Virginia Changes The Game On NIL
TRANSACTIONS FOR STUDENT-ATHLETES
On April 18, 2024, Virginia governor Youngkin signed into law a statute governing Name Image and Likeness (NIL) payments to student-athletes, the first of its kind in the U.S. House Bill 1505 goes into effect on July 1 and bypasses certain NCAA rules on payment to athletes enrolled in Virginia colleges and universities, setting a precedent other states have already begun to follow. The statute allows state colleges and universities to create and negotiate NIL deals without NCAA input or restrictions.
July 2021 marked a watershed even for student-athletes, as the NCAA rescinded rules restricting athletes from earning money from contracts with businesses that compensate them for endorsements, personal appearances, and commercials. On April 17, the NCAA passed internal legislation allowing its member schools to be more actively involved in securing sponsorship and endorsement deals for athletes, including facilitating opportunities between third party businesses and athletes. The interaction between the NCAA’s rules and state law such as the Virginia statute remains to be seen, though there appears to be some overlap. It is possible statutes like the Virginia bill and other states’ enactments pressured the NCAA to liberalize their own rules.
The new Virginia statute opens a pathway for donors to work directly with schools on paying athletes. Universities are required to develop and submit to the institution’s governing body institutional policies and procedures governing student-athletes’ use of NIL for compensation, with enforcement mechanisms. The University may also use its own assets to incentivize NIL deals for their athletes.
Finally, the statute prohibits the use of a student-athlete’s NIL in connection with alcoholic beverages, adult entertainment, cannabis or controlled substances, performance enhancing substances, drug paraphernalia, tobacco, weapons or casinos and sports betting. It also permits universities from restricting the use of the student-athlete’s NIL on “school time” – when engaged in academic, sports team, or athletic department activities. Student-athletes may not use any institution’s facilities, apparel, uniforms, or any intellectual property in the NIL-associated activities, and are required to disclose draft agreements to the university prior to executing the agreement
The Virginia statute provides an example for other states to follow, and several have bills pending in their legislature. Each state enacting a different statute makes it slightly more likely Congress will eventually supply a uniform federal standard, though the athletic community is likely years from such a national legislative leveling. Crenshaw, Ware & Martin enjoys the advantage of having attorneys with bar memberships in Virginia, North Carolina and Maryland. Our firm can assist student-athletes with the structuring of NIL deals which maximize advantage to the student-athlete and ensure an even negotiation playing field. Please reach out to Managing Partner Darius Davenport at DDavenport@cwm-law.com, Attorney Butch Bracknell at RBracknell@cwm-law.com, or any partner or attorney in the firm for assistance in navigating NIL territory. Contract Crenshaw Ware & Martin at 757.623.3000.
