Leveling the Playing Field: Addressing the Legal Gray Area of University-Collective Interactions in NIL and Title IX Compliance
In the high-stakes arena of collegiate sports, a new player has emerged: Name, Image, and Likeness (NIL) deals. These agreements have revolutionized the landscape of college athletics, allowing student-athletes to monetize their brand for the first time. However, NIL policies have created a complex web of legal and ethical challenges, concerning gender equity and Title IX of the 1972 Education Amendments: the US’s doctrine to prohibit gender-based discrimination. As universities navigate NIL policies, the interplay between deals, third-party companies, and institutional responsibilities have become scrutinized, raising questions about publicity opportunities in collegiate sports.
The current NIL system in collegiate sports operates in a legal gray area that Title IX struggles to address, particularly regarding interactions between universities and third-party collectives. It creates a loophole where gender disparities can occur in NIL opportunities. The Schroeder et al v. University of Oregon case serves as a pivotal test, establishing a precedent which determines when schools violate Title IX through their involvement with third-party companies. [1] However, the NIL framework should ultimately be restructured to avoid further legal complications and unnecessary lawsuits stemming from this ambiguity. Implementing alternative in-house models such as an educational trust fund would provide clearer compliance guidelines and ensure equitable opportunities for female athletes.
In 2019, California Senator Nancy Skinner created Senate Bill 206, (known as the Fair Pay to Play Act), which allowed collegiate athletes to profit from their own “likeness” through representations of an individual’s face or body. [2] Soon after, the National Collegiate Athletic Association (NCAA) released an interim Name, Image, and Likeness (NIL) policy on June 30, 2021, protected by the legal concept of “right of publicity.” [3] In the modern era, violation of this right means using one’s identity without consent for commercial gain and in a manner that causes monetary harm. [4]
The NCAA adopted a hands-off approach when regulating NIL deals, authorizing schools and their member conferences to create NIL policy. Consequently, policies and compensation vary by school and state. [5] In the NCAA v Alston case, it was determined that education-related benefits that student-athletes may receive are subject to restriction, but the rest of the NCAA’s compensation rules “remain on the books.” [6] This leaves a window for athletes to receive “money from endorsement deals and the like.” [7] While school systems cannot directly pay their athletes, conclusions in the NCAA v Alston case pave the way for third-party donors called boosters to fund collegiate athletes’ careers. The concept of collectives was soon born. Collectives pool funds from various boosters to create NIL opportunities for student-athletes. [8]
The current NIL system in collegiate sports presents regulatory challenges that Title IX struggles to address because collectives operate outside its purview. Title IX states, “no person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.” [9] Because collectives receive monetary support from third-party companies not affiliated with the universities nor are federally funded, they are technically not subject to Title IX’s regulations. Collectives are presumably separate from educational institutions. [10]
However, in a memo to the Office for Civil Rights (OCR), The Drake Group claims, “most collectives are now, without a doubt, entangled, entrenched, and integrated with the schools.” [11] For example, state laws like Texas’s House Bill 2804 permit a more “hands-on” approach to NIL deals. [12] As a result, schools have adapted their existing 501(c)(3) organizations to incorporate NIL fundraising and compensation activities. Some institutions, like Texas A&M with its 12th Man Fund+ and the University of Arkansas with One Arkansas, offer donors incentives such as priority points and exclusive benefits for contributing to NIL-related initiatives. Schools also offer donors additional perks through these collectives, such as exclusive events with athletes, typically focusing on male-dominanted sports like football and basketball. [13]
This coalition between third-party businesses and educational institutions is too complicated to regulate because Title IX “only governs the conduct of educational institutions and not unrelated third parties.” [14] Ultimately, it’s the athlete and collective who negotiate and enter into the NIL contract. The school’s role in facilitating connections or incentivizing certain donors does not change the fundamental nature of these agreements as private transactions. This structure creates a loophole where gender disparities can happen in NIL opportunities without clear Title IX recourse.
The Schroeder et al v. University of Oregon case is an example of the complex and unjust interactions between NIL collectives and universities. This landmark lawsuit, filed by 32 student-athletes, alleges that the University of Oregon (UO) violated Title IX by providing male athletes, particularly football players, with significantly more NIL opportunities and support compared to female athletes. [15] It describes the interactions between Division Street, UO’s primary collective, and publicity departments at the university. The case highlights a stark disparity, with three male UO athletes as top NIL earners while no female athletes received similar compensation. [16]
The Schroeder case is primarily concerned with publicity opportunities, claiming the provides extensive media coverage and photography services for the men's football team, while women’s teams, such as beach volleyball, receive minimal or no such support. [17] This disparity in publicity efforts may indirectly influence collectives like Division Street to prioritize high profile male players for NIL deals. Division Street also collaborates with UO’s departments, like the Warsaw Sports Marketing Center and the School of Journalism and Communication to promote publicity opportunities for athletes. [18] This collaboration raises questions about the extent to which universities can engage with NIL collectives without violating Title IX regulations. It is unclear if Title IX’s ban on institutional discrimination extends to indirect actions like attracting collectives through football publicity or facilitating departmental collaborations.
The Georgia Law Review outlined a theoretical scenario in which a university could violate Title IX through NIL involvement, specifically by “providing unequal levels of education, training, or career support for purposes of NIL licensing to athletes based on their sex.” [19] The Schroeder case does not precisely fit this scenario because it lacks explicit sex-based discrimination directly attributable to the institution. It appears that Division Street is the primary benefactor of NIL training (offering “Personal Branding Workshops”), and this is not exclusive to male athletes. [20] The scenario outlined in the Georgia Law Review is too simple to account for nuanced interactions between UO and Division Street.
The outcome of the Schroeder case will set a crucial precedent, potentially expanding Title IX’s reach to encompass these complex university-collective relationships. It will clarify if these partnerships constitute sex-based discrimination. Until then or if a conclusion is reached, the Schroeder case underscores the need for a restructured NIL framework that provides clearer compliance guidelines and equity for female athletes.
In-house models for compensating student-athletes have gained traction as a potential solution to address the complexities of NIL deals and ensure gender equity. These models propose that universities directly manage and distribute funds to athletes, rather than relying on external collectives or third-party arrangements. [21] In-house approaches aim to provide more transparency, control, and compliance with existing regulations, particularly Title IX.
In 2023, NCAA President Charlie Baker proposed a new in-house mechanism for compensating players through an “enhanced educational trust fund.” [22] This initiative would create a subdivision for schools that commit at least $30,000 annually for half of their scholarship athletes. [23] The fund would create a baseline income for student-athletes, incentivizing boosters to direct their money away from collectives and directly to schools. [24] This shift would give athletic departments greater authority over fund distribution, making schools accountable under Title IX for ensuring equity between male and female athletes.
In conclusion, the current NIL system in college sports creates significant Title IX compliance challenges due to the complicated dynamic between universities and third-party collectives. The Schroeder et al v. University of Oregon case highlights these issues will set a crucial precedent for determining Title IX violations in NIL opportunities. To address legal challenges and promote monetary equity for female athletes, the NIL framework must be reconstructed. Ultimately, aligning NIL practices with Title IX principles is crucial for preserving the integrity of collegiate athletics. It ensures that the benefits of NIL opportunities are distributed fairly. By proactively acknowledging these issues, institutions can create a more inclusive and just environment for female athletes.
Edited by Marshia Ahsan
Endnotes:
[1] Schroeder, et al. v. Univ. of Oregon, 6:23-cv-1806, Dec. 1, 2023.
[2] Holden, John T.; Edelman, Marc; and McCann, Michael (2022) "A Short Treatise on College-Athlete Name, Image, and Likeness Rights: How America Regulates College Sports’ New Economic Frontier," Georgia Law Review: Vol. 57: No. 1, Article 2, 34-26.
[3] Ibid.
[4] Ibid, 14.
[5] Ibid, 37.
[6] 594 US 1 (2021).
[7] Ibid, 2.
[8] Ibid.
[9] Title IX, Education Amendments of 1972, 20 USC §§ 1681.
[10] Buck, Kate, Robert Mintz, and Bhanuka Mahabamunuge. “Getting Title IX off the Sidelines and into NIL Deals.” University Business, March 7, 2024. https://universitybusiness.com/getting-title-ix-off-the-sidelines-and-into-nil-deals/.
[11] The Drake Group to Hannah Zack, Alice Yao, Suzanne Goldberg Department of Education, Office for Civil Rights (ED-OCR), August 1, 2023, “Name, Image, and Likeness (NIL) College Athlete Outside Employment,” Page 3.
[12] Ibid.
[13] Ibid.
[14] Holden, John T.; Edelman, Marc; and McCann, Michael (2022) "A Short Treatise on College-Athlete Name, Image, and Likeness Rights: How America Regulates College Sports’ New Economic Frontier," Georgia Law Review: Vol. 57: No. 1, Article 2, 61.
[15] Schroeder, et al. v. Univ. of Oregon 5, 6:23-cv-1806, Dec. 1, 2023.
[16] Ibid, 6.
[17] Ibid, 94.
[18] “Prominent Oregon Alumni Launching New Company ‘Division Street’ to Create NIL Opportunities for University of Oregon Athletes.” Division Street, October 10, 2022. https://www.divisionst.com/press-releases/oregon-alumni-launching-new-company-division-street.
[19] Holden, John T.; Edelman, Marc; and McCann, Michael (2022) "A Short Treatise on College-Athlete Name, Image, and Likeness Rights: How America Regulates College Sports’ New Economic Frontier," Georgia Law Review: Vol. 57: No. 1, Article 2, 62.
[20] “Branding Gets Personal for U of O Athletes.” Division Street, September 7, 2024. https://www.divisionst.com/stories/branding-gets-personal-for-u-of-o-athletes.
[21] Prisbell, Eric. “Title IX Concerns Mount as More Schools Work Closely With NIL Collectives.” On3, August 23, 2023. https://www.on3.com/nil/news/title-ix-concerns-mount-as-more-schools-work-closely-with-nil-collectives-the-drake-group/.
[22] Murphy, Dan. “What to Expect for NIL, Title IX With Proposed NCAA Rule Changes.” ESPN, December 3, 2023. https://www.espn.com/college-sports/story/_/id/39056505/ncaa-rule-changes-nil-paying-athletes-title-ix-charlie-baker-faq.
[23] Ibid.
[24] Ibid.