New Draft NIL Legislation Includes Athlete Restrictions, Healthcare and Booster Collectives

Under a draft of the latest name, image and likeness (NIL) legislation, college athletes would be prohibited from striking deals until a semester into their college careers, but booster-led NIL collectives could provide “benefits” to athletes and their parents with a caveat: The collectives must sign a contract with their affiliated school.

A working draft from Senators Tommy Tuberville (R-Ala.) and Joe Manchin (D-W.V.) of NIL legislation grants the NCAA great authority, creates a medical trust for athlete healthcare, includes a bevy of athlete restrictions, requires athletes to use an NCAA-created standard contract and mentions booster-led NIL collectives by name. Sports Illustrated obtained a copy of the draft, which is not complete and could undergo changes as the senators receive feedback from college leaders and others.

In a story published Tuesday, SI briefly detailed concepts in the draft as part of a story about college leaders descending on Washington D.C. to further encourage lawmakers to draft federal NIL legislation. The full Tuberville–Manchin draft can be read here. In this, a more in-depth look at the draft, Sports Illustrated outlines and explains concepts of the long-awaited bill.

However, the significance of the draft is unclear. During college leaders' four-year lobbying effort on Capitol Hill, eight hearings have been held and more than a dozen athlete bills have been introduced. None of them have even reached a full committee for debate.

Restrictions & reporting

Within 30 days of entering into a NIL deal, athletes must disclose the contract with their school, including compensation amounts and other contract particulars. NIL collectives and agents must register with the NCAA and also disclose all NIL deals with the governing body.

Athletes can enter into NIL contracts only if it (1) is in writing and signed by each party; (2) outlines the scope and timeline of work the athlete must perform; (3) states the compensation and has a duration or end; and (4) conforms with an NCAA-developed standard contract template.

In one of the more strict restrictions, an athlete must be enrolled and has to have completed at least one semester of coursework to enter into a NIL deal.

According to the draft of this bill, schools can limit athletes from entering into NIL deals with certain persons or entities, including:

• adult entertainment and sexually suggestive products of sex-oriented products
• alcohol products
• casino or gambling products including sports betting
• tobacco and marijuana products
• pharmaceuticals
• any dangerous or controlled substances
• drug paraphernalia
• weapons including firearms or ammo

However, schools cannot enter into a contract with any of those entities if the school has prohibited an athlete from a NIL deal with such a company.

In one final restriction, athletes cannot wear any item of clothing as part of a NIL deal while wearing school athletic gear.

Trust

The draft calls for the creation of a trust to be used for two reasons: (1) fund travel costs for the immediate family of “dependent” athletes; and (2) cover out-of-pocket medical expenses related to an injury sustained while playing college sports.

The trust is funded through “revenue-generating college level tournaments,” such as the CFP or NCAA basketball tournament. Those events would be required to deposit at least 1 percent of annual proceeds into the trust fund to be managed by the NCAA.

Medical costs cover an athlete for eight years after their eligibility expires or until they turn 28.

Recruiting

While the draft strictly prohibits recruiting inducements, it specifically names booster-led NIL collectives and offers them many freedoms.

Collectives can promote their program, assist in recruiting and assist in providing benefits to recruits or athletes or parents of athletes but only “if it is formally associated with an insinuation through an official contract.” Also, collectives must provide “equal opportunities” to all athletes in all programs at the school.

Enforcement

The NCAA is mostly put in control of investigating and enforcing the would-be law.

Any violation would be treated as a violation of regulations of unfair and deceptive acts under the Federal Trade Commission Act.

The draft empowers the NCAA to investigate and audit compliance with the law while also giving it the authority to distribute penalties including revoking licenses to participate in NIL. The NCAA is to also refer violations to the FTC for potential further action.

If the NCAA fails to comply and carry out duties as part of the bill, the FTC can revoke its tax-exempt status. While the draft preempts state NIL laws, it does not specifically deem college athletes as students and not employees.