2020 in Review, 2021 Preview: M&A

Having (finally) turned the page to 2021, today let’s take a look back at some of the biggest stories in sports law from the past year. 2020 was set to be a consequential year in sports even before the arrival of COVID-19. However, the pandemic only heightened the importance of a year that witnessed both blockbuster mergers and widespread layoffs in sports business, overdue support for athletes’ expression in social justice movements, and on-the-fly adjustments of how sports are watched and played.

Much of 2020’s chaos that rearranged the sports world will continue to have significant commercial impacts on the industry. Below are some of the fascinating stories that last year provided, and what we might expect 2021 to bring.

What happened:
Penn-Barstool Partnership
Perhaps the most surprising deal transpired at the beginning of the year with Penn National Gaming turning heads during Super Bowl week. The company announced that it had purchased a 36% stake in Barstool Sports for $163 million, valuing the Boston-based sports media group at $450 million. The deal was widely-regarded as a win-win as the oft-in-controversy Barstool gained the legitimacy and platform of a media superpower, while Penn acquired easy access to an ideal market audience for the rollout of a much-anticipated sports betting division. The agreement came at a time with sports betting experiencing skyrocketing growth, and in the court of public opinion, gambling has gone from taboo to tantalizing as more and more legislators rush to legalize the industry in their own states. However, the Penn/Barstool combo faces an uphill battle getting their share of the market as sports betting is already dominated by established operators in FanDuel, Draftkings, William Hill, and others.

Cohen Gets the Green Light
Steve Cohen, a hedge fund manager worth roughly $14 billion, gave Mets fans everywhere something to be excited about when he purchased the team for a MLB-record $2.475 billion this past fall. However, the acquisition did not come without significant hurdles. Back in February, he and the longtime Wilpon family ownership had reportedly agreed to a deal that would have transferred 80% of the Mets to Cohen, however talks suddenly fell through and the agreement was pronounced dead. The team went back on the market and Cohen – in his second effort – faced a competitive bid from longtime Yankees superstar Alex Rodriguez and entertainer-fianceé Jennifer Lopez. Then, when it became clear that Cohen was willing to far-outspend the competition, rumors swirled that New York Mayor Bill de Blasio was “trying to kill” any sale of the Mets to Cohen, reportedly stemming from the fact that Cohen’s former company, SAC Capital Partners, pleaded guilty in a 2014 insider trading case, which cost the firm $1.8 billion in fines. Despite these obstacles, Cohen’s purchase of a 95% stake in the Mets was approved in October. So, after years of being run like a mid-market team, the New York Mets are already seeing dividends now that Cohen, a longtime Mets fan himself, is at the helm. Following promises to spend big on the Mets, Cohen has quite literally put his money where his mouth is, already adding more than $100 million to the team’s payroll through various key moves. Since 2010 (and excluding last year’s pandemic-adjusted season), the Mets have had an average payroll of roughly $124 million. With the start of the MLB season still more than two months away and potentially more moves to be made, the Mets’ payroll already exceeds $160 million and only figures to increase. According to Forbes, the Mets are the 5th most valuable MLB team and the 41st most valuable team globally.

Spotify Snags Simmons
Spotify continued its run of podcast acquisitions with another big name buy. Having already shelled out $400 million for Gimlet Media, Anchor FM, and Parcast, Spotify reportedly spent more than $196 million to land Bill Simmons’ The Ringer in an effort to grow its sports vertical. In Spotify’s words, The Ringer, launched by Simmons in 2016, is a “website, podcast network, and video production house creating an innovative blend of sports, pop culture, politics, and tech content.” According to Statista, The Bill Simmons Podcast, part of The Ringer’s robust podcasting lineup, was the 5th highest earning podcast in 2019 bringing in over $7 million. While the growth of podcasting is hard to pinpoint, the following statistics paint a picture of its vast potential: in 2020, 55% of Americans had ever listened to a podcast, 37% of Americans twelve or older listen to one monthly, and podcasts accounted for 19% of all spoken-word audio listening in the U.S., compared to 2017 when these numbers were 40%, 24% and 15% respectively.

What to look for:
NFL to hit $100 billion?
With most NFL broadcasting rights agreements set to expire in 2022, the league will sign a new contract this year with many expecting that it will be a 10 year deal that could “far exceed” $100 billion in total value – and it’s easy to see why. Out of the 50 most-viewed TV Broadcasts of 2020, the NFL dominated claiming 33 of the largest audiences, including Super Bowl LIV, which reeled in one-hundred million viewers, unsurprisingly making it the most-watched broadcast last year – for the 28th year in a row. While core aspects of the NFL’s current agreement figure to remain intact, a few key games are expected to change hands, even including America’s most popular program. Nothing is set in stone, but rumors are that ABC and ESPN will be added to the Super Bowl rotation and ESPN will receive more flexibility in its Monday Night Football (MNF) slate to ensure the best-possible matchups. Perhaps more intriguing, the NFL is reportedly considering offering ABC, ESPN, CBS, and Fox two Super Bowl broadcasts each, and auctioning off the final two at a later date. The new broadcasting agreement will likely witness one of Amazon, ESPN+, Peacock or Apple take over the Sunday Ticket package given that DirecTV seems poorly-positioned to continue the deal. Also, Amazon may become the exclusive provider of Thursday Night Football with Fox reportedly looking to move on from the package. NBCUniversal is focusing on retaining the most-watched prime-time TV show for the last nine years in Sunday Night Football. Finally, a few notes on current pricing and revenue: rates for Sunday afternoon games have been $1 billion annually, but may jump to $2 billion; ESPN has paid $2 billion for MNF, but may need $3 billion to retain the package; Sunday Ticket is priced at roughly $1.5 billion annually, but will likely be subject to a bidding war which will drive up the cost; the NFL’s annual revenue from its media rights is currently around $7.5 billion and could double to almost $15 billion. In any event, the NFL’s much-anticipated TV deal will be something to look out for as it will undoubtedly shape the broadcasting market for the next decade.

XFL game-planning for 2022
Among all the losses experienced due to the pandemic, it’s hard to argue that any sports entity suffered more than the XFL, whose debut began with a very promising start in February, only to be stopped short the next month and later, subjected to bankruptcy. Thanks to careful planning, significant funding, and an impressive marketing effort, the XFL seemed well-positioned to erase the doubts stemming from its 2001 failure and establish itself as a legitimate and profitable “minor league” to the NFL. Early returns on the XFL proved as much: the league averaged 1.9 million viewers and was projected to hit $46 million in gross revenue for the unfinished 10-game season, exceeding internal expectations. Of course – consistent with the theme – the pandemic plunged the XFL and its investors into financial ruin, forcing CEO of WWE, Vince McMahon, to sell the team to actor and businessman Dwayne “The Rock” Johnson for just $15 million. Citing the needs to restructure the organization and have fans back in seats, the XFL has no plans for a 2021 season, however expects to return in spring 2022. Accordingly, many expect Johnson, alongside business partners Dany Garcia and Gerry Cardinale, to be active in securing investments to position the XFL for a strong – and permanent – revival next year.

Sportradar on the move
In a year that witnessed the continued growth and popularity of sports betting, Sportradar, unbeknownst to most, finds itself poised for a major move. Sportradar is an international, Switzerland-based company that collects and analyzes sports data, providing it to bookmakers, sports federations, and media companies, including the MLB, NBA, NFL, NHL, William Hill, Bet365, and many more. The company employs more than 2,000 people over 30 locations across the globe and boasts Michael Jordan and Mark Cuban among its list of investors. So, why is Sportradar making the news now? Well, after receiving a B+ credit rating from Fitch Ratings, it was revealed that the sports betting powerhouse has been raising $505 million to finance a potential acquisition, reportedly with a specific M&A entity in mind. Though the identity of this target remains unknown, some have speculated that it could pursue another sports betting platform, while others predict Sportradar may look for a casino platform. In any event, most seem to agree that at some point this year Sportradar will look to go public, however disagree whether it will do so through a traditional IPO or a SPAC, the latter of which would allow the company to reach the public roughly two-to-four months faster than using the former. Regardless, it is clear that Sportradar has big ambitions for 2021. The company just appointed a former CEO of Fiserv Inc., Jeff Yabuki, to chairman of the firm’s board of directors and while its plans are still in the dark, many expect Sportradar to make lots of noise early on in 2021.

Oliver GreenLeave a comment

Amid postponements NBA awaits vaccine, mulls mandate

Editor’s Update: Adam Silver spoke about the NBA’s vaccine policy today (1/19/21) on Sportico’s NBA Valuations Panel. Silver highlighted the role that players might have in promoting vaccine efficacy to skeptical populations. Specifically, members of the African American community may understandably mistrust the vaccine given the racist history of vaccination in this country. Silver also reiterated that the league would wait until public health officials agree it’s the right time to vaccinate players.

It is not uncommon for a team’s roster to fluctuate in size as a result of players’ injuries or other personal reasons. However, nowadays rosters seem to be thinning faster due to contact tracing and other COVID-19 health and safety protocols. Last Sunday’s game between the Boston Celtics and Miami Heat was postponed after Miami fell short of the eight-player minimum due to COVID-19 contact-tracing concerns. Per ESPN, Miami guard Avery Bradley was out due to health and safety protocols. Forward Kelly Olynyk, guard Goran Dragic, and center Meyers Leonard were also among the players potentially unable to play due to injury. The Celtics, however, do not have a brimming roster to boast of as of now either. Last week, seven players on the Boston team were out due to health and safety protocols. In fact, Jason Tatum has recently tested positive and is undergoing a 10-14 day quarantine. The Philadelphia 76ers are also currently missing players as Seth Curry tested positive earlier last week, which meant that four of his teammates had to also go into quarantine per the league’s health and safety protocol.  

Teams appear to be short-handed at this point in the season; however, according to ESPN’s Wojnarowski, the NBA has no plans to pause the season. The 2020-21 NBA Health and Safety protocol is reported to be extensive at 158 pages; however, it does not list criteria for the season to be suspended. Monitoring the virus and preventing outbreaks is significantly more challenging outside of last season’s Orlando bubble; however, teams have avoided a single large outbreak. Since last week, twelve more games have been postponed, bringing the total to fourteen. The thing that seems to be counteracting the considerable inconveniences, such as precarious competitive balance across teams and continually disrupted chemistry, is the collective sense of hope for a vaccine and a less volatile latter half of the season. The league’s health safety protocol states, “Once a vaccine is available, the league and the National Basketball Players Association will negotiate whether players, coaches, and staff will be required to receive it. If it is not required, adjustments to the safety provisions — such as requiring more masking or testing of those who choose not to receive the vaccination — might be implemented.” 

Decisions surrounding the distribution of the vaccine will be interesting to observe across professional sports leagues given that considerable skepticism already seems to exist. For example, Utah Jazz forward Derrick Favors told USA Today, “I’m a guy that don’t really take any vaccines. I try to stay away from a lot of medicine.”  Moreover, Denver Nuggets forward Michael Porter Jr. raised some eyebrows over the summer when he suggested that coronavirus was “being used for a bigger agenda” and revealed that he had never been vaccinated. Porter contracted the virus earlier in January and is currently on the list of players sidelined for the duration of their quarantine. Undoubtedly, a mandatory vaccine (assuming it’s ethical, safe, and effective) of all players, coaches, and staff could very much ease the season’s flow and ensure a quicker return to normal. So, can the NBA mandate a vaccine? Take the flu vaccine, for example. The league “strongly recommends” it, and all players and their households receive the option to take the vaccine. In the case of denial, the respective team has the right to provide the player with an educational course on the vaccine’s benefits. However, in 2021, the world is dealing with much more than just the annual flu, so how will the process be handled?

While the NBA has avoided comment on how it will handle the issue so far, history may provide insight on the legality of a potential mandate. A most relevant landmark case is Jacobson v. Massachusetts; a 7-2 decision held that Cambridge, Massachusetts could fine residents who refused to receive smallpox injections during the 1905 epidemic. Jacobson’s side argued that introducing smallpox to a healthy functioning immune system is a violation of the 14th Amendment, specifically of life and liberty. In response, the court reasoned that under the 10th Amendment, states have the authority to enact reasonable legislative action to protect public health. While this decision is over one hundred years old, there is little precedent on vaccine mandates and the NBA may look to this holding as a means to justify enforcement.  However, this determination seemed to grant power to respective states and it is uncertain how it can be applied in the context of an organization. Interestingly, although personal and ethical views are usually insufficient, “sincerely held religious belief” may qualify an exemption from a mandatory vaccination policy under Title VII. However, the current pandemic is largely uncharted territory. The consequences of a player or a coach denying the vaccine may be significant. In light of this, the conversation surrounding risk-management is likely to develop further, and shift legal determinations. Additional federal and state guidelines will likely also inform league decisions surrounding vaccination protocols. For now, Adam Silver has commented that the NBA will not “jump the line in any form whatsoever” in terms of receiving the vaccine.

Jeanette SubkhanberdinaLeave a comment

Sports Law Interview with Colin Kaepernick’s Attorney Ben Meiselas

As a board member for NYU Law’s Sports Law Association, I had the pleasure this past week to interview Ben Meiselas, the attorney who represented Colin Kaepernick in his lawsuit against the National Football League. Ben is a partner at Geragos & Geragos and heads the firm’s transactional and civil rights practice, however he is best known for representing former quarterback and civil rights activist, Colin Kaepernick. On top of being a full-time lawyer, Ben has also been the General Counsel for the Big3 Basketball League, currently serves as General Counsel for Colin Kaepernick’s “Know your Rights Camp,” and earlier last-year co-founded “Meidas Touch,” a progressive SuperPac which produces political ads to energize and engage voters. Ben was awarded the 2019 Variety Impact Lawyer of the Year for his legal achievements. He graduated law school from Georgetown in 2010. In this interview, we touch on Kaepernick’s role in the racial justice movement, the power of a law degree, working for P Diddy and Senator Hillary Clinton, advice for law school students, and much more.

Video interview shortcuts:
2:35 – 2020 in review, 7:13 – Working for P Diddy and Senator Hillary Clinton, 11:53 – Power of a law degree, 14:10 – Do you consider yourself a sports lawyer?, 19:05 – Colin Kaepernick’s role in 2021, 23:00 – Litigation vs. corporate work, and doing both, 28:14 – Combining passions in your career

 

Oliver GreenLeave a comment

Kawhi Leonard Loses “The Klaw” Logo Lawsuit v. Nike

Klaw-pyright Infringement

Despite his wild success over the last year, Kawhi Leonard took a tough “L” recently when he ran into a pick set by Nike last month. Oregon District Court Judge Michael W. Mosman granted Nike’s motion to dismiss the NBA star’s claim that he rightfully owned the “The Klaw” logo. In fact, in the complaint, Leonard’s legal team referred to the popularly-known logo as the “Leonard Logo” instead, in an attempt to establish even more of a link between the design and player. Yet, despite the undeniable connection the “KL” outstretched hand has with Leonard’s likeness, the judge’s ruling indicates that the logo and all adjoining rights to its use indeed belong to Nike. 

Size Matters

The concept of “The Klaw” was allegedly birthed when Leonard was still a second or third year player on the San Antonio Spurs. Coming out of college, Leonard boasted hands measuring 9.8 inches long and 11.3 inches wide. While those figures alone may not mean much, it should be noted that Leonard not only had the longest hands in the 2011 NBA draft, but slides in at no. 9 all-time in biggest “NBA hands” (sandwiched between Michael Jordan and Wilt Chamberlain ⁠— if you’ve ever heard of them). Thus, from his remarkably large hands, “The Klaw” stuck to Leonard as a nickname and a potentially lucrative branding opportunity.

Interestingly,  the nickname’s origin story has been called “a myth amongst the Spurs [2014] roster” as to who first conceived it or when the trend even caught fire. Leonard insists that he invented the logo while still at San Diego State University, though it could not have been created in connection to “The Klaw” moniker. In any event, Leonard’s credit for the initial sketch has not been disputed, but his protection over the foundational design was, for which he is now paying the price.

“Board Man Gets Played”

What makes this case so important is that this issue of intellectual property protection is only becoming more crucial for young athletes, as collegiate stars will be able to brand and profit off their likeness through endorsement agreements starting as soon as next year.

To Leonard’s credit, he had the foresight to begin building his brand in college, and conceptualized the following illustration. However, as a rookie with the San Antonio Spurs, the two-time champion recalls sharing a preliminary sketch of his logo idea with Nike, with whom he signed an endorsement deal. Below is a picture of Leonard’s version against Nike’s official design.

Captura de pantalla 2020-05-19 a las 9.27.16 a. m.

It is here where a few disagreements arise. The first is a matter of uniqueness and though the designs are generally similar in concept, the judge stated that he found Nike’s rendition of the logo to be “new and significantly different from [Leonard’s] design.”

Second, Leonard himself did not deny that the logo was created in connection with the endorsement contract, however argued that Nike’s design was a derivative of his work, disqualifying it from copyright protection. Again, the judge supported Nike’s claim that its version was “obviously distinct.”

However, what may be most telling is Leonard’s admission in a 2014 interview in which he speaks on the logo and his excitement in partnering with Nike. He states, “I came up with the idea of incorporating my initials in this logo. I drew up the rough draft, sent it over and they [Jordan Brand] made it perfect. I give the Jordan Brand team all the credit because I’m no artist at all. They refined it and made it look better than I thought it would ever be, and I’m extremely happy with the final version.”

Love & Basketball…and Intellectual Property

Much like the ugly breakup with the San Antonio Spurs and eventual marriage with the Los Angeles Clippers, the NBA star’s relationship with Nike unfolded similarly, with New Balance serving as Leonard’s “rebound,” if you will. Though given an opportunity to resign with Nike, once the contract between the sports apparel giant and the literal giant in Leonard expired in 2018, Leonard opted to take his talents to New Balance, signing an endorsement deal.

Though Nike, as mentioned, retains all rights to “The Klaw” logo, it is theoretically possible that New Balance could buy or license its utility in the future. Given the unlikelihood that Nike would agree to this (barring an absurdly Nike-friendly deal), there are few other options—if any—available to Leonard and New Balance to use the design other than appealing the judgment and receiving a remand.

Of course, because neither New Balance nor Leonard are able to utilize the logo, the pair has had to pivot in their endorsement efforts. While New Balance’s site is still bare bones as far as Kawhi-specific apparel, the Boston-based company unveiled a design earlier this year for Leonard’s first signature shoe. If you check out the logo on the shoe’s tongue, you’ll notice that it’s remarkably different, and more…ordinary than the disputed design owned by Nike, which honestly may align better with Leonard’s well-known, even-keeled personality.

However, if Leonard truly seeks to reclaim his logo through an appeal for his branding, the shot clock is ticking. The shoe will not officially be made available for purchase until the fall, but the odds that the case against Nike is appealed, remanded, and reversed—all before the shoe is released? Well, let’s just say Leonard would have a better chance of hitting “The Shot” again.

Oliver GreenLeave a comment

Dueling Lawsuits Between Zion Williamson and His Former Agent May Implicate Duke, Krzyzewski, Nike

Boxed-Out

Despite the pandemic, the world of sports law continues to run the headlines and claimed former Duke star Zion Williamson as its latest victim this week. In new information obtained by The Athletic, it was found that Williamson’s ex-marketing agent filed a lawsuit against last year’s #1 overall pick claiming over $200 million in potential damages.

After declaring for the NBA draft, Williamson signed a five-year contract with Prime Sports Marketing on April 20, 2019. The contract language stated that Gina Ford, the PSM president, would represent Williamson and handle all endorsement negotiations. However, Williamson later broke this contract, electing to sign with Creative Artists Agency (CAA), and sued both Prime Sports as well as Ford. His team asserted that the contract was never enforceable because the agency did not follow North Carolina’s agent guidelines nor warn Williamson about potential eligibility issues.

The following week Ford and Prime Sports countersued on the grounds that Williamson “willfully and knowingly” breached the contract and that the North Carolina Uniform Athlete Agent Act does not apply because he had already declared for the NBA draft with no intention of returning to Duke.

Full Court Press

Despite the fact that these lawsuits were filed more than a year ago, the contents of some documents were just recently made public and could have some highly damaging ramifications for both Williamson and Duke basketball coach Mike Krzyzewski. Ford’s attorneys put forth a Request For Admission, asking that Williamson admit to certain claims made by Ford and her team. The full set of interrogatories can be found here, but the major implication is that Williamson received improper benefits while at Duke and potentially entangles Krzyzewski and CAA in what could start to look like another recruiting scandal.

While Williamson is not required to answer these allegations, the procedure sets up depositions which will undoubtedly include at least the former Blue Devil and could involve the likes of Krzyzewski as well as representatives from CAA, Nike, Adidas and potentially others.

Show Me The Money

So how exactly did Ford and her team arrive at the $200 million + figure that has been reported? Well, as mentioned, the contract signed by Williamson was for five years and awarded Ford a 15% commission on endorsement deals. Therefore, the number cited in the lawsuit represents 15% of the total amount Ford estimates she would have negotiated for Williamson over the life of the deal — $1.3 billion.

As crazy as that number may seem, it’s certainly not impossible to imagine. In the one month alone that Ford represented Williamson, she negotiated deals with Mercedes-Benz, EA Sports, 2K Sports, Burger King, Puma amongst many more. Though no deals were struck at that time, the impressive list of potential clients speaks to the extensive interest major brands had in partnering with this generational talent. Of course in turn, it speaks to the vast amount of money that Ford could have earned through commission.

However, those deals and the subsequent money instead went to CAA which negotiated the largest rookie sneaker deal with Nike’s Jordan Brand for seven years, $75 million. The agency also sealed deals with Gatorade, Mountain Dew, Panini, and 2K Sports though the terms of those agreements are not public.

Location, Location, Location

Though the basics of this case are fairly straightforward, the way in which it will play out is anything but. Beyond just the coronavirus courtroom complications, the largest wrench in these proceedings is the location in which both competing lawsuits were filed.

Team Zion

For Williamson, his biggest advantage resides in the fact that he sued Ford first, and in North Carolina. In such, Williamson’s attorneys kept the ball in their court by controlling the state and consequently the legal system under which the case will be ruled.

This locational aspect of the legal battle is crucial because each state operates under its own Athlete Agent Act (AAA). The language and interpretation of the AAA is essentially what the argument that Williamson breached the contract rests upon. North Carolina’s version has very strict definitions for what constitutes an athlete, agent, an agency contract, etc. This framework is what Williamson’s team is working within to establish that the contract he initially signed is unenforceable.

The argument is that Williamson was unethically manipulated into signing a contract with Ford on account that she met with Williamson’s parents while he was still in college. If true, this would constitute “indirect contact,” which, under North Carolina’s AAA, would nullify the terms of the agreed-upon contract, thereby exonerating Williamson.

Team Ford

As for Ford’s lawsuit, her team took the liberty of filing in Florida which operates under a very different AAA. It is undeniable that Williamson breached the contract, however the legitimacy of the contract’s initial signing is up for debate, which Florida’s AAA will determine. While this location benefits Ford’s attorneys, timing has not been on their side. Williamson’s team appealed the lawsuit and the closure of the courtrooms due to coronavirus have impeded any progress her side had hoped to achieve by this point.

Moreover, given that Williamson filed first, Ford is at a disadvantage in that her team must wait until the conclusion of that lawsuit before appealing in the event that her team loses. She also maintains that Williamson was never “manipulated”, rather that he signed both willingly and voluntarily. One of Ford’s attorneys wrote, “Williamson is an adult male of high intelligence with exceptional business acumen. He is acutely cognizant of his value as a basketball superstar and of his branding, marketability and earning potential.”

Postgame Analysis

Because both sides unsuccessfully attempted to have the other’s case thrown out, each lawsuit will proceed in its respective state. In a vacuum, the way the contract should have been written would have included an arbitration clause, in which case, this information would have likely been kept private. However, the potential endings for this dispute include everything from a quick settlement to a full-scale trial.

The language of each state’s AAA contains enough ambiguity that effective litigation will play a crucial role in hashing out the interpretation of the above issues. It is likely that when the North Carolina-based lawsuit does eventually play out it will favor Williamson given the state’s AAA structure. However, it is equally as likely that Ford’s lawsuit in Florida’s system will yield a positive result for her and her team.

Given the complexity of this case and the wide-ranging possibilities of its conclusion, a “fight-to the death,” so to speak, would probably be a zero-sum game. Beyond just lawyer’s fees, which will quickly run up the expenses on both sides, it is hard to imagine Williamson, Duke, Nike and whomever else may be involved allowing this story to drag out in the headlines. Expect this case, like many other litigations, to end in a quiet, albeit Zion Williamson-size settlement.

Oliver GreenLeave a comment

NCAA Publishes Proposal For Name, Image, & Likeness Rights

Blurred Lines

The NCAA has shifted its stance on college athlete compensation and is restructuring collegiate sports to allow Division I student-athletes to earn money from endorsements and sponsorship deals as early as 2021. However, while this landmark consideration seems to indicate a step forward for college athlete rights, there are already signs that limitations potentially exist on the NCAA’s ability to ensure that this plan is effectively introduced.

The NCAA Board of Governors met on Monday and Tuesday last week to review recommended rule changes that would allow its athletes to profit off of their names, images and likeness (NIL).

Bubble Watch

Among the proposed rule adjustments, some changes made the cut while other rumored additions were left out. As established, the NCAA would allow collegiate athletes to profit from NIL. However, the recommendations did not include any specific procedures for doing so. What is known however, is that the NCAA hopes to establish a system that does not favor a particular individual, school or conference. In turn, the multi-billion dollar organization is calling on Congress to help standardize this emerging niche in college sports across all states.

Another omission involved the absence of group licensing, which means that the rumors of a return of EA’s popular video game NCAA Football are dead, for now at least. The NCAA stated that group licensing is “unworkable” given that there is no players association-type body to bargain on the players’ behalf. More so, group licensing could even open the door for players to classify themselves as employees of the NCAA, which would deteriorate the “amateurism” shield that has protected the association from employee designations.

Last 4 In, First 4 Out

Below is a quick run down of how athletes can and cannot be paid.

In:

–  Third party endorsements such as promoting a product or service through advertisement

– Social media influencing, i.e., Twitter, Instagram, TikTok, Facebook etc.

– Own work products and/or business, i.e., podcasts, Youtube videos, video game streaming, athletic lessons, etc.

– Personal promotion such as autograph signings, meet and greets, etc.

Out:

– Use of intellectual property from schools or conferences in endorsements

– Endorsement payments made from schools or conferences

– Facilitation of endorsements from schools or conferences

– Endorsement payments and/or booster payments as compensation for participation in collegiate athletics

“Back in my day…”

NIL rights fly in the face of the organization’s “amateurism” designation. NCAA.org features an entire page on amateurism and the organization requires all participating DI and DII athletes to be amateurism-certified before competing. The concept of amateurism dates all the way back to the NCAA’s 1906 inception. While the institution has done a remarkable job legitimizing and codifying amateurism in professional-grade sport, that foundation may face a potential threat.

Blue-chip high school basketball prospects have somewhat forced the NCAA’s hand. Over the course of the last year, the NCAA has witnessed some top-tier talent go to non-college program alternatives. The projected #1 overall pick in the 2020 draft, Lamelo Ball, elected to play overseas in Australia this past season, while the 23rd overall selection in the 2019 draft, Darius Bazley, took on a $1 million internship with New Balance. However, everything truly changed when the NBA G-League launched its professional pathway program at the end of 2018, which provided NBA prospects with a more “conventional” alternative to skill development than the aforementioned options.

The program has seen its popularity take off in recent weeks, welcoming three of the top 20 high school recruits in the country, who would have otherwise played for college programs. Jalen Green (#1) was reportedly considering Auburn and Memphis before announcing his G League decision. Meanwhile, Isaiah Todd (#14) and Daishen Nix (#20) spurned commitments to Michigan and UCLA respectively for the pathway alternative.

Moreover, others are expected to follow and for good reason – the program pays prospects $125,000 (at a minimum, top prospects like Green can make up to $1 million) and offers prospects a full scholarship to Arizona State University, which partnered with the program. However, these only outline the explicit benefits. Prospects who elect for this program (or any NCAA alternative) can already receive endorsement deals, market their own image, amongst other NIL rights, which the NCAA is currently working to introduce next season.

Sudden Death

The NCAA is on the clock and may consider instituting these changes even sooner or run the risk of losing other top high school prospects. Further, other states are already looking to follow the footsteps of California and Florida, which have already passed their own laws permitting NIL rights. The first of those agreements (Florida) goes into effect July of 2021 and will not wait for the NCAA. The consequences of having different systems of NIL compensation in place at different times across all 50 states are certain to be wide-reaching, but at a minimum will create vast disparities in compensation. For example, if Florida is indeed the first to implement its bill, it is reasonable to expect a surge of high school talent to Florida’s Division I schools, which would tip the competitive balance in the NCAA.

There are endless considerations for the NCAA to take into account as it moves forward. It looks as though Congress will have its hands full until 2021 between dealing with the pandemic the fact that it is an election year. For those reasons, the NCAA may largely be on its own in finding an equitable solution to implement NIL rights in all 50 states. As for now however, the ball is in the NCAA’s court.

Oliver GreenLeave a comment