A Sports Agent’s Role In The World Of NIL: Part I

The sports marketing industry will soon undergo the single most dramatic change in its history, when college athletes are finally granted the right to monetize their Name, Image and Likeness. The mission of Student Athlete NIL is to help brands seize this opportunity and capture the attention of student-athletes, identify the ones that best personify their values, and then develop value-based partnerships with those individuals to mutually reach their goals. Working hand-in-hand, we can finally democratize college athletics.

 

A Sports Agent’s Role In The World Of NIL: Part I

As the July 1 effective date approaches for Florida’s name, image, and likeness (“NIL”) legislation, sports agents’ role in the world of college athletics is expected to grow. Endorsement opportunities will rise for student-athletes, an entirely new segment of the industry never available to sports agents previously. Yet, as the effective date approaches and federal proposals are considered, one thing is still uncertain: the relationship between agents and student-athletes.

 

Sports agents’ relationship with student-athletes in an NIL world will ultimately be dependent upon the legislation that is eventually approved. Currently, a small number of states have passed NIL legislation, but those pieces of legislation could be preempted by federal legislation. This article considers how sports agents’ roles could look between these different legislative proposals and Florida’s NIL legislation (as a model for state legislation).

 

Certification and Regulation

Florida’s bill provides a level of certainty since it has already passed and will go into effect, unless preempted, July 1. Under Florida’s bill, student-athletes can be represented by an agent or attorney, but all attorneys must be a member in good standing of The Florida Bar, and all agents must be licensed in the state through the Department of Professional Regulation.

Agents then would still be under the jurisdiction of the Sports Agent Responsibility and Trust Act (“SPARTA”). The question of agent certification and regulation has been a ripe topic of federal proposals.

Proposals typically grant power to the Federal Trade Commission (“FTC”) or some other body to federally regulate agents. For example, Marco Rubio’s Fairness in Collegiate Athletics Act gave the FTC power to enforce violations of SPARTA. Several other proposals have also given the FTC power: Reps. Anthony Gonzalez and Emanuel Cleaver’s Student Athlete Level Playing Field Act chose the FTC to enforce endorsement contracts; Sen. Roger Wicker’s Athletes Compensation Rights Act assigned the FTC to choose a private, non-profit group to oversee NIL legislation into the future; and Sen. Jerry Moran’s recent proposal assigned the FTC to work with the bill’s newly-established “Amateur Intercollegiate Athletics Corporation” (AIAC) to oversee agents who represent student-athletes and regulate other industry participants.

At least one scholar, Michael McCann, has questioned the validity of utilizing the FTC in this regulatory capacity, though, emphasizing the agency’s passivity in the area of agent regulation. McCann quotes a former deputy director of the FTC as saying he had “never heard of SPARTA” when he was at the FTC, and McCann found no warning letters or courts referring to SPARTA over a 15-year period.

Regardless of the eventual legislative model enacted, agents will likely be faced with a higher level of regulation and will need to ensure they are receiving the proper certifications (whether that be at the state or federal level) and following the proper procedures before signing student-athletes to endorsement contracts.

 

The Agent’s Role

In professional sports, athletes can sometimes be regarded as personal assistants to their athletes—aiding them in a bevy of aspects, from money management to renting a home and providing emotional support in the middle of the night.

Will agents be as involved in the lives of student-athletes? Florida’s bill stated that universities could not prevent a student-athlete “from obtaining professional representation by an athlete agent or attorney engaged for the purpose of securing compensation for the use of her or his name, image, or likeness”. That language seems to suggest that athletes are to be hired by student-athletes only to help the athletes find and sign endorsement contracts, but that is arguable.

Rubio’s bill says the student-athlete can earn money from NIL and “subject to the requirements under section 3 of [SPARTA], obtain professional representation with respect to matters described in subparagraph (A).” Subparagraph A referenced the student-athletes’ right to earn money from their NIL, so that language is similar to Florida’s language.

Other regulations, whether those be federal or state, could also affect this issue of how involved athletes will be with student-athletes.

 

Endorsements’ Similarity To Professional Sports

Student-athletes’ endorsement contracts, and their similarity to professional sports endorsement contracts, will once again depend on the legislation ultimately agreed upon. Most likely, any legislation ultimately passed will have some type of limitation distinguishing it from professional endorsements. Agents will have to tread more carefully with student-athlete endorsement contracts.

For example, in Florida, the bill states that the student-athlete’s compensation “may only be provided by a third party unaffiliated with the intercollegiate athlete’s postsecondary educational institution.” Student-athletes also cannot enter into an endorsement deal that would conflict with his/her team contract with the university, and all contracts must be disclosed to the university. Under the Florida law, agents would need to ensure endorsement contracts are not signed with boosters, and the agent must make sure to disclose all contracts to the university.

Federally, proposals have taken different stances on whether endorsements should be limited to certain industries/products. For example, Gonzalez and Cleaver’s bill stated student-athletes could not enter into endorsements that could harm the athlete’s reputation (such as alcohol or tobacco). Meanwhile, Sen. Chris Murphy and Rep. Lori Trahan introduced a bill, the only of its kind, which does not give the NCAA or any other body the ability to regulate the products athletes endorse.

Ultimately, agents may have to maneuver different pitfalls when finding and negotiating endorsement contracts. Student-athletes could be limited to endorsements that do not conflict with their university contract, endorsements not from any boosters or anyone connected with the university, endorsements that don’t injure their reputation, and (potentially) endorsements that don’t conflict with their school’s sponsors. This possible list of differences serves as a distinguisher from an agent’s search for endorsements for his/her professional athletes.