrain athlete NIL income. Moreover, the act would give athletes the right to organize through collective representation, like a trade association or 501 (c) nonprofit, which would be significant for group NIL agreements, and a private antitrust right to sue under the act would make any violation per se illegal.
This more open approach is appropriate. There is no reason college athletes should be controlled by the NCAA, their conferences or their institutions any more than other students in their attempt to earn NIL income. As long as the athlete is contracting with third parties at fair market value, other restrictions are unnecessary. While it is arguable that contracts with alcohol and gambling companies should be restricted, the NCAA does not restrict its member colleges from signing deals with such companies for ethical reasons, so athletes should not be restricted either.
Guardrails that restrict deals to third parties and at fair market value, however, are necessary for the following reasons. If college athletes are allowed to enter into employment contracts with their universities (rather than only with third parties), then their relationship with the university is transformed from an educator/student relationship to an employer/employee one. Such a transformation would undermine the fundamental purpose of a college education. While this purpose has already been vitiated, it is both desirable and possible to restore the intended relationship, rather than discarding it in the name of free markets. In addition, if the college athlete is compensated in non-educational coin by the university, the contract’s terms become subject to Title IX since universities benefit from $130 billion of federal government subsidies annually. Compensation schemes that reflect athlete revenue production will reward only male athletes and, hence, violate core principles of gender equity.
A fair-market-value guardrail is also important because it would prevent the introduction of athlete NIL rights from devolving into an open labor market for high school and college athletes. Absent a fair-market-value rule, a university could arrange with a local retailer an exchange such as free use of a luxury box with catering at football games if the retailer offers $100,000 to a football recruit for making an appearance at its store to sign autographs.
The College Athlete Economic Freedom Act is silent on both the possibility of university/athlete contracts and on a possible fair-market-value guardrail. It is also ambiguous on the interpretation of the scope of NIL rights. Does it, for instance, include revenues from live broadcasting of games?
While the College Athlete Economic Freedom Act begs for additional clarification and definition, the bill’s broad assertion of athlete rights goes well beyond those proposed in the Rubio, Gonzales and Wicker federal bills, as well as the plethora of state bills and the tightly constrained proposals that the NCAA put forward and then tabled. At the very least, the Murphy/Trahan College Athletic Economic Freedom Act will open up a discussion on athlete rights that have long been artificially and unnecessarily suppressed by the NCAA and, ultimately, help foster a more meaningful and equitable system for college athletes in the United States.