On July 1, 2021, the National Collegiate Athletic Association (NCAA) implemented a landmark rule change allowing college athletes to profit from their Name, Image, and Likeness (NIL). This rule change marked a significant departure from the NCAA’s long-standing prohibition against student-athletes receiving compensation beyond scholarships and stipends. Driven by mounting legal and public pressure—including state legislation that threatened to undermine the NCAA’s authority and a series of high-profile lawsuits challenging the organization’s restrictions on athlete compensation—this decision has spurred the growth of a new industry where student-athletes, brands, and universities are capitalizing on remarkable opportunities for financial gain, brand development, and enhanced engagement within the sports ecosystem.
Now in its third year, the collegiate athletics “NIL Era” has brought both opportunities and challenges as stakeholders navigate a complex and fragmented regulatory environment. Varying state laws, university and college-specific rules, and NCAA policies make up an ever-evolving NIL legal landscape. This patchwork of regulations creates significant uncertainty for student-athletes, institutions, and brands alike, as they must continuously adapt to differing and sometimes conflicting requirements. The lack of a unified federal standard further complicates compliance efforts, prompting ongoing calls for comprehensive federal legislation to harmonize NIL regulations across the country. With new opportunities and challenges emerging daily, it is no surprise that legal professionals are increasingly being called upon to provide guidance to stakeholders navigating this developing landscape.
One of the primary legal considerations in the NIL context is the interplay between state laws and institutional policies. Here in Ohio, Executive Order 2021-10D (the “Order”), which was signed by Governor Mike DeWine on July 1, 2021, established the state’s NIL law. This Order aims to ensure that Ohio’s student-athletes can benefit from NIL opportunities while maintaining compliance with state and NCAA regulations. Among other things, the Order prohibits compensation contingent on athletic performance or participation, requires disclosure of NIL agreements, and mandates that such agreements do not conflict with existing institutional sponsorships. Additionally, the Order prohibits educational institutions from directly compensating student-athletes for their NIL, ensuring that all compensation comes from third-party entities. The Order also encourages institutions to provide educational workshops on financial literacy, contract negotiation, and intellectual property rights to help student-athletes.
At the institutional level, NIL rules and policies are customized to fit the unique environment and resources of each institution and its athletic department. Consequently, failing to recognize and appreciate these variations can increase the risk of violating those rules and potentially the law. This issue is particularly acute when service providers, such as lawyers, represent student-athletes, brands, or institutions across multiple jurisdictions. Each institution’s specific requirements and compliance mechanisms must be thoroughly understood and adhered to in order to mitigate legal risks and ensure that all parties are operating within the bounds of both institutional policies and applicable laws. Accordingly, it is imperative for legal professionals to stay informed about the nuances of NIL regulations at each institution and to provide tailored advice that reflects these differences.
The contractual structures of NIL deals between student-athletes and third parties are as varied as the rules and laws governing them. The absence of a standard form of engagement adds another layer of legal complexity, as terms and conditions must comply with a myriad of interwoven rules, policies, and laws. Over the past three years, there have been NIL deals that range from simple agreements in exchange for merchandise to comprehensive contracts valued at hundreds of thousands of dollars. As with any relationship resulting in legal obligations, factors such as power disparities, access to legal counsel, and experience, significantly impact the outcomes of the deal. Understandably, as these deals grow larger and more complex, the need for assistance from legal counsel becomes increasingly critical.
In September 2023, Gervon Dexter initiated a lawsuit against an investment capital company with which he had entered an NIL deal during his tenure as a student-athlete at the University of Florida. Under the terms of the deal, Dexter committed to paying 15% of his pre-tax NFL earnings for the next 25 years in exchange for a one-time payment of $436,485. Although Dexter ultimately chose to voluntarily dismiss the case in favor of alternative dispute resolution, the terms of the agreement were revealed in the complaint, prompting widespread criticism. Many, including members of the Florida Legislature, deemed the terms of the deal to be violative.
In May 2024, Jaden Rashada filed a lawsuit alleging breach of contract and misrepresentation by the University of Florida’s NIL collective, Gator Collective. Rashada claims the collective failed to honor a multimillion-dollar NIL deal promised during his recruitment, causing him financial and reputational harm. The lawsuit also suggests that Rashada was misled about the terms and enforceability of the agreement, which influenced his decision to commit to the university. The allegations in Rashada’s complaint illustrate yet another instance of potential violations of NCAA rules, institutional policies, and state law. Despite the case being in its early stages, it already underscores the critical need for transparent and enforceable NIL agreements to protect student-athletes’ rights and ensure compliance with all relevant regulations.
In September 2024, Matthew Sluka, the quarterback for the University of Nevada, Las Vegas, encountered an issue related to an alleged verbal commitment of compensation made by an assistant coach. The failure to follow through on this commitment led Sluka to announce that he would utilize his redshirt eligibility and refrain from competing in any further games during the 2024 season. This surprising decision underscores the challenges and complexities associated with NIL deals, highlighting how off-field NIL issues may directly impact on-field actions. It also illustrates the fragility of the collegiate athletics NIL regulatory framework. Although this matter is in its early stages and under review at the time of this article, its outcome is likely to have significant consequences for future NIL deals and compliance standards.
The legal profession will inevitably play a pivotal role in shaping a fair and equitable NIL ecosystem. As the NIL legal landscape continues to evolve, it is crucial that legal practitioners stay informed and adaptable to help clients navigate this complex and dynamic area effectively. As demonstrated by the examples discussed above, the NIL landscape is multifaceted and often requires an understanding of various legal disciplines depending on the circumstances. By keeping abreast of regulatory developments, ethical considerations, and emerging trends, legal professionals can ensure that the rights and interests of all parties are protected, fostering a transparent and compliant environment that benefits everyone involved.
Shaw is an associate attorney at Vorys, Sater, Seymour and Pease, where he concentrates his practice on intellectual property protection, with a primary focus on trademarks, copyrights, and publicity rights. He possesses extensive experience in advising athletes, entertainers, and influencers in structuring sponsorship deals, licensing agreements, marketing campaigns, and more. Jabari became a member of the CBA in 2016 and served as the YLS Chair during the 2021-2022 term.