The writing has been on the wall for a while, but a U.S. Supreme Court decision is bringing the idea of college athletes being able to profit from their name, image and likeness closer to reality.
SCOTUS upheld a district court’s ruling that the NCAA was violating antitrust law by not allowing student-athletes to receive compensation outside of education-related benefits. While the specific ruling was fairly narrow in scope, legal experts believe it puts the NCAA in poor position to fend off related legal challenges—specifically, a looming lawsuit challenging its long-held name, image and likeness policy.
If that lawsuit goes through, student-athletes would no longer be barred from, among other things, creating and selling merchandise featuring their likeness. That could present new business opportunities for branded merchandise companies, though the rules—and the path forward—are still fairly unclear.
The NCAA is a convoluted system. Being that there are so many Division I schools (357 to be exact) and multiple conferences, it’s hard to apply one rule to all schools. According to USA Today, the ACC, Pac-12 and Southeastern conferences had all offered up a proposal that would leave it up to the individual schools to develop their own rules regarding student-athletes’ right to profit.
Basically, if that came to fruition, it could mean that a player from Villanova has carte blanche to market the heck out of their name and appearance on things like apparel, but a player at Duke couldn’t.
Now, those conferences are reevaluating the proposal in response to the SCOTUS ruling, potentially relaxing name, image and likeness restrictions further to avoid running afoul of antitrust laws. Eight states have already passed laws allowing student-athletes to make money from their name, image and likeness beginning July 1 or whenever schools close. The NCAA is currently working to find a solution for student-athletes who compete in schools outside of those states.
Justice Kavanaugh: “The NCAA couches it’s arguments for not paying student athletes in innocuous labels. But the labels cannot disguise the reality: The NCAA’s business model would be flatly illegal in almost any other industry in America.”
— Adam Schefter (@AdamSchefter) June 22, 2021
The NCAA’s Division I Council, which is the association’s primary policy-making group, is scheduled to meet next week to vote on rule changes regarding this new development.
“Because of [Monday’s] ruling, this is evolving as we go,” one source familiar with the council’s plan told USA Today. “There’s a healthy dialogue that will continue not only tomorrow, but throughout the week. Were looking for what is the best bridge from now to, hopefully, federal legislation that doesn’t trigger any antitrust issues. Inside counsel and outside counsel are taking a look with a sharper pencil and a more concise lens. There are going to [be] adjustments [to the proposals]. The only thing that’s off the table is a do-nothing option.”
One legal expert said that, from a university standpoint, the best course of action would be giving schools the power to make their own rules, since “regardless of how restrictive the conference or school rules are, they are unlikely to violate antitrust law because no individual conference or school has sufficient power in the market to harm competition.”
So, where this leaves the promotional products industry is a place of optimistic confusion. Student-athlete merchandise represents a new revenue stream that would complement the existing colleges and universities market, likely without the licensing hurdles that accompany it. Being able to add new products specific to star athletes opens up opportunities beyond just boilerplate one-promo-fits-the-whole-team campaigns.
But, until there’s either consensus among the conferences or one standardized NCAA rule that applies to every single Division I school, there is likely to be some uncertainty and roadblocks for trying to get in on the ground floor here.
It could be the kind of market, similar to cannabis, that varies state-by-state (or even school by school). But, the opportunity now exists for the branded apparel market, which is such a major part of the professional sports world, to make its way down to college.
