Newsletter, Image, Likeness Vol. 75: The Consequences Of Charlie Baker Proposing That Schools Pay Athletes NIL Money

The Weekly Longer NIL Thought.

Does the NCAA have a game plan?

In late 2023, NCAA president Charlie Baker brought to light various proposals, including one where amateurism rules are relaxed so that schools can directly pay players for their NIL rights. Since then, states such as Virginia have pushed forward with legislation that would not wait for the NCAA to act and instead codify that nothing stands in the way of schools directly compensating athletes (see Vol. 74).

While some may commend Baker for his progressive tone, is he and the NCAA burdened by the actions and inaction of years past?

My colleague Michael McCann brought up a good point this week in an article where he said, "Should the NCAA permit colleges to make direct NIL payments, the association better take compliance and enforcement seriously. If any so-called 'NIL' payments turn out to be pay-for-play and the NCAA is shown to have acquiesced, a court would be inclined to conclude the NCAA permits pay-for-play."

Furthermore, McCann noted that "there’s the related NCAA worry of whether college athletes are employees. By itself, direct NIL payments?shouldn’t?trigger employment recognition if the payments are really about the right of publicity . . . the bigger worry for the NCAA is if purported NIL payments are revealed as recruiting and retention payments. Those payments would resemble compensation for labor, which is more akin to employment."

Why would such payments that go directly from school to player be looked at any differently than the current slate of transactions between collectives and athletes? While collectives are wise enough to include endorsement-related deliverables and NIL-styled grants of rights, most consumers of college sports are also wise enough to see between the lines and respect that a premise to these deals is that athletes will attend and perform for a specific school.

Why does Baker and the remainder of the NCAA believe that "NIL" payments from schools to players, removing the collective as a "pass-through," will avoid scrutiny on the subject of whether the payments are truly salaries disguised as NIL? It's like thinking that just because a contract may be titled "Independent Contractor Agreement," it can't be deemed to be an "Employment Agreement." This appears to be a dangerous road for the NCAA to follow unless, of course, it is at the point where it is throwing its hands up in the air and, behind closed doors, resolved that even an employment model is preferable to the current state of affairs.

John Calipari Leaves Kentucky, Joins Arkansas.

It was rumored that Coach Cal will have access to an NIL package in excess of $5 million per year.

Coach Cal then confirmed that NIL will not be an issue at his new home.

"The other thing to change is figuring out our roster, and you have to go in now and have NIL ready, which the school will do," said Calipari. "I don’t have to go out and do it anymore. I had to at Kentucky."

Zach Edey Says He Missed Out On NIL Money Due To Immigration Concerns.

"I feel like I'm missing out on a lot of money," said Edey during the Final Four, who noted that he can benefit from what is considered "passing income" but "it's not like I can go film a commercial in West Lafayette."

This is something I wish the government would act on and relieve stress surrounding foreign athletes partaking in NIL activities in the U.S.

NIL Collectives Need To Take Note Of IRS Issues.

Daniel Libit of Sportico highlighted that the IRS, in January, sent a denial letter to an NIL collective (the name of the collective was redacted) that was seeking tax-exempt status.

“Based on the facts presented in your application, you serve a private rather than a public interest, because you confer benefits primarily on student athletes of a particular university’s sports teams for the use of their NIL,” the IRS wrote. “You have not demonstrated that these student athletes belong to a charitable class.”

“This seems to be an indictment against [the tax-exempt status of] all the collectives and should mean the other collectives lose their status as well,” Phil Hackney, who teaches at the University of Pittsburgh School of Law, told Sportico.

Hackney says that those who prepare and sign the non-profit tax returns of NIL collectives are taking a risk and that he wouldn't sign off on one.

Former Kansas State QB Is Driving A New Bronco.

Will Howard, now at The Ohio State University, is in the driver's seat of a Ford Bronco as part of his relationship with THE Foundation NIL collective.

Bruce Pearl Explains His Frustrations With The Current State Of "NIL."

“The biggest obstacle is that it’s OK for anybody representing a collective at another school to call my current players right now and say, ‘just check it in. You’ve had a great year. How much is Auburn going to do? What’s your NIL there? Oh well if you think about coming here to this school, it could be this,'” Pearl said. “So it’s not exactly the free market system because in the free market system there are contracts. There are non-competes. There are certain guidelines and right now there’s not enough order to it.”

“I’m glad the kids are getting paid,” he said. “I really am. I want my guys to not work at a Subway, but I want them to own five of them when they get done. I think it’s a really good thing, we just need to find a way to put a little order in it. But that’s been the most thing is the tampering and guys being recruited off your own roster.”

Duke's Jared McCain Explains His NIL Strategy.

“I’ve always been wanting to just do things a little differently,” he said. “Definitely started with the painting nails, obviously. But everything I do is kind of geared toward, ‘Is this going to fit my personality?’ Like signing with Celsius, just doing things that fit and align with my ideas, my goals and everything I stand for. That’s been a major key for me, picking anything I do. Just being myself.

“I’m going to credit my parents for the way they raised me to always stay true to myself and no matter how many hate comments or how many Twitter threads about me are out there, just always stay true to myself and never let anyone telling me what I can and can’t do.”

Alabama Athletic Director Asks Fans To Support NIL Collective.

This still feels really weird. Schools should be paying players directly.

And Houston NIL Collective, With Coach Sampson, Asks For A Fundraising Goal Of $1 Million To Be Met.

NIL Collectives Starting To Put More Conditions On Payment.

While collectives remain precluded from premising compensation on performance or removing promised compensation due to lack of performance (both considered by the NCAA to be a form of "pay-for-play"), nothing precludes collectives from conditioning compensation on other thresholds.

"One trend I’m seeing pop up this time of year in NIL land: collectives including academic and behavioral requirements in NIL contracts," wrote agent Daniel Poneman . "Grad students blowing off second semester classes: say bye to your last few payments."

As I wrote back to him, I’ve negotiated bonus compensation based on academic achievement for athletes with major brands. While the NCAA prohibits compensation contingent on athletic performance, there’s no such restriction on consideration that falls outside the scope of pay-for-play.

Final Thoughts.

That is it for Vol. 75 of Newsletter, Image, Likeness. Thanks to the more than 8,520 people who have subscribed to this newsletter thus far, and please feel free to share this free resource with others on LinkedIn or elsewhere.

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