Written on behalf of Feigenbaum Consulting
In the final days of June 2021, the United States Supreme Court issued a landmark decision that paved the way for college athletes in the United States to be compensated beyond scholarships. We blogged about that decision in late June, and with major college sports such as football and basketball well underway, we wanted to take a moment to update our readers on how the NCAA, as well as college athletes, have responded to the news.
Supreme Court rules on antitrust allegations
The matter made its way to the Supreme Court after current and former students accused the NCAA, which governs college sports in the United States, of anti-trust practices through its prohibition of athlete compensation. They alleged this position was in violation of the Sherman Act, which prohibits “contracts, combinations, or conspiracies in restraint of trade or commerce.”
The NCAA stated its policies stemmed from problems that could arise if schools were able to pay athletes, including creating an uneven playing field for smaller schools, and that since schools are not commercial enterprises, the Sherman Act should not apply to them.
The problem athletes presented was that not only were they not able to receive monetary compensation from the schools they play for, but they were also prohibited from entering into endorsement deals, selling autographs, or making any money from their names, images, and likenesses (“NIL”).
The court’s decision found a sort of middle ground in allowing student-athletes to pursue endorsement deals but did not order schools themselves to pay athletes. The decision stated,
“Everyone agrees that the NCAA can require student-athletes to be enrolled students in good standing. But the NCAA’s business model of using unpaid student-athletes to generate billions of dollars in revenue for the colleges raises serious questions under the antitrust laws.”
The court’s decision opened the doors to compensation for athletes. But what has happened since then?
Athletes begin to make money
While college athletes had long been prohibited from making money off autographs or other endorsement deals, there has been plenty of controversy surrounding athletes who appeared to be skirting these rules. In 2013 it was reported that Heisman Trophy winner Johnny Manziel, who later went on to play for a short time in the NFL, had accepted money for signing hundreds of autographs, photos, and other types of memorabilia. The controversy clouded the early days of Manziel’s career, though he was largely able to put it behind him as he entered the NFL.
Fast forward to this year, and the five figures that Manziel was reported to have accepted seem like a small amount compared to what some athletes are making. Alabama’s star quarterback Bryce Young has inked nearly $1 million in deals associated with his NIL. The school’s coach, Nick Saban, said that while Young is making good money, he is worried about the imbalance in the locker room, telling al.com, “I hope it doesn’t affect team chemistry across the board, in terms of how people respond to that and how players respond to that.”
Not long after news broke about Bryce Young’s income, it was reported that Ohio State freshman quarterback Quinn Ewers had struck a $1.4 million deal with a sports marketing company for his NIL as well as autographs.
It’s not only male athletes who are inking deals. Haley and Hanna Cavinder, twins who play basketball for California State University, Fresno, were reported to have parlayed their Instagram and TikTok presence into endorsement deals with a nutrition company and a mobile phone company.
Perhaps in anticipation of Nick Saban’s concerns about a lack of opportunity for athletes without star power, Brigham Young University has offered all female athletes the opportunity to earn up to $6,000 per year through a deal with a location data intelligence company that allows athletes to wear the brand’s clothing and attend promotional events. The school’s men’s football team has also signed a deal with a nutrition company that benefits all 123 players on the team. In exchange for wearing the sponsor’s logo on helmets, the company stated it was providing compensation “comparable to the costs of tuition for an academic year.”
Which types of athletes are getting paid and for how much?
It’s natural to think that most compensation is aimed at athletes playing football or basketball. This was a concern the NCAA shared during the Supreme Court hearing. And while it’s true that football was bringing in the most compensation, basketball wasn’t even a close second. It should be noted that the basketball season starts later in the year, and further reporting might change that.
The website Inside Higher Ed reported that 60.1% of all NIL deals have involved football players, with women’s volleyball following with 9.8% of all deals. The same report found that 47.8% of compensation is in exchange for social media posts, with 19.1% for licensing and 12.8% for autographs.
In terms of which class of athletes is seeing the most compensation, Division I athletes secured an average of $471 per athlete, with Division II and III following at $81 and $47 respectively.
Despite the Supreme Court’s ruling, athletes are still bound by the state laws of the school in which they are enrolled. By the end of August, it was reported that over half of all states, including most of those in the southern United States had signed NIL legislation outlining the conditions of athlete compensation.
For states without legislation, the NCAA prohibits compensation:
- For work not performed
- Work that is contingent upon enrollment at a specific school
- For athlete participation or achievement in sport
- From educational institutions themselves in exchange for an athlete’s NIL
It remains to be seen whether Congress will enact any legislation that will apply to students nationally.
Work with Feigenbaum Law for representation in entertainment or sports
At Feigenbaum Law, our team of professionals offers a full range of services to clients in the sports and entertainment industries including agents and coaches, especially as it relates to cross-border matters and financial arrangements. We take a personal approach with our clients, understanding and meeting their unique needs. Contact us online, or call us at (905) 695-1269 or toll-free at (877) 275-4792 to learn more about how we can help you or the athletes you work with.