A DEVIL’S BARGAIN?—THE COMPETITIVE BIRTH AND FRACTURING OF NILS FOR THE STUDENT ATHLETE

By Samuel Smith¹, Thomas Burt²

$10 million dollars. That number represents how much money previous number one overall pick Caleb Williams made at USC for his Name, Image, and Likeness ("NIL").³ A number that would have sparked countless controversies, suspensions, and revocation of his Heisman trophy—just ask former USC football player Reggie Bush⁴—only five years ago. However, since 2021, high profile athletes making millions of dollars in college from their NIL has become common.⁵ In 2021, the U.S. Supreme Court’s decision in National College Athletic Association v. Alston, followed by states on the verge of passing NIL laws, led to the NCAA implementing NIL policies that opened up the flood gates.⁶ The decision to allow college athletes to receive compensation for their NILs did not happen overnight.

The tension between the multi-million dollar institutions of college football and basketball, and the amateur status of their athletes, has been rising for decades. While in other sports, young athletes headed to the elite ranks forgo college and develop in a professional environment, in these two sports, college is the preferred or almost exclusive development environment for future top-level professionals. In a free market, these athletes would be able to sell their valuable services to the highest bidders. But the operation of that market has been until recently almost entirely controlled by the NCAA, and its member conferences and schools. Athletes could not bargain for pay, or for the value of their name, image, and likeness . . . not even for scholarships covering the full cost of attendance. To many observers, this screams unfairness: sports awash in money, and talent compelled to spend years developing, risking injury, with strictly limited compensation.

In response, three separate approaches to compensating student athletes have emerged, particularly but not exclusively in basketball and football, the two most lucrative sports. The first treats student athletes as employees; this has gained the least traction. The other two are antitrust concepts: either that the student athletes should be permitted to bargain for greater educational and health benefits from the schools they play for (the Alston approach, as described below); or that they should be permitted to bargain for and retain some of the value of their NIL. The NCAA has been battling lawsuits against athletes for decades now, but both the NIL theory and Alston recently exploded forward and changed the financial world for student athletes.