California passed legislation to allow college athletes to be compensated for their likeness. Under this new legislation, schools would not compensate student athletes, but athletes would be allowed to profit off their likeness via third party businesses. This law would not go into effect until 2023. In response to this recently passed legislation, the NCAA’s Board of Governors unanimously voted to allow student athletes the opportunity to profit off their name, image and likeness (NIL), but with a catch.
The Collegiate Model
The actions by the Board of Governors do not allow athletes to immediately benefit from their NIL. Instead, the board has directed each of the NCAA’s three divisions to begin creating a structure for student athletes to make money off their name, image and likeness. Each division has until January 2021 to create a framework on how to govern student athletes. In the official wording, the NCAA added an unclear condition — any benefit would have to be “consistent with the collegiate model.” Many questions will need to be addressed before student athletes see any benefit from their likeness.
Profiting off of Popularity
The road for student athletes to officially benefit from their NIL will certainly be a messy one. If implemented, student athletes will not be paid by their universities, but they will be able to strike deals with businesses to profit off their marketability. Revenue sources would come from autographs, video games, and endorsement deals from shoe and clothing companies. This would provide many student athletes, who will not play professionally, the opportunity to cash in on their peak profitability during their collegiate years. Undoubtedly, the NCAA will want to have oversight of how and when athletes are compensated.
If the NCAA ultimately devises a framework for student athletes to benefit off their likeness in the future, the Anders Sports, Arts & Entertainment Group will have the knowledge to help student athletes with a variety of areas including tax compliance and planning. Contact an Anders advisor to learn more.All Insights