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Bipartisan federal NIL bill introduced for college sports

A bipartisan pair of congressmen introduced federal legislation Thursday that, if passed, would open the door for college athletes to make money from a wide variety of endorsement deals and create some flexibility to adjust their proposed regulations over the course of the next three years.

The bill, co-authored by Rep. Anthony Gonzalez (R-Ohio) and Rep. Emanuel Cleaver (D-Mo.), provides some restrictions on the types of products or companies college athletes would be allowed to endorse. It stops short of implementing all of the restrictions that the NCAA and other college sports administrators have asked Congress to help them impose. The proposed law would also create a 13-member commission whose role would be to recommend ways for legislators to change the law as the nascent marketplace for college athletes becomes more clear and any unintended consequences emerge.

“The reality is we’re going down a path we’ve never gone down before,” Gonzalez told ESPN.

The congressmen both said they hope to bring the bill to a vote sometime in early 2021.

Current NCAA rules prohibit college athletes from accepting any payment from a third party in exchange for the use of his or her name, image and likeness (NIL). In the past year, more than two dozen states have passed or proposed laws that would make it illegal for colleges to enforce the NCAA’s current NIL rules. Those changes will go into effect in some states as early as July 2021.

The NCAA responded by making plans to change its current rules and by asking Congress to create a federal law, which would avoid differences in state laws that might give one group of schools an advantage over others when recruiting future athletes. That request came with some suggested “guardrails” that college sports leaders say are designed to keep endorsement deals from becoming thinly veiled salaries or recruiting tools.

Under the law proposed by Gonzalez and Cleaver, athletes would not be allowed to sign a contract with companies or brands related to alcohol, tobacco, marijuana, gambling or adult entertainment. The law would also give the schools the power to prohibit athletes from wearing anything that promotes one of their endorsers during games or other university-sponsored events. The Federal Trade Commission would be in charge of enforcing all aspects of the new law.

The proposed law does not include any restrictions about athletes signing deals with the competitors of companies that sponsor their school, which is a provision that some college sports leaders wanted. That means, for example, an athlete who attends a school with a Nike contract would be allowed to sign an endorsement deal with Under Armour, but he or she wouldn’t have the right to wear Under Armour apparel during games or other school-sponsored events.

Gonzalez said they debated including a provision that would address concerns about athletes endorsing companies that compete with brands who sponsor their school, but ultimately decided any such rule would be unfair to the athletes.

“There is a real concern that you could find yourself in a world where institutions or conferences have captured the whole market,” Gonzalez said. “I thought the cleanest thing to do was to pull that provision out, and if it becomes an issue we can address it later on. My sense is that it won’t.” The bill explicitly prohibits schools or universities from paying their athletes directly. Cleaver, however, said he hopes that NIL rights will be an interim step on a path toward eventually giving college athletes an opportunity to be paid like professionals.

“This is a step in that direction,” Cleaver told ESPN. “…I think we have to move in a way that you can get as much as you can as soon as you can.”

Gonzalez has said in the past that he is not in favor of athletes being paid directly by their schools.

This bill would also prohibit boosters from paying athletes “directly or indirectly” as a recruiting tool.

The bill does not make it clear how the FTC would draw a distinction between payments for an athlete’s value as an endorser versus his or her value as a recruit. For example, if a restaurant owner wants to pay the local college’s star quarterback $100,000 to appear in a 30-second radio commercial, there is no prescribed way to determine when that type of contract crosses the line from the fair market value for an endorsement into a payment to make sure the quarterback stays at the local college.

“The fair market value question came up in a handful of conversations,” Gonzalez said. “We didn’t feel like we could legislate and determine fair market value on every deal. My sense is the market will establish itself over time and it’ll take care of itself.”

The proposed 13-member commission, which would file annual progress reports to commerce committees in both the House and Senate, is also designed to help address these kinds of issues. If the new law creates a wave of outlandish endorsement contracts, the commission could recommend that Congress rewrite the law to try to more clearly define what payments are fair.

The commission would be formed no more than 60 days after the law is passed and would include at least two current or former student-athletes who represent the interests of current athletes. Other members would include coaches, athletic directors, conference administrators, sports marketing experts and corporate governance experts who have no relation to college sports. Members of Congress would appoint 12 members of the commission, and those 12 members would select a 13th person to lead the group.

Along with suggesting changes to the law, the commission would also be in charge of advising the NCAA on how to certify agents for the athletes and recommending a dispute resolution process. The commission would be disbanded after three years.

This bill is one of several proposals related to NIL rights making their way through the federal legislative process. Sen. Marco Rubio (R-Fla.) proposed a bill this summer that failed to gather much momentum because it granted the NCAA an antitrust exemption to protect it against future litigation. The bill created by Gonzalez and Cleaver only vaguely addresses antitrust law, which was another one of the items that NCAA and college sports leaders were hoping Congress would provide. A short clause in the bill says that it should not be used to “provide a cause of action pursuant to the Sherman Act.” Gonzalez said he and Cleaver attempted to remain neutral on the antitrust issue and said that this clause does not prevent athletes from filing antitrust lawsuits against the NCAA in the future.

Sens. Cory Booker (D-N.J.) and Richard Blumenthal (D-Conn.) have proposed a “College Athlete Bill of Rights” that more broadly addresses some of the practices in college sports that they say are unfair to athletes. Booker and Blumenthal have said that if federal lawmakers are going to help the NCAA by providing NIL legislation, they should also use the opportunity to enforce rules that improve health and safety standards for college athletes and give them a bigger voice in future decisions.

The NCAA released in April a rough outline of how it plans to change its rules. A working group that has spent the past year evaluating ways to modernize the NCAA’s NIL restrictions is expected to present a more detailed proposal by the end of October. The NCAA’s Board of Governors would then vote on those proposed changes in January 2021.

“We greatly appreciate U.S. Reps. Gonzalez and Cleaver’s collaboration to sponsor bipartisan legislation to strengthen the college athlete experience,” said the NCAA in a statement. “We look forward to working together with both representatives, their co-sponsors and other members of Congress to further establish a legal and legislative environment where our schools can continue to support student-athletes within the context of higher education.”

The NCAA’s proposal will still be more restrictive and conflict with some of the state laws that have already passed. In order for a federal law to preempt the state laws that have already been signed, Congress will have to agree on a solution during the first six months of 2021.

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