Sumayyah Borders

30 December 2024

The world of college athletics has undergone a major shift with the advent of Name, Image, and Likeness (NIL) compensation, allowing student-athletes to profit from their personal brands. The National Collegiate Athletic Association (NCAA) had always maintained a strict amateurism model that barred athletes from earning money, despite the billions in revenue generated by college sports. With the rise of social media and increasing public scrutiny, the pressure for reform grew, culminating in a landmark ruling that granted athletes the right to monetize their NIL. While this development has been celebrated as a victory for athletes, it has also opened the door to complex policy challenges. As NIL rights continue to reshape the landscape of college sports, the need for coherent and effective policy frameworks has never been more urgent.

For decades, college athletics operated under the principle of amateurism, with the NCAA prohibiting athletes from receiving any form of compensation beyond their scholarships. This approach maintained a strict boundary between college athletes and professionals, asserting that student-athletes should compete purely for the love of the game, rather than for financial gain. However, the concept of amateurism faced growing criticism, especially as college sports became a multibillion-dollar industry [1]. This commercial transformation is a far cry from the humble beginnings of college athletics, which originated in the mid-19th century with events like the first intercollegiate rowing match between Harvard and Yale. This event is often recognized as the birth of organized collegiate sports in the country. Following this match, other sports began to take root on college campuses. In 1859, Amherst defeated Williams College in the first intercollegiate baseball game, and in 1869, Rutgers and Princeton played the first college football game. As these sports grew in popularity, so did the need for standardized rules and oversight, thus leading to the formation of the NCAA in 1906. Over the 20th century, college sports continued to expand, with football and basketball emerging as fan favorites. However, substantial revenue generation did not begin until late in the century, when broadcasting became more widespread [2]. The industry’s growth accelerated rapidly in the 1980s following a pivotal Supreme Court ruling in NCAA v. Board of Regents of the University of Oklahoma (1984), which allowed universities and conferences to negotiate their own broadcasting rights [3]. This opened the door for substantial television contracts, making college athletics a key revenue stream for many schools. The NCAA capitalized on this growth by expanding its tournaments, most notably with the expansion of the March Madness basketball tournament in 1985. The explosion of digital media in the 2000s further catapulted college sports into an era of unprecedented growth. Cable sports networks like ESPN made games widely accessible, while internet streaming and social media platforms allowed fans to follow teams more closely and athletes to develop personal brands [4].

The push for NIL compensation came from mounting pressure by athletes, legal challenges, and public outcry. High-profile athletes highlighted the unfairness of not being allowed to profit from their own name or image while universities and the NCAA capitalized on their popularity. This disparity was brought to the forefront through cases like O’Bannon v. NCAA (2015). Ed O’Bannon, a former UCLA basketball player, filed the lawsuit in 2009 after discovering that his likeness had been used without consent or compensation in a popular EA Sports game, NCAA Basketball 09. Bannon sued the NCAA and the Collegiate Licensing Company (CLC), alleging violations of Section 1 of the Sherman Antitrust Act [5]. The Sherman Antitrust Act of 1890 is a federal statute aimed at promoting fair competition in the marketplace. More specifically, Section 1 states: “every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several States, or with foreign nations is declared to be illegal” [6]. In simpler terms, this section outlaws agreements between two or more parties that unfairly limit competition or trade. In O’Bannon v. NCAA, the plaintiff argued that the NCAA’s amateur rules prohibited athlete compensation and was an illegal restraint of trade under the Sherman Act. The district court agreed that the NCAA’s current practice was indeed an antitrust violation, and the lower court ruled that the NCAA should allow the awarding of scholarships to students-athletes up to the full cost of attendance. Additionally, the ruling called for the NCAA to allow colleges to provide up to $5,000 per year in trust for athletes, which they could receive upon graduation. In 2015, the Ninth Circuit Court of Appeals upheld the ruling that the NCAA’s restrictions violated antitrust laws but struck down the $5,000 cap, leading to a narrower ruling that schools could provide athletes with full ride scholarships. Athletes could receive athletic scholarships prior to this, but these scholarships typically did not cover the full cost of attendance. Although the ruling didn’t immediately allow athletes to receive unrestricted NIL compensation, it was a major step toward dismantling the NCAA’s firm stance on amateurism [5]. 

Another significant turning point came with the NCAA v. Alston (2021) case, which questioned whether the NCAA’s restrictions on education-related benefits violated antitrust laws by unfairly limiting compensation and restricting competition. The plaintiffs, including Shawne Alston, a former football player at West Virginia University, argued that the NCAA’s rules prohibiting athletes from receiving education-related benefits–such as payments for academic achievements or internships–were anticompetitive and violated the Sherman Act. They contended that these rules kept college athletes from competing for compensation in a free market. The NCAA argued that allowing athletes to receive more than their scholarships in education-related benefits would undermine their amateurism model, eroding the “integrity” of college athletics. In a unanimous decision, the Supreme Court ruled in favor of the plaintiffs. The Court held that while the NCAA could regulate some aspects of college sports, it could not place broad limits on education-related benefits like scholarships for graduate programs or additional tutoring. This decision allowed for greater financial support for athletes in ways directly related to their education but did not force the NCAA to adopt direct salary payments or broader compensation [7][8][9].

Meanwhile, state governments began passing their own NIL legislation, most notably California’s Fair Pay to Play Act in 2019, which required that California universities compensate their athletes for their NIL. It is important to note that the law does not permit colleges and universities to pay athletes directly; it only allows student-athletes to capitalize on the use of their NIL [10]. In 2020, other states followed suit and passed similar laws prohibiting the NCAA from penalizing athletes for profiting from their own NIL with social media endorsements, content creation, autograph signings, and sponsorship deals. In response to the mounting pressure of new state laws, the NCAA implemented an interim NIL policy in 2021, allowing athletes across all divisions to profit from their name, image, and likeness. Under this policy, athletes can engage in endorsement deals, monetize their social media presence, and participate in activities that generate revenue from their NIL. Despite the significant progress, the NCAA’s interim policy has left much of the regulation to individual states and institutions, creating inconsistencies across the country. States with NIL laws offer different protections and opportunities for athletes, while schools in states without such laws often establish their own frameworks. This disparity has prompted calls for federal legislation to standardize NIL rights and create uniform regulations [11].

The introduction of NIL compensation in college athletics has sparked a complex policy debate centered around two major concerns. On one hand, NIL compensation is seen as a vital step in empowering athletes, finally allowing them to profit from their personal brand and market value. For years, college athletes contributed to a multibillion-dollar industry without receiving any form of compensation. NIL rights rectify this imbalance, enabling athletes to earn money in various ways while they are still gaining an education. For many athletes, especially those who come from financially disadvantaged backgrounds or who may not make it to the professional level, NIL income can be a game-changer by providing financial stability. However, NIL challenges the traditional amateurism model that the NCAA and institutions have long upheld. There is a risk that athletes might prioritize schools based on the potential for lucrative NIL deals rather than their fit with the school’s academic or athletic programs. Furthermore, not all college athletes profit from NIL in the same way with higher profile athletes receiving substantial monetary and non-monetary gains while lesser known athletes receive less cushy benefits [12].

Additionally, NIL compensation has the potential to exacerbate competitive inequalities between powerhouse programs and smaller schools. Powerhouse programs, with their extensive media presence, wealthy booster networks, and established commercial ties, offer athletes greater NIL opportunities. As a result, these schools may attract more top-tier talent. Conversely, smaller programs with fewer resources and less national exposure may struggle to offer comparable opportunities [12]. Even within nationally-recognized programs, disparities in NIL compensation persist among different sports, conferences, and positions. High-revenue sports, like football and basketball dominate NIL deals due their visibility and the substantial revenue they generate for universities. In contrast, athletes in less commercially popular sports often struggle to secure similar opportunities. On average, a Division One (D1) men’s basketball player is expected to earn about $630,000 a year, while a D1 men’s swimmer/diver earns about $4,400 annually. Gender disparities also exist in the smaller sports with collegiate female athletes typically earning more than male athletes in the same sport. For example, compared to men’s swimming/diving, women in the same sport earn about $13,500 annually [13]. We could also examine differences in NIL between different positions in different conferences. At the D1 level, there are two major groups of conferences: Power Four and Group of Five. On average, the starting lineup for a Power Four program can collectively expect to earn around $10.5 million per year, with quarterbacks leading the way at approximately $820,000 annually. However, take a powerhouse conference like the Southeastern Conference (SEC), whose starting players can collectively expect to earn upward of $14.4 million annually. SEC quarterbacks earn over $1 million annually, and offensive and defensive linemen earn over $750,000 annually. Overall, the expected compensation for the top-10 earning players at SEC schools at any position is over half a million dollars. Meanwhile, the average value of the twenty five highest-earning players at any position at Group of Five schools is just under $50,000 [13]. 

These disparities reflect broader economic principles in college sports, where NIL compensation aligns with supply and demand. Programs and positions that drive revenue—such as SEC quarterbacks—command higher compensation. Some argue that this is a natural outcome of a market-driven system. However, others suggest that interventions, such as federal legislation, could standardize NIL policies across states and conferences to create a more level playing field. Additionally, educational programs could help athletes in less commercially visible sports or smaller schools leverage their platforms to attract local sponsorships or social media-driven deals. Federal legislation or revenue-sharing models could address these inequities, but such solutions would require navigating legal and institutional resistance [12]. 

In a major shift for collegiate sports, the NCAA and its power conferences announced in May 2024 that universities would be allowed to directly compensate their athletes, beginning in 2025. The decision follows the settlement of three cases—House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA. The settlement mandates that schools pay out approximately $2.78 billion in total back damages to athletes over the next 10 years [14][15]. While this development promises more stable and direct financial benefits for athletes, it has sparked debates about equity in fund distribution, particularly for athletes in lower-revenue sports like track and field or gymnastics.

The settlement raises broader questions about the nature of college sports. Will the growing financial rewards change the focus of student-athletes from education to profit? Policymakers must ensure that college sports continue to prioritize education while allowing athletes to benefit from their NIL rights. One possible solution is the implementation of caps on NIL earnings. While this would allow athletes to profit from their personal brands, it would also prevent financial incentives from overshadowing academic responsibilities. By setting reasonable limits on earnings, policymakers can ensure that the primary focus of college sports remains on education, rather than turning college athletics into a full-time professional endeavor. Another potential policy solution is to set academic requirements for NIL eligibility. For instance, universities could require student-athletes to maintain a minimum GPA in order to qualify for NIL deals. This policy would not only help ensure that education is the main focus, but it may also create an incentive for athletes to remain academically engaged, even as they benefit from NIL opportunities. Such regulations could protect the integrity of college athletics, ensuring that athletes do not lose sight of their primary role as students.

Special thanks to Dr. Lawrence Feick from the College of Business Administration for reviewing this piece.

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Image via Pexels Free Photos

Works Cited

[1] NCSA. “What Is NIL? Name Image Likeness Rule Explained.” NCSA, November 6, 2024. https://www.ncsasports.org/name-image-likeness. 

[2] Lewis, Guy. “The Beginning of Organized Collegiate Sport.” American Quarterly 22, no. 2 (1970): 222. https://doi.org/10.2307/2711645. 

[3] NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984).

[4] Basso, Jordan C., “Sports Marketing and Branding among Gen Z and Their Digital Associations” (2023). Student Publications. 1114.

[5] O’Bannon v. NCAA, 802 F.3d 1049 (9th Cir. 2015).

[6] Sherman Antitrust Act, 15 U.S.C. §§1-38 (1890).

[7] NCAA v. Alston, 594 U.S. ___ (2021).

[8] Harvard Law Review. “NCAA v. Alston.” Harvard Law Review 135, no. 1 (November 10, 2021). https://harvardlawreview.org/print/vol-135/ncaa-v-alston/. 

[9] Yoo, Kwanghyuk David. “SCOTUS Analysis: NCAA v. Alston.” Emory University School of Law, August 2, 2021. https://law.emory.edu/news-and-events/releases/2021/08/scotus-yoo-ncaa-v-alston.html. 

[10] Bank, Steven A. “The Olympic-Sized Loophole in California’s Fair Pay to Play Act.” Columbia Law Review 120, no. 4 (May 2020). https://columbialawreview.org/content/the-olympic-sized-loophole-in-californias-fair-pay-to-play-act/. 

[11] Lockard, Simon. “The Fair Pay to Pay Act and How California Led the Way to College Athlete Pay Reform and the Development of NIL – Business Law Digest.” USC Gould’s Business Law Digest, April 27, 2024. https://lawforbusiness.usc.edu/the-fair-pay-to-pay-act-and-how-california-led-the-way-to-college-athlete-pay-reform-and-the-development-of-nil/. 

[12] Cohen, Sammy, Ryan Colon, Amanda Tuzzo, and Amanda Padden. “Name, Image, and Likeness and Its Ramifications for Student-Athletes.” Black in Blue: the Duke Sports & Race Project, 2024. https://blackinblue.trinity.duke.edu/name-image-and-likeness-and-its-ramifications-student-athletes-0. 

[13] Drape, Joe, and Allison McCann. “In College Sports’ Big Money Era, Here’s Where the Dollars Go.” The New York Times, August 31, 2024, sec. Business. https://www.nytimes.com/interactive/2024/08/31/business/nil-money-ncaa.html. 

[14] Brutlag Hosick, Michelle. “Settlement Documents Filed in College Athletics Class-Action Lawsuits.” NCAA, July 26, 2024. https://www.ncaa.org/news/2024/7/26/media-center-settlement-documents-filed-in-college-athletics-class-action-lawsuits.aspx. 

[15] Murphy, Dan, and Pete Thamel. “NCAA, Power 5 Agree to Let Schools Pay Players.” ESPN, May 23, 2024. https://www.espn.com/college-sports/story/_/id/40206364/ncaa-power-conferences-agree-allow-schools-pay-players.