Fair or Futile

May 30, 2023

grayscale photo of concrete building

Fair or Futile?

Our Take on the FAIR College Sports Act Discussion Draft

If Congress wants to wade into NIL – a potentially billion dollar industry – then it needs to put forth legislation that will actually make an impact. We don’t need just more of the same, or a redundant governing body.

The main points of the bill rehash what the NCAA previously put in place:

  • Student-athletes cannot be prohibited from earning “market value” compensation
    • Makes sense. But, is Congress angling to have its proposed United States Intercollegiate Athletic Committee (USIAC) set the price? That’s a bit absurd. What the market is willing to bear determines “market value”. There are far too many factors – the sport, the player and the university – that go into determining the value of an NIL sponsorship for Congress to try to standardize these deals.
  • Using an agent is permitted
  • Prohibits recruiting and performance inducements (e.g., pay-for-play)

A New Governing Body: But Only for 5 Years?

This bill calls for the creation of the USIAC, a non-governmental agency made up of student-athletes, conference officials, NCAA officials, and a board of directors appointed by congressional leaders who have sanction ability. Strangely, the bill draft says that the USIAC will cease its existence after 5 years. NIL is exponentially growing – who knows what it will look like and its value in the future.

If the USIAC is truly the answer to the challenge of creating clear, equitable NIL regulations, why disband it before it can really get started? This just sets us up for another tumultuous regulatory experience in the very near future.

Putting the structure, politicalness, and sanction ability aside, the USIAC’s purpose seems legitimate – creating an NIL clearinghouse.

As a clearinghouse, the USIAC has typical functions:

  • Registrations
  • Disclosures
  • Reporting
  • Enforcement

Click here for a deeper dive into the details of the proposed structure.

One Surprise, If You Read Between the Lines

Is Congress hinting that it will take a stand on high school athletes, without actually saying it? The bill discussion draft prohibits student-athletes from entering into an NIL agreement until 90 days after enrolling in an institution of higher education.

Overruling the States and Protecting the Athletes

There are a few other points within the discussion draft that warrant mentioning:

  • The strictly prohibited activities commonly seen in state laws (e.g., no endorsements for alcohol, tobacco, or lewd/sexual organizations, etc.) are permissive in this draft. This means each institution is free to make its own determination of what is prohibited. Could it be possible that institutions may suddenly become less restrictive in order to seem more NIL-friendly?
  • Student-athletes who end their participation in athletics will be protected in terminating any NIL agreements without the other party being able to bring legal action or demand any repayment of funds. This makes sense – we need to ensure that student-athletes’ best interests stay at the forefront of the NIL ecosystem.

Connection and Transparency are the Key

Who writes and enforces the rules is really a moot point. What we need to be discussing is how to keep all the NIL stakeholders connected so that the entire process is transparent and trackable.

The long-term solution is an automated, end-to-end digital platform. ALC’s GameDayNIL platform was built to connect and protect all NIL stakeholders – student-athletes, universities, collectives, donors and brands. What’s more, the platform is compliance and transparency-driven to withstand the obligations of future regulations.

Read our full legislative analysis here.

Contact us to learn more about GameDayNIL.