Developing a NIL policy: Limitations on NIL activities (Part 5)

Throughout our Developing a NIL policy series, we have provided checklists to help colleges and universities with the drafting and/or tweaking of their name, image and likeness (NIL) policies since the National Collegiate Athletic Association (NCAA) reversed its broad prohibition on athletes’ abilities to profit from their NIL. So far, we’ve reviewed: (1) the five foundational pillars, (2) general statements to include; (3) the use of institutional logos, marks and facilities; and (4) disclosure and institutional review of contracts. In this fifth installment, we address limitations on activities that some state laws may allow institutions to include in their NIL policies. Using Ohio’s executive order as an example, we highlight some of the types of limitations in state NIL laws and considerations for including limitations in policies. We also address the NCAA’s guidance on limitations for booster involvement in NIL. 

Before using this checklist, please note that the intricacies of NIL all but mandate that you consult with your policy team and counsel, as our checklist may not reflect your institution’s priorities or approach to this complex issue. Additionally, while we recognize that the majority of existing state NIL laws share considerable similarities, we use as an example only, Ohio Executive Order 2021-10D, and our focus is on NCAA compliance.  Please be mindful that your state may not have any NIL laws or guidance.

1. Consider prohibitions you may want to (or have to) include in your institution’s policy and be clear on the limits of those prohibitions in your policy.

Ohio, like many states that have enacted their own NIL laws, has identified certain limitations that a college or university may place on the types of entities with which a student-athlete can contract for their NIL use. When considering potential impacts on the institution’s image or values, these limitations are unsurprising. Specifically, Ohio allows institutions to prohibit (note that this is permissive in Ohio) athletes from contracting within industries associated with:

• Controlled substances, alcohol and tobacco: Any company or brand that manufactures, markets, sells or is associated with a controlled substance, marijuana product, medical marijuana product, alcoholic product, tobacco product, electronic smoking device, vapor product or product or device that consists of or contains nicotine that can be ingested into the body.
• Marijuana: Any medical marijuana cultivator, processor, laboratory or retail dispensary licensed under Chapter 3796 of the Revised Code or under the laws of another state.
• Adult entertainment: Any business engaged in the sale, rental or exhibition for any form of consideration of adult entertainment that is characterized by an emphasis on the exposure or display of sexual activity.
• Gambling entities: Any casino or entity that sponsors or promotes gambling activities.

Determining whether and to what extent your institution will enact these permissive prohibitions is a conversation best had with the stakeholders on your campus. Plus, once a set of prohibitions are in place, the conversation necessarily turns to how broad or narrow they will be enforced – remember, many NIL laws are very vague. To that end, consider the difference between these two policy statements:

“Student-athletes are prohibited from contracting with businesses associated with gambling.”

“Student-athletes are prohibited from contracting with businesses whose primary purpose is gambling, betting, or sports-wagering. While the University cannot provide an exhaustive list of every business whose primary purpose is gambling, betting, or sports-wagering, NIL contracts that are associated with businesses who offer gambling (e.g., through the sale of state lottery tickets) or who are owned by a larger entity that is associated with gambling, betting, or sports-wagering would not be prohibited under this Policy.”

While this language may be somewhat idealistic in the sense that institutional policy-making often strives for maximum flexibility, your NIL policy will likely gather some wear-and-tear. To that end, the more examples you can provide, the better the chances for understanding. 

2. Consider prohibitions you may want to include in your institution’s policy regarding boosters. 

Another area you may want to address with your stakeholders when considering limitations on NIL activities hits on a potentially sensitive subject: boosters. The NCAA’s November 2021 Q&A on NIL activities specifically (and briefly) affirms that student-athletes can enter into NIL agreements with boosters, “provided the activity is in accordance with state laws and school policy” and “is not an impermissible inducement and does not constitute pay-for-play.” The concern for institutions is that, while a booster and student-athlete NIL agreement may not directly involve the institution, the consequences of that agreement could appear to be an improper inducement or pay-for-play. 

Examples of booster-involved conduct are not hard to find. In fact, at least one prominent booster has taken to a public platform to both describe his stated goals with his NIL offerings and his displeasure with the NCAA apparently poking around said deals.    

Unpacking all of this, it is unclear at this point how institutions will be pulled into NCAA review of NIL deals with boosters, if at all. However, publicly at least, the institution can be difficult to separate from a particularly vocal booster and NIL sponsor. With concerns that comments or NIL commitments may have the appearance of improper recruiting inducements or pay-for-play, an institution may want to consider policy limitations on booster NIL agreements, or at the very least, how or whether the institution will want to publicly address booster and NIL agreements. 

In sum, there are still a lot of unknowns as the NIL process continues to unfold, but colleges and universities can place some limitations on NIL deals in their policies, many of which may be detailed in state law, like in Ohio’s executive order. As we all learn more about the types and successes of NIL deals and the role of the NCAA in NIL enforcement, colleges and universities can best protect themselves and their stakeholders by discussing and considering limitations that best fit the institution’s culture and ethics.  Further, when deciding to include limitations in policy, colleges and universities should anticipate and address any potential confusion over interpretation of those limitations by providing clear examples in their policy.