Notice to Sports & Entertainment Customers – November 2022 | Kaufmann & Canoles

Following the latest version of the NCAA’s updated guidance on “eligible” and “ineligible” actions, below are tips for colleges, universities, student-athletes, brands, and sponsors when it comes to name, image, and similarity.

As for colleges and universities:

  • Universities should adopt NIL rules that strike the right balance between protecting the university’s interests in avoiding affiliation with “vice” industries and avoiding conflicts with school sponsors on the one hand, without unduly limiting the ability of athletes to conclude NIL agreements on the other .
  • NIL policies of universities should address collective booster activities and what athletics staff are allowed to do and cannot do with respect to relationships with individual supporters, as well as booster collectives and external brand representatives seeking to work with the school’s student-athletes.
  • Universities should also clearly communicate their NIL rules and any applicable state NIL laws to athletes, as well as personnel who may interact with booster athletes or collectives. In addition, institutions should provide students with easy-to-use (and understand) forms to disclose NIL agreements prior to implementation and to request permission to use any school branding, logos or signs in NIL activities.
  • While existing trademark law will protect universities from the unauthorized use of school trademarks, logos or insignia in NIL student-athlete activities, it will be best to address the use of school intellectual property in NIL activities before it happens, not after. At the very least, the use of institution brands, logos and insignia should not be permitted in NIL activities without prior written approval, and universities should explicitly communicate this to their student-athletes in advance.
  • Universities should also have an internal process in place to identify contracts with university sponsors, as well as the length and breadth of those contracts. Schools should also identify the institution’s sponsors’ competitors and determine which ones the school would consider limiting student-athlete NIL activities, and how or to what extent.

As for student-athletes:

  • Student-athletes should strive to protect their trademarks, logos and personal brands as early as possible. A student-athlete, either alone or with the assistance of legal counsel, may file a trademark application in the United States for a personal mark that she has a good-faith intention to use for up to three years Before the student-athlete actually begins selling personal branded products or services, so there’s no reason to delay filing until sales begin. In the event that the student-athlete’s brand becomes popular, the student-athlete will have the necessary protections to have unauthorized products removed from online stores and to prevent trademark infringement or counterfeiting.
  • Student-athletes, with the help of legal counsel, should also ensure that their NIL activities comply with any applicable state law and university NIL rules. Many states have adopted NIL statutes, and those universities in states without statutes have adopted their own institutional policies that student-athletes must comply with.
  • Student-athletes should always remember that NIL agreements are “compensation for something,” meaning that the student-athlete must perform an identifiable service or activity in exchange for being paid. Universities and their NIL partners may require proof of such activity (for example, a photo during an appearance). Further, if a NIL contract is terminated with no such service or activity provided by the student-athlete, then the student-athlete cannot receive payment, or withhold prepayment, for such contract, as this would jeopardize the student’s amateur status -athlete. .
  • Student-athletes and their families can hire a non-agent attorney at any time and not risk losing their amateur status. Therefore, whenever student-athletes have questions or are contacted by brands or agents regarding NIL agreements, they may consult and seek legal counsel to assist in exploring any applicable laws and regulations.
  • To help identify, market, and secure NIL deals, student-athletes can hire NIL agents before executing a NIL deal and even before committing to play for a particular school.
  • In retaining agents, it is important to consult with a non-agent attorney to ensure that all parties comply with state NIL law, which may require the agent to be licensed or registered in the state or may require that the agent has not represented a university in the past four years. Student-athletes and NIL agents should also review state NIL laws and school NIL rules to determine whether the student-athlete’s professional relationship should also be disclosed to the college, as well as the appropriate times to hire a NIL agent, as could have consequences for high school amateur status depending on state law in the student-athlete’s home state.
  • Counsel should be consulted regarding the terms of any engagement with a NIL agent and particular care should be taken to ensure that the engagement addresses NIL matters only while the student-athlete competes in track and field and does not extend beyond that term . This is especially important when considering “joining” an institution’s collective, as some collectives have become a mechanism for becoming the “agent of record” for an athlete, which can have some negative implications down the road when one student-athlete progresses to the next level or transfers to another school that does not deal with such “registration agent” collectives.
  • NIL deals should be negotiated to give the student-athlete the freedom to make additional deals down the road and allow the student-athlete to continue promoting their personal brand without exclusively licensing their personal brand to just one external NIL sponsor .
  • NIL offers should contain clear and understandable language describing what service or activity the student-athlete will provide in exchange for the stated fee. It is important that student-athletes understand what is expected of them, but also ensure that, after the fact, the service can be clearly demonstrated as being provided in accordance with the terms of the NIL Agreement.
  • When negotiating deals, student-athletes should consider including reverse morality clauses, which would allow the student-athlete to terminate a contract with a brand if the brand takes actions that seriously conflict with the values social status of the student-athlete.
  • NIL agreements should ideally be on an annual basis. In the era of the one-and-done and transfer portal, it is important to avoid issues of NIL offers that are not transferable to another institution or limit the ability of student-athletes to commit to other offers at their next stop. It is important for proper legal review by legal counsel and negotiated terms of any NIL agreement to ensure that ‘pay per play’ or ‘pay per join’ issues are avoided whilst still providing student-athletes the freedom to make decisions in their own best interests and careers.
  • Most large universities have engaged with external NIL partners to assist with NIL issues and provide a platform for student-athletes to engage in NIL activities and help educate student-athletes on NIL issues. While most of these NIL exchanges have processes for reviewing NIL agreements and related reporting requirements, student-athletes should not rely on these. It is important for student-athletes to remain diligent in their NIL activities, which would include having their NIL agreements reviewed by legal counsel, as well as independent follow-up with the school’s NIL reporting department to ensure compliance with state law and school rules.
  • Remember, when it comes to receiving NIL compensation, it is not the amateur status of the NIL exchange or NIL brand sponsor that is at stake, but the student-athlete.

Finally, regarding brands and sponsors:

  • Brands should ensure that all payments for NIL student-athlete activities are not contingent upon enrollment in a particular university or improper payments for the game. No brand wants to be the cause of a student-athlete’s loss of eligibility due to improper payments, because brands pay for exposure and need the student-athlete to compete to receive that exposure.
  • Brands must also ensure that the compensation offered to student-athletes is reasonable in light of their NIL activity in order to avoid an after-the-fact audit. For example, paying $20,000 per sponsorship post on social media to a student-athlete who has only a few hundred followers risks attracting attention as an improper payment and risking the student-athlete’s amateurishness eligibility. On the other hand, paying a student-athlete $20,000 per sponsorship post on social media may be perfectly reasonable if the student-athlete has millions of social media followers because the brand is, ultimately, paying for exposure to those followers.
  • It is also recommended that brands consider including morals clauses in NIL contracts with student-athletes, which will give the brand the right to terminate the agreement in the event of certain prohibited behavior by the student-athlete. Let’s face it: College students don’t always have the best judgment as they grapple during college, so it’s important for brands to put these protections in place early on. It is also important to include provisions in the contract that protect against student-athlete deductions for uncompleted NIL activities in the event of termination of the NIL contract.
  • Brands need to have self-awareness for their industries and their actions. If a brand is in a “vice” industry that is prohibited by state NIL legislation, or a specific school’s NIL policy, from engaging in NIL agreements with student-athletes, then that brand should focus on another marketing area rather than attempting to tie their brand to collegiate athletes. Additionally, brands in the “vice” or prohibited industries should also be aware of event sponsorship opportunities, such as sponsoring a NIL appearance event for a student-athlete or collective, even if the brand does not directly pay the student- athlete, could have negative consequences for the student-athlete.

Schools, universities, and student-athletes can rely on Kaufman & Canoles for assistance in implementing these guidelines. We look forward to sailing with you in this particular area.

Leave a Reply

Your email address will not be published. Required fields are marked *