How college athletes can navigate NIL rules

Those of us privileged to represent high school and college athletes have been fighting for years to secure compensation rights for our players. There is progress in major federal antitrust actions, which is inching us toward a model where college athletes can legally be paid by schools under specific circumstances. 

However, the abhorrent tradition of schools and their representatives exploiting our athletes continues, influencing them to take risks that can jeopardize their careers. This is still possible due to inadequate policies governing "pay for play" schemes and name, image, and likeness (NIL) rights in college athletics since the 2021 Supreme Court decision in NCAA v. Alston. 

Let's discuss how lawyers can continue to play a key role in protecting our athletes from financial and strategic missteps that can be just as intense as on-the-field action. 

Analyzing the (foul) play

The University of Nevada Las Vegas (UNLV) Rebels football team made headlines in late September 2024 after opening the season with three consecutive wins. Despite a great start, a more astonishing move happened shortly afterward, when the quarterback who led them to victory, Matt Sluka, abruptly left his new team after game three upon the realization that he would not be paid what he was led to believe. 

According to Sluka, an assistant coach from UNLV allegedly promised him $100,000 to transfer from Holy Cross as part of a NIL deal. This blurring of the boundaries is misleading, especially since some NIL deals have been structured in ways that resemble pay for play arrangements. 

Sluka alleged little-to-no money exchanged hands, and he hiked himself back into the transfer portal, where he had been just a year earlier. 

Five years ago, Sluka's actions would have been considered a "pay for play scandal." He and the assistant coach who allegedly lured him into the transfer portal might have been blacklisted. Though pay for play may become admissible when it comes to broadcast rights for specific Division I players due to a pending settlement in federal court, this scenario serves as a plausible template for what to expect in college athletics when it comes to exploiting talent:

•Some colleges use shady recruitment methods.

•Often our college athletes make poor strategic decisions.

•Unsanctioned or bad faith negotiations. 

In reaction to the Sluka debacle, NCAA President Charlie Baker posted on X that there was still "evidence of dysfunction in today's NIL environment, including examples of promises made but not kept to student-athletes..." 

Pay for play addressed in court and on the hill

Following the UNLV incident, on Oct. 8, U.S. District Judge Claudia Wilken granted preliminary approval to a $2.78 billion legal settlement in House v. NCAA and two other class actions, which is poised to transform college sports by allowing schools to pay players. 

Specifically, the implementation of the direct payment program means financial compensation will be extended exclusively to athletes participating in sports teams within institutions in the Power 5 that generate broadcast revenue. This includes football and men's and women's basketball teams at schools affiliated with the Power Five conferences. Consequently, a significant number of college athletes from other sports and conferences will not be included in this new compensation model and may not receive direct payment. 

Some say Judge Wilken rejected key details of the settlement and requested revisions. Athletic Business reported that the attorneys proposed changes to Judge Wilken that the settlement will not prohibit any deals that are currently allowed and will not expand the NCAA's regulatory authority to enforce pay for play rules. 

A final hearing is set for April 7, 2025.

This settlement could lay the groundwork for progress and fairness for our athletes. Stakeholders today agree that a federal framework is necessary to fairly govern the changing landscape of college athletics. Federal legislators had demonstrated bipartisanship on this issue, but the NCAA might not require a solution supported by both political parties if Republicans can effectively align its members in both the House of Representatives and the Senate. Their collective stance is that players would not be classified as employees, and thus preempt state laws and should be exempt from certain labor protections and taxes.

Additionally, the backing of President-elect Trump could further eliminate the need for a bipartisan approach. 

Unmasking other pay for play schemes

Many current pay for play arrangements blur the line between legitimate NIL deals and performance-based compensation. Overvalued NIL contracts might raise some eyebrows but is perhaps the most subjective pay for play method. Here are some other and far riskier ways pay for play could be masked or entangled within other arrangements:

Employment-like contracts with boosters' businesses. Boosters or other individuals tied to a school might "hire" athletes with vague or minimal duties. For example, a booster-owned business could pay an athlete a high salary for a part-time role or one-time project. It can be just as shady as a "no-show" job. This could be framed as NIL work but may effectively function as a disguised payment for being on the team. 

Wining and dining with boosters. Don't think the employment concept would be a red flag? In February 2023, the NCAA placed the University of Miami's athletic department on a one-year probation after the school's women's basketball coaches arranged "impermissible contact" - in the form of a dinner - between notorious booster John Ruiz and twin sisters Haley and Hanna Cavinder. At the time, the players were at the peak of their social media influence and prestige, with a reported 4 million followers on TikTok and estimated earnings of close to $2 million thanks to NIL endorsements.

Ambiguous branding. An athlete could also be approached by a sports agency or brand with vague deliverables or unclear expectations, such as "general promotional work," which can effectively be a means to funnel compensation under NIL. 

For example, Ruiz and his company, LifeWallet, were known for endorsing athletes via promotional work. Ruiz and the company also faced federal civil and criminal investigations by the Securities and Exchange Commission and U.S. Attorney's Office for the Southern District of Florida in January 2024 related to representations made to investors and spending practices. This raised questions about the alignment between these lucrative contracts and traditional recruiting incentives, as they might be interpreted as indirect inducements for athletes to join specific programs. 

Clearly, our athletes need skilled lawyers to help vet the types of endorsements they want to accept and - of equal importance - the caliber of those making the offers. 

How sports lawyers can protect our athletes 

Our athletes are competing and earning amid a precarious era. With National Signing Day coming up in December, lawyers should look to the Sluka-UNLV episode as a way to educate their athlete clients.

This includes:

• Ensuring any promises are binding and clearly in writing. 

•Reviewing NIL agreements offered by schools (or any person or entity). Compensation for broadcast rights will not be available for players at all schools.  

• Strategizing before entering the transfer portal too frequently or outside the limits of NCAA guidelines, preserving scholarships or legitimate NIL endorsements.

By leading the way in showing how the evolving NIL landscape can be properly navigated, sports lawyers can back athletes in managing their affairs off the field. It might even inspire federal lawmakers to score a big victory by passing a framework in 2025.