When the NCAA amended its amateurism bylaws on July 1, 2021, the Association removed a handful of key restrictions that were previously placed upon collegiate “student-athletes.” In addition to the ability to sign name, image, and likeness (NIL) endorsement deals, athletes were permitted to sign with sports agents to represent them. While the NCAA has restricted agent activity to be for marketing purposes only (i.e., no professional player agent representation agreements are permitted, only NIL representation agreements), the definition of “NIL” has ebbed and flowed over the three years it has been in effect to be inclusive of more activities that may not have initially been envisioned. Thanks to a handful of lawsuits, state legislative activity, and a proposed legal settlement (House), NIL has come to include activity that is akin to pay-for-play—originally impermissible under the original NCAA interim NIL policy.
Background
While some athletics administrators and even legislators have noted a difference between “true” NIL marketing deals and NIL collective agreements, their legal operation—at least for now—is quite similar. Moreover, the sports agents that represent athletes in contract negotiations are governed by the same laws, regardless of whether they are negotiating a “true” NIL marketing deal or a collective contract.
Athletes across the country have received countless hours of education related to NIL contracts. Many universities have prioritized—and rightfully so—providing athletes with the resources they need to navigate and understand NIL agreements successfully. Athletes have been warned extensively about the pitfalls of signing bad NIL deals, including the potential for eligibility issues, intellectual property issues, and financial issues, to name a few. Even more critical than well-drafted and favorable NIL deals (at least in the eyes of this practitioner) is a comprehensive and legally compliant representation agreement between athlete and agent.
Why it Matters
In most circumstances, “NIL agents” are treated by the law the same as professional sports player agents. Most states—but not all—treat both as “athlete agents” and subject them to licensing requirements and regulation. While state law often treats both types of agents the same, there is one glaring difference: union certification and regulation. Professional sports player agents are subject to several rules set forth by a players association. Usually, there are minimum educational requirements, and the agent must pass an exam and pay a substantial amount in dues to the union. Additionally, agent conduct is subject to union oversight—bad or unethical agents can face consequences, including losing their ability to represent players.
What Athletes and their Agents Need to Know
Professional player agent representation agreements are usually standardized by a union. As an example, the National Basketball Players Association (NBPA) Standard Player Agent Contract (SPAC) is required for all representation agreements between NBPA-certified agents and NBA players. Agents and athletes have no ability to modify contract language or clauses for concerns like arbitration or intellectual property. Otherwise, there are blank spaces in the SPAC that the athlete and agent fill in for items like the agent’s commission rate (which is a range that is set by the union).
Contrarily, NIL agents and the athletes signing with them have no standard representation agreement. As a byproduct, representation agreements can vary greatly. Some agents even begin working with athletes without a written agreement at all. It is imperative that athletes and agents alike understand the implications and importance of a well-drafted and legally compliant representation agreement.
The Implications
Typically, an athlete stands to lose much more from a bad representation agreement than he or she might from a bad NIL deal—the stakes are simply much larger. Particularly in an era where agents are rumored to be taking a 20% (or more) commission on six-figure NIL collective deals, athletes should be extremely cautious when signing a representation agreement. Moreover (and perhaps this concern should belong more to agents than to athletes), representation agreements that do not conform to the requirements of a state regulatory scheme are typically voidable by the athlete and potentially punishable by fines or jail time for the agent.
As discussed extensively elsewhere, NIL contracts are incredibly important. NIL representation agreements are even more important. Here are more extensive discussions on the legal implications for NIL agents and the questions that athletes should ask agents before hiring them. Consider working with legal counsel prior to entering into an NIL agent representation agreement.
