On February 3, 2022, Alabama Governor Kay Ivey signed into law Alabama House Bill 76which repealed Alabama’s NIL law which legalized collegiate student-athletes receiving compensation for their names, images and likenesses (“Law NONE”). Like this author previously wrote, college football recruiting was the initial impetus for Alabama’s passage of the NIL law and, ironically, college football recruiting was the ultimate impetus for Alabama’s repeal. In the wake of the repeal of the NIL law, many wonder if Alabama student-athletes can still accept compensation for their NIL. As this article explains, the answer is yes.
Context of the NIL law.
On April 20, 2021, Alabama Governor Kay Ivey signed into law Alabama’s NIL law. Alabama Rep. Kyle South (R-Fayette), who sponsored the NIL bill, said the main purpose of the NIL law was to ensure that Alabama universities are not disadvantaged by recruitment compared to universities in states with similar laws. Auburn University and the University of Alabama supported passage of the NIL Act. For our summary of the NIL law, click on here.
Alabama’s NIL law was incorporated and incorporated into a pre-existing law – the Alabama Revised Uniform Athlete Agents Act (2016) (“Agents ActAmong other regulations, the Agents Act requires persons acting as agents of athletes in Alabama to register with the Alabama Secretary of State before representing student-athletes in connection contracts with professional teams. Where amendment contracts.
Developments after the NIL Act
After Alabama enacted its NIL law, several developments occurred that had consequential effects on the meaning of the NIL law:
On June 21, 2021, the United States Supreme Court ruled on the case of NCAA vs. Alston et al., who on antitrust grounds unanimously upheld a decision by the United States Court of Appeals for the Ninth Circuit that struck down NCAA caps on student-athlete academic benefits.
Effective July 1, 2021, the NCAA has adopted a interim policy allowing student-athletes to receive NUL compensation, which stated the following:
- Individuals may engage in NIL activities consistent with the law of the state where the school is located. Colleges and universities can be a resource for state law matters.
- College athletes who attend a school in a non-NIL state may engage in this type of activity without violating NCAA name, image, and likeness rules.
- Individuals may hire a professional service provider for NIL activities.
- Student-athletes must report to their school NIL activities that comply with state law or school and conference requirements.
On January 20, 2022, the NCAA voted to ratify a new, streamlined constitution that will reduce NCAA liability and revise rules at all levels of college sports, including declaring that student-athletes “cannot be compensated by a member institution to participate in sport, but may receive educational benefits and benefit from marketing through the use of their name, image and likeness.
Repeal of the NIL Act
Based in part on developments after the passage of the NIL Act, the Southern Representative sponsored House Bill 76 to repeal the NIL Act after sponsoring it less than a year earlier; and, on February 3, 2022, Governor Kay Ivey signed the bill into law and officially repealed the NIL Act.
While pushing for passage of the bill in the House, Rep. South explained why the repeal of the NIL Act has become important: “[The NCAA] adopted a set of rules for their member institutions, and where we end up, the state rules were more restrictive than what the NCAA had established…. South said earlier that the NCAA’s decision to allow student-athletes to receive NIL compensation meant Alabama’s NIL law. was more restrictive, raising concerns that Alabama’s top universities might be at a recruiting disadvantage. “It’s a bit the essential behind [HB76]“said the representative of the South. “It may be the shortest law on the books, passed one session and repealed the next.”
The exact provisions of Alabama’s NIL law that the Alabama legislature and governor deemed too “restrictive” are unclear. The NIL Act contained many restrictions, including the following:
- The term “compensation” excluded scholarships or stipends from an educational institution calculated on the basis of cost of living and attendance at the institution.
- It limited the amount of NIL compensation properly payable to student-athletes by imposing a standard that the NIL compensation must have been “proportionate to the market value” of the student-athlete’s NIL compensation.
- The payer of a NIL compensation could not condition their payment on athletic performance or attendance at a particular institution.
- Only third parties that do not belong to the student-athlete’s educational institution or operate under its authority could pay NIL compensation to the student-athlete.
- Neither an educational institution, nor an entity with the purpose of supporting or benefiting an educational institution or its intercollegiate sports, nor an officer, director or employee of an educational institution or entity could not compensate or cause compensation to be paid to a student-athlete or a student-athlete’s family for the use of the student-athlete’s TIN
- Except with the written consent of the educational institution, a student-athlete may not enter into a VOID indemnification contract if the educational institution determines that a contractual clause conflicts with a contractual clause binding the educational institution. teaching
- Before a student-athlete could sign a NIL compensation contract, the student-athlete had to disclose the contract to the educational institution in the manner prescribed by the institution.
- A contract for the NIL of a student-athlete trained while the student-athlete was participating in intercollegiate sport at an educational institution could not extend beyond the student-athlete’s participation in the sport in the educational institution.
- A student-athlete may not receive or contract for NIL compensation in a manner that also uses any registered or licensed trademarks, logos, verbiage, or designs of an educational institution, unless the institution teaching has provided the student-athlete with written permission to do so. therefore before the execution of the contract.
- A student-athlete could not receive NIL compensation as an inducement to attend or enroll or continue to attend a specific educational institution.
- Educational institutions may prohibit student-athletes from entering into sponsorship contracts with, or receiving compensation from, certain brands or companies and from wearing certain clothing or equipment under certain circumstances (including tobacco companies or brands, liquor companies or brands, vendors or dispensaries of controlled products). substances, including marijuana, adult entertainment companies, and casinos or other entities that have sponsored or promoted gambling).
What’s left to regulate NIL compensation?
Following the repeal of the NIL Act, three primary regulatory sources still govern the payment of NIL compensation to student-athletes in Alabama.
First up, the NCAA interim Policy NONE remains in effect and will apparently be approved by the NCAA’s new simplified constitution.
Second, educational institutions and sports conferences are free to adopt their own regulations regarding NIL compensation. These regulations may impose some of the same restrictions imposed by the now repealed NIL Act.
Third, the Alabama Agents Act remains in effect after the repeal of the NIL Act and governs “endorsement contracts.” Under the Agents Act, an “endorsement contract” is an agreement under which a student-athlete is employed by or receives consideration from a third party for publicity, reputation, following or fame (c i.e. NIL) of the student-athlete obtained due to ability or performance. Therefore, in addition to requiring athletes’ agents to register in Alabama, the Agents Act continues to govern NIL compensation in a number of ways, including, among other things, requiring that the agent (i) make certain disclosures and warnings to the student-athlete from the contracting agency and (ii) inform the student-athlete’s educational institution of their relationship. An agent’s failure to comply with the Agents Act results in civil and criminal penalties, including a fine of up to $50,000 and felony charges.
In summary, Alabama repealed its NIL law less than a year after enacting it. Student-athletes can still receive compensation for their NIL in Alabama, but they must comply with only three main regulatory regimes instead of four – the NCAA’s Provisional NIL Policy, the Educational Institutions Regulations of the ‘Alabama and the Agents Act.