As The NCAA Prepares For The New Frontier In Student-Athlete Marketing, It Should Look To The New Olympic-Athlete Marketing Rules For Guidance
By: David Lisko and Daniel Buchholz
Published in the American Bar Association Forum on the Entertainment & Sports Industries publication – Entertainment and Sports Lawyer Spring 2020 Volume 36, Number 2, Pgs. 33-36
The National Collegiate Athletic Association (“NCAA”) recently announced it will permit students participating in college athletics to benefit from the use of their name, image, and likeness. The NCAA’s announcement is only the beginning, however. The NCAA has not provided any substantive guidance on its recent policy change, and it is unclear what rules and procedures the NCAA will adopt. This Article argues that the NCAA should look to the recently revised U.S. Olympic & Paralympic Committee Rule 40 guidelines as precedent to follow in its effort to balance fairness between the NCAA, the schools, and the student athletes’ marketing endeavors.
II. Historic NCAA Amateurism Rules
The NCAA proscribes rules governing eligibility for student-athletes at its roughly 1,100 member colleges and universities. A long-standing requirement of the NCAA is that participants of intercollegiate sports be amateurs. The NCAA has therefore adopted numerous “amateurism rules” that limit student-athletes’ ability to profit from their athletic performance. These amateurism rules for Division I schools – those with the largest athletic programs – are located in Article 12 of the Division I Manual Bylaws. Bylaw 12.1.2 provides that individuals lose their amateur status – and thus, are not eligible to participate in NCAA athletics – if they receive payment for their athletic performance. Further, Bylaw 22.214.171.124 states a student-athlete becomes ineligible to participate in NCAA athletics if the individual:
(a) Accepts any remuneration for or permits the use of his or her name or picture to advertise, recommend or promote directly the sale or use of a commercial product or service of any kind; or (b) Receives remuneration for endorsing a commercial product or service through the individual’s use of such product or service.
In other words, Bylaw 126.96.36.199 prohibits student-athletes from entering into marketing contracts for the use of their names, images, and likenesses.
The NCAA’s historic amateurism model has faced harsh criticism in recent years. For starters, some have contended the NCAA’s definition of amateurism has been historically malleable, changing frequently over time in significant and contradictory ways. Others have contended the NCAA applies its amateurism principles inconsistently. Furthermore, while the amateurism model is intended to promote competitive balance, some have argued the NCAA’s “[r]estrictions on pay are actually promoting competitive imbalance as the very best talents join each other on the same small collection of teams.”
The NCAA’s amateurism rules have faced numerous challenges in court as well. For example, in 2009, a group of Division I basketball and football student-athletes brought an antitrust class action against the NCAA and its licensees to challenge the NCAA’s amateurism rules regarding the use of their name, image, and likeness. The court in the Northern District of California ultimately held the NCAA’s amateurism rules violate federal antitrust laws and student-athletes were entitled to $5,000 annually for use of their name, image, and likeness. The Ninth Circuit Court of Appeals affirmed the district court’s holding that the amateurism rules violate antitrust laws, but reduced the $5,000 payment to the cost of attendance. In another case, a group of former student-athletes at the University of Pennsylvania brought an action against the NCAA, their school, and more than 120 Division I schools, alleging that student-athletes were employees who were entitled to minimum wage under the Fair Labor Standards Act (“FLSA”). Ultimately, the district court and the Seventh Circuit Court of Appeals concluded that student-athletes are not employees under the FLSA.
In response to this criticism and in recognition of a changing culture regarding amateurism, the NCAA’s governing board recently voted unanimously to permit college athletes “to benefit from the use of their name, image and likeness in a manner consistent with the collegiate model.” The NCAA’s decision was based on recommendations from the NCAA Board of Governors Federal and State Legislation Working Group – a task force comprised of college presidents, athletics directors, and student-athletes. This task force is currently compiling input and feedback on how best to respond to the state and federal legislative environment. For example, California passed a law requiring the NCAA to allow student-athletes to monetize their name, image, and likeness. Additionally, five U.S. senators formed a bipartisan working group to discuss federal legislation allowing student-athletes to profit from their name, image, and likeness.
The NCAA’s board also requested the NCAA’s three divisions to immediately consider updating their bylaws and policies. The NCAA has not yet provided guidance on its recent policy change, and it is unclear what rules the NCAA’s three divisions will adopt.
III. Historic Olympic-Athlete Sponsorship Agreements and Rule 40
Unbeknownst to most because it has been generally ignored by the sports media, there has been a similar uproar from Olympic-athletes regarding their ability to profit off of their name, image, and likeness. Prior to 2019, Bylaw 40.3 of the Olympic Charter (“Rule 40”) stated: “Except as permitted by the [International Olympic Committee (“IOC”)] Executive Board, no competitor, coach, trainer or official who participates in the Olympic games may allow his person, name, picture of sports performance to be used for advertising purposes during the Olympic Games.” In other words, no athletes participating in the Olympics could allow their name, image, or likeness to be used for commercial advertising purposes during the games period unless a limited waiver was granted by the IOC.
Not surprisingly, Rule 40 was unpopular among Olympic-athletes because it created a situation where Olympic-athletes could not enter into marketing contracts for the use of their name, image, or likeness during the exact time when their name, image, and likeness had their highest earning potential. Frustrated by the situation, during the 2016 Summer Olympics, athletes from several countries organized and staged protests against Rule 40’s restrictions. Following the 2016 Summer Olympics, two athletes and the Federal Association of the German Sports Goods Industry took affirmative action and brought the issue to the German Federal Cartel Office (Bundeskartellamt, “FCO”) – the authority responsible for enforcing German laws against restraints on competition. The FCO’s president noted that “[w]hile athletes are the key figures of Olympic Games, they cannot benefit directly from the IOC’s high advertising revenue generated with official Olympic sponsors.” The FCO concluded Rule 40 was “too far-reaching and thus constitute[d] abusive conduct,” in violation of the German Constitution.
In response, the IOC amended Rule 40 in June 2019. The revised version of Rule 40 now states: “Competitors, team officials and other team personnel who participate in the Olympic Games may allow their person, name, picture or sports performances to be used for advertising purposes during the Olympic Games in accordance with the principles determined by the IOC Executive Board.” The IOC then issued its “key principles” for implementing the amended Rule 40 in July 2019 and instructed each country to implement and publish its own Rule 40 guidelines and compliance procedures. On October 7, 2019, the U.S. Olympic and Paralympic Committee (“USOPC”), which is responsible for implementing the IOC’s key principles in the United States, issued guidance on Rule 40. For convenience, the term “Rule 40” as used throughout the rest of this Article refers collectively to Rule 40, Bylaw 40.3, the IOC’s key principles, and the USOPC’s guidance.
IV. The New Rule 40 Guidelines
The scope of Rule 40 is limited in time and to who it applies. Specifically, Rule 40 only applies during the 2020 Olympic Games, meaning from the opening of the Olympic Village (July 14, 2020) until two days after the Closing Ceremony (August 11, 2020). Additionally, Rule 40 only applies to competitors, coaches, trainers, and officials participating in the 2020 Olympic Games. Former Olympic participants who are not competing in the 2020 Olympic Games are excluded from Rule 40’s application. Rule 40’s application is further limited to non-Olympic partners or “personal sponsors” of participants. Many of Rule 40’s requirements and restrictions do not apply to official Olympic partners that have sponsorship agreements with the IOC and other Olympic committees.
Where Rule 40 applies, the process for Olympic-athlete marketing begins with obtaining permission. Rule 40 permission is a two-step process. First, the athlete must register their personal sponsors with the USOPC. Second, the personal sponsor must successfully complete the “Personal Sponsor Commitment.” Additionally, “[p]ermission will not be granted without the explicit, advance consent of the athlete for his/her name, image and/or likeness to be used in the relevant campaign. There are no exceptions.”
After permission is obtained, athlete marketing is allowed in two ways: (1) “generic marketing” of a product, service, or brand, which includes one or more athletes; or (2) “athlete-focused marketing” reflecting a personal sponsor’s support of an athlete’s participation in the Olympic games. In either case, the marketing must follow certain rules. For starters, the advertisement cannot use Olympic intellectual property or imagery from the Olympic games. Additionally, the advertisement cannot imply any relationship or association between the sponsor and the Olympics. These rules mean the advertisement cannot use the official Olympic logo or depict the athlete wearing official Olympic team gear (e.g., “Team USA”). Nor can the advertisement include an image of the athlete taken from within an Olympic venue.
Generic marketing means any advertising of a company or brand where the only connection to the Olympics is that the advertisement uses a participating athlete’s image. The advertisement must be specific to an athlete’s relationship with the company or brand. The advertisement cannot imply an association with the Olympics, use Olympic intellectual property, or use an image taken from within an Olympic venue. And while the advertisement may include Olympic accomplishments, it may only do so if such accomplishments are balanced with non-Olympic accomplishments. For example, an athlete’s biography that states “Olympian” and “Tour Champion” is permissible, but a biography that just states “Olympian” is not permissible.
Athlete-focused marketing means a piece of content that includes an athlete’s likeness, such their name, image, or voice. Athlete-focused marketing comes in two forms: (1) athletes thanking personal sponsors; and (2) personal sponsors recognizing athletes’ performances. Athlete-focused marketing can make factual references to an athlete’s story or performance. It may not, however, mention or promote the sponsoring company’s products or services. Additionally, athlete-focused marketing cannot use more than one participating athlete. This prohibition is intended to prevent any implication that the advertisement is connected to the Olympics.
Most significantly, there was a substantial focus on Olympic-athlete social media marketing campaigns during the 2020 Olympic Games. Precise rules and procedures were set in place for what Olympic-athletes were, and were not, allowed to do on social media during the 2020 Olympic Games. A procedure was even created for Olympic-athletes to submit proposed social media posts to the USOPC for comment and approval prior to the 2020 Olympic Games. Finally, a social media monitoring system was referenced that will monitor Olympic-athletes’ social media activity during the 2020 Olympic Games.
According to the IOC and USOPC, the restrictions outlined above are premised on the principle of solidarity. Under this principle, the IOC, the specific national Olympic committees, and the Olympic-athletes share in the marketing dollars available so that operations of the IOC and specific national Olympic committees are supported, Olympic sports development and promotion are supported, and the Olympic-athletes are able to profit off of their hard work and athletic ability. Obviously, there are enormous costs associated with the Olympics and if those costs are not covered there would not be a 2020 Olympic Games. The program also helps secure funding of all Olympic teams – regardless of the individual profile and commercial or sporting success of their athletes. This is important because the majority of Olympic sports, teams, and individual Olympic-athletes are not profitable or even self-sustaining financially. “[B]y accepting some limited restrictions on [marketing] activities during the [Olympic] Games, athletes who enjoy personal sponsorship deals are helping to secure funding to support all national Olympic teams, regardless of the profile or success of their athletes.”
V. The NCAA Should Adopt Rule 40 Type Regulations For Student-Athletes
The NCAA must ensure a workable plan is adopted to implement its new policy. A lot of money and many futures are at stake. The USOPC’s Rule 40 guidelines provide a baseline for the NCAA’s new rules based on similar athletes in similar situations. First, there must be solidarity between the NCAA, athletic conferences, schools, and student-athletes. Marketing dollars must be shared to ensure operations and opportunities are maintained. Second, like in the Olympics, a select handful of superstars receive the majority of the spotlight and will receive the majority of the marketing opportunities. Third, like Olympic-athletes, student-athletes have significant social media influencer potential, which is the primary basis for their marketability. Fourth, both Olympic-athletes and student-athletes are generally unsophisticated actors that will need significant compliance coaching and monitoring.
The USOPC’s Rule 40 guidelines provide a good fit to work off of. Many of Rule 40’s requirements and restrictions can be easily applied to collegiate athletes without much change. Like Rule 40, the process for student-athlete marketing should begin with obtaining permission. The student-athlete should have to register their personal sponsors with the NCAA, their athletic conferences, and the institution the student-athlete attends. Second, the personal sponsor should have to successfully complete the a commitment form, similar to Rule 40’s Personal Sponsor Commitment. This commitment form should allow the NCAA, the athletic conferences, and the athlete’s institution to, among other things, review the content of the advertisement and confirm the sponsor obtained the athlete’s consent to use their name, image, or likeness.
After permission is obtained, student-athlete marketing should follow similar rules and methods provided for under Rule 40. To begin, the advertisement should not use the intellectual property of the NCAA, the athletic conferences, or the student-athlete’s school, and the advertisement should not include imagery from NCAA- or school-affiliated games. This means the advertisement cannot use the official logos of the NCAA or the student-athlete’s school. Nor can the advertisement depict the athlete wearing official team gear. Furthermore, the advertisement should not imply any relationship or association between the sponsor, the NCAA, the athletic conferences, and the student-athlete’s school.
These restrictions would strike a fair balance between the student-athlete, the NCAA, the athletic conferences, the school, and the sponsor. The student-athletes would be able to profit from the use of their name, image, and likeness. The NCAA, athletic conferences, and schools would be able to protect their highly valuable intellectual property. And the sponsor could enter into sponsorship deals with college athletes, rather than the NCAA, athletic conferences, or schools, at presumably a lower cost.
Provided the rules outlined above are followed, permissible methods of student-athlete marketing should include generic marketing and athlete-focused marketing. Similar to Rule 40, generic marketing will mean any advertising of a sponsor where the only connection to the NCAA, the athletic conferences, or the student-athlete’s school is that the advertisement uses an image of an athlete who participates in NCAA athletics. Generic marketing may include the athlete’s NCAA, athletic conference, or school accomplishments, but only if such accomplishments are balanced with non-NCAA or non-school accomplishments. Athlete-focused marketing – any content that includes a student-athlete’s name, image, or likeness – will include athletes thanking sponsors and sponsors recognizing athletes’ performances. Athlete-focused marketing can make factual references to a student-athlete’s story or performance, but it should not, however, mention or promote the sponsor’s products or services. Additionally, athlete-focused marketing should not use more than one student-athlete from the same school, athletic conference, or sport. This prohibition will prevent any implication that the advertisement is connected to the NCAA, a particular athletic conference, or the athlete’s school.
The USOPC’s Rule 40 guidelines are not, however, a perfect fit. The scope of student-athlete marketing rules must be more expansive than Rule 40. Rule 40 only applies when the athletes are participating in the Olympic Games. A comparable period for student-athletes might be when their sport is in season (e.g., August to January for college football players). But the student-athlete marketing rules should apply for a relatively longer period than Rule 40 – most likely, their entire collegiate career. Additionally, Olympic-athletes are allowed to have agents and attorneys solicit, draft, and negotiate sponsorship agreement while NCAA student-athletes currently are not, which must change under this new regime of amateurism rules and regulations. Most importantly, wealthy individuals and companies giving money to Olympic-athletes without receiving anything in return is encouraged. Student-athletes are not permitted to receive similar gifts. In fact, the NCAA’s worst case scenario is a rich booster entering into one-sided sponsorship agreements with student-athletes (potentially never even publishing any marketing materials using the student-athletes’ name, image, or likeness but paying them anyways) in order to buy himself or herself a national championship for their preferred school. In sum, the USOPC’s Rule 40 guidelines provide a baseline for the NCAA’s new rules, but those guidelines are not a perfect fit and additional factors will need to be take into consideration.
The NCAA’s recent announcements regarding rule changes opens up a significant opportunity for a small number of elite student-athletes to receive compensation based on their athletic performance. However, the NCAA must ensure a workable model is adopted to maintain principles of solidarity between the NCAA, athletic conferences, school, and student-athletes. While not a perfect fit, Rule 40 provides a baseline for the NCAA’s new rules and should be used as precedent by the NCAA when creating guidelines for these new rules.
David Lisko is a litigation and sports attorney in Holland & Knight LLP’s Tampa Office. Daniel Buchholz is a litigation attorney in Holland & Knight LLP’s Tampa Office.