NIL and the NCAA: What Are the Rules?

College athletes now have more rights to their name, image, and likeness (NIL)

Fact checked by Vikki VelasquezReviewed by Andrew SchmidtFact checked by Vikki VelasquezReviewed by Andrew Schmidt

NIL is shorthand for name, image, and likeness, which refers to a person’s right to control how their identity is used for commercial purposes. For years, celebrities like actors, musicians, and professional athletes have enjoyed NIL rights and been able to monetize them through product endorsements and other activities. Until 2021, however, amateur athletes had no such opportunities.

Today, under new National Collegiate Athletic Association (NCAA) rules and a variety of state laws, that is changing. Here is a guide to the rules and laws as they stand now.

Key Takeaways

• College athletes can now make money from the commercial use of their name, image, and likeness (NIL) as a result of new NCAA rules introduced in 2021.
• Many states now have NIL-related laws as well.
• NCAA rules still forbid schools from paying their athletes. However that may change as the result of a May 2024 court settlement.
• Some state laws prohibit athletes from endorsing certain types of products and services.
• The NCAA, the states, and many individual schools have reporting and disclosure requirements for any NIL deals that athletes enter into.
• As yet, there is no federal NIL law; many groups, including the NCAA, have called for one.

History of NIL Restrictions by the NCAA

For many decades, the NCAA opposed extending NIL rights to college athletes, and its rules specifically barred them from making money off of their names, images, or likenesses. That restriction didn’t apply to the athletes’ schools, teams, or leagues, which were able to capitalize not only on the popularity of a particular team but also on that of individual athletes.

While proponents of this arrangement argued that it allowed athletes to maintain their unsullied amateur status and uphold the sanctity of their sport, athletes and their families couldn’t help but notice that everybody but them seemed to be getting rich off of their labor.

In 2021, the issue came before the U.S. Supreme Court in National Collegiate Athletic Association v. Alston et al. (Alston was Shawne Alston, a former running back for the West Virginia University Mountaineers football team.) On June 21, 2021, the court upheld a lower court’s determination that the NCAA’s rules on the compensation of athletes violated federal antitrust law.

Just over a week later, on June 30, 2021, the NCAA issued what it referred to as new “interim” rules covering college athletes’ NIL rights.

Note

USA Volleyball defines likeness as “your ‘semblance,'” and offers as examples the outline of Michael Jordan on the Jordan brand and Arnold Palmer’s signature on Arizona Iced Tea. It notes that EA Sports’ video games depicted former NCAA athletes’ likenesses “by using their height, body type, number, and playing style—but never their name or exact image.”

The NCAA’s Interim NIL Policy

In announcing its new policy, the NCAA offered “guidance to college athletes, recruits, their families, and member schools” in the form of four bullet points, reprinted here as they appeared in the association’s press release at the time:

• Individuals can engage in NIL activities that are consistent with the law of the state where the school is located. Colleges and universities may be a resource for state law questions.
• College athletes who attend a school in a state without an NIL law can engage in this type of activity without violating NCAA rules related to name, image and likeness.
• Individuals can use a professional services provider for NIL activities.
• Student-athletes should report NIL activities consistent with state law or school and conference requirements to their school.

Since that time, the NCAA has offered more detailed guidance on a number of NIL-related issues. In particular, it has attempted to clarify what schools are and aren’t allowed to do with respect to compensating their athletes or helping them obtain compensation for the use of their NIL.

For example, a October 2022 advisory to NCAA Division I members noted that schools can “provide information to SAs [student athletes] about opportunities that [the] institution has become aware of (transmit information without further involvement).”

But schools weren’t allowed to “proactively assist in the development/creation, execution or implementation of a SA’s NIL activity (e.g., develop product, develop promotional materials, ensure SA performance of contractual NIL activities) unless the same benefit is generally available to [all of] the institution’s students.”

The NCAA’s May 2024 Proposed Settlement

On May 23, 2024, the NCAA agreed to a court settlement that, if approved by the judge in the case, will further expand athletes’ rights to monetize their names, images, and likenesses. In particular it would end the prohibition against colleges directly compensating their athletes, including for the use of their NIL.

As part of the settlement, the NCAA also agreed to pay nearly $2.8 billion to current and former athletes who lost out on opportunities to capitalize on their NIL as a result of the old rules.

State NIL Laws and NCAA Compliance

Even before the 2021 Supreme Court ruling, some states had been introducing their own laws extending NIL rights to college and high school athletes. California passed the first such law in 2019.

Currently, about 30 states have NIL laws on the books. Because state laws differ from one another and from NCAA rules, the NCAA and other groups have called for a uniform federal law governing the practice. Several bills have been introduced in the U.S. House or Senate, but no federal law has passed to date.

Meanwhile, the NCAA has stated that “schools must adhere to NCAA legislation (or policy) when it conflicts with permissive state laws. In other words, if a state law permits certain institutional action and NCAA legislation prohibits the same action, institutions must follow NCAA legislation.”

Permissible NIL Activities for College Athletes

The new state laws and NCAA rules have made it possible for athletes to cash in on their celebrity in an assortment of ways. Among the potentially lucrative possibilities:

• Product endorsements
• Merchandise licensing, such as apparel with their name on it
• Personal appearances
• Autograph signings

However, certain activities remain off-limits. In South Carolina, for example, athletes can’t endorse “tobacco, alcohol, illegal substances or activities, banned athletic substances, or gambling.”

In addition, individual schools and the governing bodies of specific sports may have their own rules and prohibitions.

Quid Pro Quo Arrangements and NIL Deals

Current NCAA rules require that any NIL deal be a quid pro quo arrangement. This means that athletes must do something in return for the money they are paid. According to the NCAA, “Student-athlete NIL agreements should include the expected NIL deliverables by a student-athlete in exchange for the agreed upon compensation and student-athletes must be compensated only for work actually performed.”

The point is to prevent anyone from paying an athlete simply for playing their sport and disguising it as an NIL payment. “Pay-for-play,” as it’s often called, has long been forbidden under NCAA rules. That could change, however, if the May 2024 proposed court settlement goes into effect.

Compliance and Reporting Requirements

Athletes are required to comply with the relevant state, NCAA, and college-specific NIL rules and, in most cases, to report any NIL deals they enter into. According to the NCAA, 20 states currently have such disclosure requirements.

On the NCAA front, the disclosure rules are still evolving. In January 2024, NCAA Division I announced new rules that are scheduled to go into effect for member schools on Aug. 1, 2024. They will, for example, require athletes “to disclose to their schools information related to [any] NIL agreement exceeding $600 in value, no later than 30 days after entering or signing the NIL agreement.” In addition, “Prospective student-athletes will be required to disclose the same information within 30 days of enrollment.”

The rules don’t require individual athletes to report their NIL deals to the NCAA, but their schools are expected to provide “deidentified” data on them to the NCAA or its designee at least twice a year. The NCAA says it “will use that information to develop an aggregated database so student-athletes can better understand trends in NIL agreements and so the national office and member schools can make informed decisions about NIL-related policy.”

While athletes might be subject to criminal penalties for violating their state laws, or potential punishment by their schools, any penalties that the NCAA imposes appear most likely to fall on the schools.

In an early indication of what might lie ahead, the NCAA imposed sanctions on Florida State University in January 2024 for the actions of an assistant football coach who had allegedly violated the rules by introducing a prospective transfer student to a booster who offered him an NIL opportunity worth about $15,000 a month. After its investigation, the NCAA imposed a long list of penalties on Florida State, including a two-year probation, a fine of $5,000 plus 1% of the football budget, and an assortment of restrictions on its ability to recruit new athletes.

Future Outlook for NIL and the NCAA

The NCAA had good reason for characterizing its 2021 NIL rules as “interim.” They are likely to undergo numerous changes in the months and years ahead, driven by forces both inside and outside the NCAA.

In January 2024, the states of Tennessee and Virginia sued the NCAA, maintaining that its rules on using NIL payments in recruiting athletes were a violation of antitrust law. Florida, New York, and the District of Columbia joined the suit in May 2024, the same month that the NCAA proposed changing its rules.

Perhaps even more disruptive to the longtime status quo, the National Labor Relations Board issued an opinion in February 2024 that college athletes (in this case, basketball players) were employees of their university (in this case, Dartmouth) and entitled not only to compensation but also the right to unionize. On March 5, 2024, the Dartmouth men’s basketball team voted to unionize.

What Are the Key Provisions of the NCAA’s Interim NIL Policy?

The NCAA’s interim NIL policy allowed college athletes, for the first time, to personally benefit from the commercial use of their names, images, or likenesses. It did not change the association’s rule that schools are not allowed to pay their athletes, but that may also change as the result of a proposed court settlement in May 2024.

How Do State NIL Laws Impact College Athletes and NCAA Compliance?

Many states now have NIL laws. Athletes in those states who play for NCAA member schools must comply with those laws and NCAA rules. In some cases, the state laws spell out more specifically what athletes are and aren’t allowed to do, especially regarding the endorsement of certain kinds of products and services.

What Are Some Examples of Permissible NIL Activities for College Athletes?

Athletes can now accept money for personal appearances, many kinds of product endorsements, and the licensing of apparel, such as caps or jerseys, among other commercial activities.

What Are the Consequences of Noncompliance with NCAA NIL Rules?

So far, the NCAA has been slow to crack down on violators of its NIL rules, although early indications are that it is more likely to go after schools and boosters than individual athletes.

What Are Potential Future Developments in NIL Regulations by the NCAA?

The NCAA’s NIL rules are currently in flux, as are state laws. In addition, pending court cases—and the proposed May 2024 settlement— could completely change the relationship between athletes and their schools. Ultimately, student athletes may be entitled to all the rights of employees, including collective bargaining.

The Bottom Line

After years of prohibiting athletes from making money from their names, images, and likenesses, the NCAA made a dramatic change to its rules in 2021 and proposed further changes in 2024. While the NCAA’s rules are still evolving, current and future athletes (and their families) should try to stay abreast of them, as well as any applicable state laws. Star athletes, in particular, may want to seek professional advice.

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