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What Does NCAA’s Abandonment Of TPA Concept Mean For Its NIL Legislation?

Now that the Third-Party Administrator role has been eliminated, what’s next?

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Photo by M. Anthony Nesmith/Icon Sportswire

The NCAA has notified its remaining finalists for the Third-Party Administrator, which was meant to assist with the administration of name, image and likeness activities, that the organization no longer plans to fill the role. Former NCAA executive vice president Oliver Luck, whose company The NIL Education and Information Center with sports media executive Bill Squadron was a finalist, confirmed they received an email notifying them of the decision.

The NCAA accepted bids for the TPA role through last October and was initially planning to make a final decision in November. However, it has continued to delay that decision, along with any decision on its own NIL legislation, until finally alerting finalists it would abandon the TPA concept entirely.

Where are we without a third-party administrator?

What does this mean for the decision looming over the NCAA next week when the Division I Council meets June 22 and 23 to again discuss its own name, image and likeness legislation?

Luck says he believes the NCAA will pass legislation covering several “buckets,” as he describes them, before July 1. The first bucket would be what student athletes can and can’t do.

NIL rights for student athletes with guardrails

In the NCAA’s legislation considered back in January and subsequently tabled, it looked something like this:

Student athletes could under the legislation:

  • Receive compensation based on their value as a student athlete, including any value gained as a result of their exposure as a student athlete
  • Establish their own business or engage in business activities and receive compensation from those activities
  • Use their name, image or likeness to promote athletically or nonathletically-related business activities, including products, services and personal appearances
  • Reference the institution they attend consistent with the same policies that apply to any student (however, see below for restriction against using institutional marks)
  • Post or repost content created by the institution or one of its vendors to social media, however, the institution retains the rights to the content and the content is not used in any activities for which the student athlete is compensated
  • Sell items provided by the institution that are properly retained by the student athlete at the end of the season, such as awards and apparel, but not until they have exhausted eligibility or have become permanently ineligible for competition, however, student athletes may sell institutional merchandise they have purchased subject only to institutional restrictions related to the resale of items including institutional marks
  • Be compensated for their autograph, however, a student athlete is not permitted to receive compensation for signing an autograph while participating in a required athletically-related activity or otherwise representing the institution and no institutional marks can be used in conjunction with the sale of the autograph
  • Receive compensation for teaching or coaching sport skills or techniques in their sport on a fee-for-lesson basis and use their name, picture or appearance to promote or advertise the lessons, subject to the following conditions: i) if institutional facilities are used, they must follow the same rental processes as the general public; ii) playing lessons are prohibited; iii) compensation is paid by the lesson recipient (or the recipient’s family member) and not any other individual or entity, and iv) the instruction is comparable to what would be provided during a private lesson when the instruction involves more than one individual at a time
  • Use their name, image or likeness through a crowdfunding service to raise funds for educational expenses not included in cost of attendance (such as mission trips or internships), as long as there is no institutional involvement
  • Sell equipment related to their sport, even if their name, image or likeness is used
  • Hire an agentor other adviser, unless it’s to secure an opportunity as a professional athlete

Student athletes could not under that legislation:

  • Receive pay, or promise of pay, for participation or performance in their sport
  • Receive compensation as an inducement for enrollment
  • Involve the institution or any institutional staff member in the development, operation or promotion of the student athlete’s business activity, unless it is developed as part of a student athlete’s coursework
  • Sell any product or service to an institution or institutional staff member
  • Use institutional facilities in the development, operation or promotion of their business activity
  • Conflict with existing NCAA legislation, such as rules on sports wagering and banned substances
  • Allow their name, image and likeness to be used by an athletic equipment company or manufacturer to publicize that the institution’s athletics program uses its equipment
  • Engage in activities that conflict with existing institutional sponsorship arrangements or institutional values (as defined by the institution)
  • Receive professional services from an institutional staff member related to the student athlete’s name, image and likeness activities

There was also a disclosure requirement that stated student athletes would need to disclose the details of any arrangements. That piece was to be managed by the TPA. Now the assumption is those disclosures would be made directly to athletic departments, putting the onus on them to have the right software, systems and procedures.

Agents and other representation for student athletes

The second bucket Luck expects the NCAA will adopt into legislation next week is with regards to agents and brand representatives. Previous legislation considered earlier this year gave these key guidelines for the use of professional service providers:

  • Can be used for advice regarding name, image and likeness
  • Can provide representation in contract negotiations related to name, image and likeness
  • Cannot be an employee or independent contractor of the institution, with the exception of an entity that contracts primarily to provide product (not services) to the institution
  • Fees must be typical by industry standards and must be disclosed in a written agreement
  • Student athletes may receive the same de minimis benefits (meals, copies, mailing) a non-student athlete would receive

One acknowledgement in the last proposal stated, “…boosters may be the most likely sources of opportunities for student-athletes to engage in name, image and likeness activities. Student-athletes should be permitted take advantage of legitimate opportunities, even if the source of the opportunity comes from a booster of the institution.”

Rights for prospective student athletes

The final bucket Luck expects to be addressed is with regards to prospective student athletes, which would allow high school students to take advantage of the same types of opportunities without fear of losing eligibility.

What to expect from the NCAA

“I can’t imagine the NCAA not having its own system,” says Luck. “That would just be awful. I can’t imagine a worse scenario.”

Former Forbes.com contributor Darren Heitner, a Florida attorney involved in Florida’s NIL legislation, believes the NCAA has no choice but to pass its own legislation given the failure of the federal government to step in and help it by passing a national law.

“I typically refuse to make assumptions about or speculate as to what the NCAA will or will not do on any given issue, since the NCAA rarely proceeds like a rational actor. However, it seems as though the NCAA, after years of sitting on its hands and doing absolutely nothing with regard to name, image, and likeness will have no choice but to pass legislation a mere week prior to numerous states enacting their own NIL laws.”

“If the NCAA does nothing, then it will be helpless if numerous athletes in states that have not enacted such NIL laws begin to commercialize their publicity rights,” says Heitner. “If the NCAA took punitive action against those athletes and/or their schools, it could lead to a major backlash that would cripple the entire institution of the NCAA.”

Of course, it is still possible the NCAA will simply decide to give a blanket waiver of its current rules prohibiting student athletes from profiting off their name, image and likeness to student athletes in those states with laws going into effect.

“If the NCAA provides a blanket waiver as opposed to passing legislation, then athletes in states without NIL laws would have fewer restrictions than those in states with NIL laws, and it would totally destroy the entire amateurism model, which is a fraud in itself,” says Heitner.

Even if the NCAA passes its own legislation, expect to see a bit of a Wild West scenario as we go into the school year. Although institutions have been preparing for quite some time, they’ve been making decisions without knowing what rules will govern NIL beyond the state laws passed.

By July 1, institutions will either have new NCAA legislation to quickly learn and implement, or they’ll be attempting to navigate their individual state laws with perhaps little to no guidance from the NCAA. Brands, agents and other types of representatives will similarly be trying to nail down what they can and cannot do as the marketplace opens, and student athletes will be trying to balance leveraging these new rights and ensuring they remain eligible.

Six states are currently set to put their own NIL laws into effect on July 1: Alabama, Florida, Georgia, Mississippi, New Mexico and Texas. Oklahoma and Nebraska’s laws allow schools to grant NIL rights immediately, although none have done so yet. Eleven other states have laws set to go into effect on dates that range over the next two years.

Two sources have also confirmed the NCAA has emergency meeting time reserved the week of June 28 in case additional meetings are needed following next week’s scheduled discussions.

This piece originally appeared on Forbes

Author

  • Kristi A. Dosh is the founder of BusinessofCollegeSports.com and has served as a sports business analyst and contributor for outlets such as Forbes, ESPN, SportsBusiness Journal, Bleacher Report, SB Nation and more. She is also the author of a book on the business of college football, Saturday Millionaires. Kristi is a sought-after consultant and speaker on topics related to the business of college sports and a former practicing attorney. Click to learn more

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