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.

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But the changes are likely not complete. These cases represent one step in the history of student-athletes versus NCAA, with more cases and litigation expected to arise.⁷ These rapid changes pose two questions, how did we get here, and where are we going?

I. NCAA SPORTS IS A BILLION DOLLAR INDUSTRY

We got here because of the paradox of "amateur" sports supporting a billion-dollar industry. As economist James Koch wrote:

[d]espite the claims of the National Collegiate Athletic Association (NCAA) that it is a champion of amateur athletics and physical fitness in colleges and universities, the NCAA is in fact a business cartel composed of university-firms which have varying desires to restrict competition and maximize profits in the area of intercollegiate athletics.⁸

This statement, written in 1973, has become more obviously true with each decade.

During the fiscal year of 2022-23, the NCAA made $1.3 billion in revenue.⁹ $945 million came from media and marketing deals tied to championship events, with $900 million coming from the CBS and Warner Bro. Discovery rights to the NCAA men’s basketball tournament.¹⁰ Division 1 football is subdivided, with the top teams included in the College Football Playoffs, which is also known as the bowl subdivision ("FBS football"). The College Football Playoffs, which the NCAA does not have direct involvement in, brings in $470 million of revenue annually.¹¹ The Power 5 conferences, recently reduced to 4 with the practical end of the Pac-12, brought in $3.55 billion in revenue.¹² The conferences roughly distributed to each member school 6% of their total revenue.¹³ The majority of the money comes from NCAA football and men’s basketball.¹⁴ However, football and men’s basketball athletes only receive about 7% of the revenue in the form of scholarships and living stipends.¹⁵

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The amount of money that FBS football and men’s college basketball make departs radically from the remainder of intercollegiate sports. The difference makes them the "Money Sports" of intercollegiate athletics. The amateur sports model that is deep in the NCAA’s tradition which is rooted in athletes playing for pride, championships, Olympic chances, or professional careers after college works for the majority of intercollegiate sports because the schools, conferences, and NCAA are not becoming wealthy off the student-athletes’ labor. That is the opposite however in the Money Sports. Schools, conferences, and the NCAA become vastly wealthy because of the athletes’ labor. Everyone involved—coaches, commissioners, presidents, etc.—reaps the benefits except the athletes.

The problem is that the Money Sports are themselves an industry. An industry in which the athletes are the economic actors selling their athletic ability, which we recognize in the professional context as work.¹⁶ However, what the athletes can bargain in exchange for their athletic ability is determined by the NCAA. Even though the NCAA is "non-profit," the negotiations and compensation that schools enter into to recruit Money Sports athletes are necessarily commercial because of the billions of dollars the athletes bring in for the schools. Schools compete against each other for athletes’ athletic abilities by offering educational quality, coaching and training reputation, athletic and non-athletic career potential, grants- in-aid for academic expenses and a living stipend while in school, anticipated success of the team, opportunities for media exposure for the athlete and opportunities for compensation for use of their name, image and likeness. But all the categories of benefits schools can use to recruit athletes are limited by what the NCAA and the schools have agreed upon, which is different and lower in value than what would be available in a free market.

The athletes have no alternative market in which to sell their athletic performance. The National Football League recruits overwhelmingly through the draft from NCAA schools, and particularly the bowl subdivision. Alternative routes to the NFL through development leagues are marginal at best.¹⁷ As a result, the athletes have to accept the agreements that the NCAA and schools have on recruiting if they want to play intercollegiate sports.¹⁸ The Money Sports athletes are forced to sell their athletic ability for the limited benefits that can be offered to them while the schools, conferences, and the NCAA make an extraordinary amount of revenue off the athlete’s athletic abilities. Student-athletes must take on a full- time student academic schedule, while also committing to hours of practices, weight training, rehab, film, travel, games, and other miscellaneous events for their sports. The athletes are also sacrificing their ability to work during the school year due to their busy schedule. In addition, the athletes are also normally unable to obtain summer internships due to summer training/ practices. This inability to gain work experience can negatively affect athletes’ post-graduation employment opportunities. The

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athletes are effectively working full-time football or basketball jobs on top of attending school, resulting in many benefits for their colleges, including economic gain.¹⁹

The Money Sports athletes also sacrifice their short-term and long-term health in addition to sacrificing their educational benefits because of the constraint on their academic options due to travel and games, and general decreased available time they have in their daily schedules due to commitments required by their sports. Not only do the athlete’s athletic schedules effect their time commitment to their education, their athletic schedules effect the classes that they are able enroll in. The athlete’s inability to freely choose classes effects the educational major they pursue. Resulting in athletes gravitating towards certain education majors that fit into their athletic schedule. Therefore, athletes are having to choose degrees they may not prefer. A few athletes will work extremely hard and pursue the major they desire, but often summer classes and extra years are required to graduate.

The NCAA’s role, in short, is to place a wall between the high-dollar industry around the athletes’ performances, and the athletes themselves, compensated only in the partial cost of an education, that due to their athletic schedules they cannot fully use. That arrangement and the general discomfort with it are why we are where we are today, in the middle of on- going litigation.

The three solutions advanced to date for these problems are employment, bargaining for payment of services, and NIL. It has repeatedly been seen that the arguments that the athletes are employees have failed and for various reasons, stakeholders including fans dislike it as an option.²⁰ Bargaining for non-cash payment of services, in the form of full cost of attendance and additional educational and personal benefits, has gotten significant traction because of Alston. For example, subsequent rules revisions in response to Alston allow student athletes to bargain for life-long healthcare and further education, including the next degree.²¹ The recent settlement between the NCAA and Power Five conferences, if accepted, will allow schools to share up to $20 million in revenue annually with athletes, potentially expanding athletes’ bargaining for payment of services.²² NIL is the most unorthodox solution in that it splits the actual athletic performance from the brand value generated by that performance, which is sold in a different market: the university bargains for the athletic labor, but others including apparel makers and the producers of video games want to make use of the name, image, and likeness. This solution has the most transformative potential, and has been most completely embraced by the NCAA because it most completely preserves nominal amateurism and places the least pressure on the universities in bargaining. However, in the long run, NIL allows athletes in Money Sports,

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and also in non-money sports to make millions, and may most permanently alter which athletes play for universities, and why.

II. WHERE DID THE PROBLEM GROW FROM AND WHAT HAVE THE SOLUTIONS BEEN

"The NCAA’s business model would be flatly illegal in almost any other industry in America."²³

A. THE ORIGIN OF COLLEGIATE AMATEURISM AND THE NCAA

Arguably the first intercollegiate competition was a rowing competition between Harvard and Yale in 1850.²⁴ The model for this competition was drastically different to what we know of intercollegiate athletics today because the athletes were compensated with an all- inclusive trip, prizes, and unlimited alcohol.²⁵ However, by 1880 intercollegiate football, primarily between Yale and Princeton, was the center point of intercollegiate sports.²⁶ In 1905, after years of crisis with many life-ending injuries happening in collegiate football, President Theodore Roosevelt eventually created what is now known as the NCAA.²⁷ After years of limited change and universities providing monetary compensation to players, in 1948 the NCAA came out with the "Sanity Code" that essentially abolished all pay for play in the NCAA. The rules have been expanding ever since.²⁸ The basic rule that college athletes are students, and not paid players representing the schools, has held to this day. Most collegiate sports earn relatively modest revenue, and student athletes rarely place their sporting careers over their non-sporting future prospects. There are two exceptions: men’s college football and college basketball are regional and even national industries.

The NCAA brings in over a billion in revenue, with football and men’s basketball both pulling in hundreds of millions in revenue per year.²⁹ The athletes that are playing in the games do not see any of the revenue go into their pockets, even though the athletes are the reason why people watch and allow the NCAA to bring in the enormous amount of revenue that it does.³⁰ The NCAA has for a long time argued the reason to not allow athletes to receive compensation for their athletic services is to preserve "amateurism" and to keep competitive balance between institutions.³¹

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Amateurism for the players, who at the top levels hope for lucrative professional careers, sits oddly with the amateurism of student athletes in other sports. Major League Baseball and NHL hockey, for example, stock their starting rosters with players shaped by minor or junior leagues that begin before college and only secondarily incorporate former intercollegiate players.³² These sports operate like international (soccer) football, where seamless professional development of teens with professional prospects is the norm. The NFL, and to a lesser extent the NBA, maintain development leagues only as a secondary feeder, and take most of their starting rosters from former NCAA athletes. Comparatively few NFL players never played for an NCAA school, or even a non-Division 1 NCAA school.³³ For these two sports, spending one to five years in an unpaid apprenticeship, bearing most of the risk of career-ending injury, is virtually mandatory.

Nor does the amateur status of the athletes prevent individual schools from paying their coaches and staff millions of dollars.³⁴ Indeed, the highest paid public employee in 43 states are coaches at an athletic powerhouse at a large public university.³⁵ The level of coaches and quality of facilities are equivalent, if not better than their sports professional leagues.³⁶ Coaching staffs on FBS football teams are larger than NFL coaching rosters.³⁷ To add, the NCAA president makes close to four million per year and the head of the major conferences between two to three million per year.³⁸ It appears in almost all aspects that NCAA football and men’s basketball operate closer to how professional leagues run, compared to how amateur high school athletics are run. The only difference is that the players for the NCAA are not allowed to be paid for their athletic capabilities.

The glaring imbalance in these sports expresses itself in two ways. First, the universities themselves are the recipients of the student-athlete’s labor. The universities field teams, the conferences organize competition, which they sell as an entertainment product. ESPN’s television rights to the College Football Playoffs was previously 12-years for $5.47 billion,

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and was recently extended 6-years for $7.8 billion.³⁹ Additionally, CBS and TBS recently extended their March Madness basketball tournament deal that was previously 14-years for $10.8 billion, an additional 8-years for $8.8 billion.⁴⁰ The student-athletes’ on-field or on- court performances were necessary inputs to these entertainment products that brought the schools millions and the conferences billions. But their compensation was less, even, than the full cost of attending the university.⁴¹ The students are in effect paying to intern during the early years of their sporting careers.

The second way this imbalance has expressed itself, is that the student athletes have become media personalities. Particularly in basketball, their distinctive images are tremendously valuable, especially as high-dollar video games use the distinctive players to draw buyers in to paying for the games. The NCAA Football video games made around $125 million annually in revenue for EA Sports.⁴² In just two weeks, the new NCAA Football 25′ video game made $500 million in sales.⁴³

B. WHAT HAVE THE COURTS DECIDED?

1. COLLEGE ATHLETES AS EMPLOYEES

The first possible solution to the problem is to determine that student-athletes are employees of the university. Characterizing the athletes as employees would allow the athletes to bargain for wages, benefits, and hours. It would also allow the athletes to unionize and open up federal labor laws to the athletes. It would also be consistent with many athletes’ eventual transition to the professional ranks, where NFL and NBA players are employed by the teams they play for, and with the development environments in baseball and hockey, where the minor league players are employed by their teams.

In Dawson v. National Collegiate Athletic Ass’n, a group of FBS Football players sought to establish that the NCAA and the PAC-12 conference were their joint employers.⁴⁴ The Ninth Circuit likewise found that student-athletes are not employees of the university under California law, and that there is no authority that would support that student-athletes are employees of the conference or NCAA.⁴⁵

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Recently, there have been a few decisions that have given some traction to the argument that athletes are employees. In Johnson v. Nation Collegiate Athletic Ass’n, a group of athletes argued that they were employees of the universities they played for.⁴⁶ The court held that student-athletes are not barred from bringing Fair Labor and Standard Act (FLSA) claims simply because of the long history of amateurism.⁴⁷ The Johnson court accepted that the athletes may be employees under FLSA if "the athlete and college or NCAA reveal an economic reality that is of an employee-employer."⁴⁸ In addition, Dartmouth men’s basketball was allowed to unionize over the objection of the Trustees of Dartmouth College because the National Labor Relations Board denied the request to stop the election until after further review.⁴⁹ Although this is a speck of traction in the direction of student-athletes as employees, it is facing a phalanx of contrary precedent. Dawson, Alston, and Berger v. National Collegiate Athletic Ass’n have all addressed in one way or another, if student- athletes were employees to the university, conferences, or the NCAA, it would run counter to the long-accepted tradition of amateurism in college sports.⁵⁰

Employing the student athletes represents a full abandonment of amateurism. The main resistance, legally and probably culturally, is that amateurism is part of the product.⁵¹ As the Alston court said, "courts should take care when assessing the NCAA’s restraints on student- athlete compensation, sensitive to their procompetitive possibilities."⁵²The procompetitive possibilities are referring to the tradition of amateurism in college sports, which was argued to increase consumer demand.⁵³

Not only has considering student-athletes as employees not been accepted by the court, certain other negatives effects could arise if they were to be. If universities had to pay their athletes, which unless they play a Money Sport the university is already losing money by supporting the team,⁵⁴ the university may decide that from an economic standpoint they cannot afford to pay the athletes and ultimately just cut the program. That is why it may be seen as a surprise that Dartmouth’s men’s basketball team wanted to unionize because the Ivy league already has a deep tradition focused on amateurism

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and academics as they don’t allow any athletic scholarships.⁵⁵ Combined with the fact the team did go 6-21 in the 2023-24 season,⁵⁶ if it is decided that the student-athletes are employees and Dartmouth must pay them wages, nothing would stop Dartmouth from discontinuing the program because it does not make economic sense, and the history of amateur athletics would have essentially ended.⁵⁷

2. BARGAINING FOR PAYMENT OF SERVICES

In 2016, O’Bannon v. NCAA was decided by the Ninth Circuit of the U.S Court of Appeals.⁵⁸ The case was brought by two former athletes who had appeared in NCAA basketball and football video games.⁵⁹ The players brought a claim under Section 1 of the Sherman Act that the NCAA NIL rules were an unlawful restraint of trade.⁶⁰ In NCAA v. Bd. of Regents of the Univ. Okla.,⁶¹ it was decided that because of the unique need of the NCAA to have a certain level of cooperation between institutions, a rule of reason test must be used.⁶² Bd. of Regents dealt with television rights of member institutions.⁶³ The O’Bannon court decided that because of the same need for a level of cooperativeness, that a full rule of reason test should be applied to the current case.⁶⁴

The district court, after performing a rule of reason analysis, determined that the NIL rules were an unreasonable restraint of trade.⁶⁵ The district court held that the NCAA did present procompetitive justifications, such as to preserve amateurism and to promote competitive balance.⁶⁶ The district court then determined that the NCAA could achieve the same result by a less restrictive alternative: allowing schools to provide athletes with full cost of tuition scholarships and $5,000 of extra cash compensation after graduation unrelated to academics.⁶⁷ The Ninth Circuit ruled that allowing athletes full

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cost of tuition scholarships was a less restrictive alternative, however, allowing $5,000 of compensation unrelated to academics was not a less restrictive alternative to preserve amateurism.⁶⁸ The court essentially said that people watch college football because of the amateur aspect, which means players do not get paid, and that this feature is a reason for the NCAA’s success.⁶⁹ In weighing the argument that amateurism is key to the economic success of NCAA football and basketball, the Ninth Circuit accepted the comparison of those intercollegiate sports to minor league baseball, which has only local viewership and lacks the market NCAA football and basketball enjoy.⁷⁰

The court in O’Bannon had to decide how expansively to define the procompetitive benefit of amateurism.⁷¹ The court accepted the Bd. of Regents holding that preserving amateurism was a procompetitive purpose. But the NCAA further asked the court in O’Bannon to hold that any rule that served to promote amateurism was therefore lawful.⁷² Preserving amateurism is such a through-line in NCAA regulations that accepting the procompetitive benefit of that purpose without seriously weighing less restrictive alternatives would essentially exempt the NCAA from antitrust scrutiny.⁷³ The court in O’Bannon ultimately agreed that preserving amateurism was a procompetitive justification, but weighed the restraints with procompetitive purpose against less restrictive alternatives.⁷⁴ Amateurism does have a procompetitive effect because the appeal of college sports to the consumer is increased because of the amateur status of the athletes.⁷⁵ However, giving student-athletes full cost of attendance scholarships does not violate the NCAA’s concept of amateurism because the scholarships would go to covering legitimate costs of attendance.⁷⁶ Consumers of college sports would not correlate full cost of attendance scholarships with impeding the amateur aspect of the student-athlete relationship.⁷⁷ Allowing full cost of attendance scholarships is a less restrictive alternative that does not decrease the procompetitive purpose of amateurism.⁷⁸

College football and basketball athletes in a different suit against the NCAA, NCAA v. Alston, alleged that the NCAA and member institutions were violating section 1 of the Sherman Antitrust Act because they were agreeing to restrict compensation colleges and universities could offer student-athletes.⁷⁹ The district court, with no contest of the NCAA, found that the NCAA and the 11 Division 1 conferences were in agreement to restrain compensation to student-athletes. The district court then proceeded into the

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rule of reason test.⁸⁰ The NCAA has near complete dominance for the market of college basketball and football athletes.⁸¹ The athletes have no viable substitute and that results in the NCAA and member schools ability to restrain compensation to any extent they want without the risk of losing their market dominance.⁸² Member schools still compete in the recruiting of student-athletes but at artificial caps the NCAA and member schools created.⁸³ The district court determined in a market without restraints student-athletes would receive higher compensation.⁸⁴

In a free market, without any restraints the athletes would be able to bargain for increased compensation. The athletes provide enough value to their schools that the NCAA would increase compensation given to athletes in order for the schools to experience economic gain.⁸⁵ That is why the NCAA and the member schools created the restraint. The member schools do not want to compete with each other to compensate the athletes for what they are realistically economically worth because that would result in lower margins. Instead, because the NCAA is a private organization, the schools cooperate with the NCAA to place restraints on compensation to student-athletes in order to increase their own profits.

The district court, recognizing the procompetitive justification of amateurism, looked to see if there was a less restrictive alternative.⁸⁶ Similar to the reasoning in O’Bannon, the district court found that caps on educational-related benefits, scholarships for graduate school, payments for tutoring, and paid post eligibility internships do not effect amateurism.⁸⁷ The general public would not confuse these types of compensation with a professional salary and does not ruin the consumer demand for college sports with amateur athletes.⁸⁸

The NCAA appeals up to the Supreme Court of the United States arguing that the lower courts improperly subjected the NCAA to the rule of reason test.⁸⁹ The NCAA did not challenge them and its member schools are horizontally price fixing in a market where they have monopoly control and are restraining athletes’ compensation where in a free market the athletes would receive greater compensation.⁹⁰

The Court’s analysis was focused on the third step of the rule of reason test that requires the plaintiffs to prove a less restrictive alternative.⁹¹ The NCAA tried to make

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an argument that the district court required the NCAA to demonstrate their rules were the least restrictive alternative. The Court denied this argument and noted that the district court never expressed this, but rather expressed that once they found the NCAA restraints were clearly stricter than necessary to achieve the procompetitive benefits, it was a violation of Sherman act section 1.⁹²

The Court ultimately ruled that the NCAA is enjoined from prohibiting educational-related compensation, academic and graduation compensation, and in-kind benefits.⁹³ The court addressed the NCAA concerns and stated the scope of the injunction did not prohibit the NCAA to implement rules that ban educational benefits from third parties, compensation unrelated from educational activities (e.g., NIL), and in-kind benefits unrelated to educations (e.g., giving an athlete a Lamborghini).⁹⁴

The case outlined that NCAA football and basketball players are selling their athletic services, which is to say their labor, to NCAA institutions.⁹⁵ In a free market, the athletes would be receiving greater compensation; however, the need to preserve amateurism is a procompetitive justification that allows the NCAA and member schools to restrict cash payments for play.⁹⁶ By this logic, the NCAA is not allowed to restrict compensation, except where that compensation would demonstrably defeat the perception of the athletes’ amateur status and thereby risk losing consumer demand.⁹⁷ Essentially, student-athletes are independent contractors that can seek compensation in non-cash forms, in the form of educational and health insurance benefits.

Alston is a distinct decision for collegiate athletes. Student-athletes are able to take the holding only so far. Alston respects the procompetitive purpose of amateurism and accepts the amateur aspect of FBS football and NCAA men’s college basketball as an important reason why they are both hundred-million-dollar industries.⁹⁸ Athletes can expand Alston presumably to the extent that they are able to bargain for non-cash payment of services.⁹⁹ Student-athletes have expanded it to include life-long health insurance and further education.¹⁰⁰ The recent agreement by the NCAA to stop enforcing their transfer eligibility rules will allow athletes each year to bargain for payment of services that are allowed under Alston without any consequences to their eligibility.¹⁰¹ Furthermore, additional benefits the athletes may seek to bargain for in the future that is not pay for play

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cash payments are limited. A couple examples that may be able to be bargained for under the holding from Alston would be paid education for their children (the results may differ between children they already have before college, have during college, and have after college) and paid education for spouses.

Soon after the decision in Alston, when many states were on the verge of passing NIL laws, the NCAA released a policy allowing NIL rules.¹⁰²

C. THE BIRTH AND EXPANSION OF THE LUCRATIVE WORLD OF NIL

On June 30, 2021, the NCAA announced their first interim policy that would allow student-athletes to make money off of their NILs.¹⁰³ Currently, the majority of states have proposed or enacted their own NIL laws, with some states pushing to have athletic departments to have the ability to be more involved in the process.¹⁰⁴ The NCAA was motivated to adopt NIL because of the increase pressure against the NCAA through litigation to fix the problem, specifically in the Money Sports, of the NCAA making billions and the athletes not even getting their full cost of attendance covered.¹⁰⁵ O’Bannon and Alston’s holdings demonstrate courts agree that amateurism is a procompetitive purpose, but disagree with the NCAA as to what type of compensation would eliminate the amateur status of the athletes and hurt NCAA’s consumer demand.¹⁰⁶

Bloom v. National Collegiate Athletic Association decided in 2004 shows how far we have come in just twenty years with college athletes making money off of their NIL.¹⁰⁷ Bloom was a talented skier and football player.¹⁰⁸ Bloom had a professional skiing career but also wanted to play football at the University of Colorado.¹⁰⁹ Skiing, an expensive sport, requires athletes to raise much of their money through prize money and other endorsements in order to fund their career.¹¹⁰ University of Colorado on behalf of Bloom asked the NCAA for a waiver to allow him to keep his modeling and endorsement deals that were connected to his skiing career in order to maintain his skiing career and not have the endorsements be a violation of the NCAA eligibility rules in order for him to be eligible to play football.¹¹¹ Bloom argued that the money he was making through his NIL

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was solely connected to his ski career, and not connected to his football career.¹¹² The court ruled that it was impossible to separate the two and did not accept his waiver.¹¹³ The case demonstrates a zero tolerance the NCAA had for NIL compensation.

The NCAA realized after Alston that compensation for NIL is completely disconnected from the compensation that member schools offer. Bloom was essentially arguing this, but took it further to say that his fame was unrelated to college athletics and the court still denied the argument.¹¹⁴ The NCAA and member schools were restraining the athlete’s ability to be compensated for their celebrity status by people and companies unrelated to the member school. In a free market with no restraints, the athletes would be able to make significant compensation similar to non-athletes with similar celebrity status. The NCAA realized because of how disconnected NIL—or in theory should be disconnected—is from the athletic programs, allowing student-athletes NIL would not ruin the athlete’s amateur status in the publics eyes and would not hurt consumer demand. The NCAA essentially realized that allowing NIL is a less restrictive alternative to the procompetitive purpose of amateurism because NIL is disconnected from the member schools and would not be viewed as the member schools paying professional cash salaries to the athletes. Thus, keeping the consumer demand for amateur athletics.

The result seems to have worked. Out of the top 50 NIL earners, 44 are Money Sport athletes, football and men’s basketball.¹¹⁵ A large part of the success NIL compensation has had is because of NIL collectives. NIL collectives are independent from the university and the goal is to pool funds from businesses and boosters to help facilitate NIL deals and offer ways for the athlete to monetize their NIL.¹¹⁶ The three main collective types are marketplace collectives, donor-driven collectives, and dual collectives.¹¹⁷ Marketplace collectives allow for a common meeting space to connect for possible NIL opportunities.¹¹⁸ Donor-driven collectives are the most common collectives where boosters and supporters pool their money, which is then paid to the players in an NCAA-compliant manner by the collective.¹¹⁹ Dual collectives are a combination of marketplace and donor-driven collectives.¹²⁰

On its face it appears that NIL compensation has done what it was intended to do: allow Money Sport athletes to be compensated based on their celebrity status/ fame. In addition, NIL compensation has leaked out to the non-money sports and have allowed for non- money sports athletes to make money off of their fame. For example, LSU gymnast

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Livvy Dunne is third in total NIL revenue.¹²¹ The positive effects of that could be great for college sports and sports in general. For Olympic and individual performer sports, such as gymnastics, golf, tennis, swimming and diving, and track and field, where often times the best athletes never attend college, or leave college early to focus on their professional careers, NIL may have positive effects. NIL could increase the number of athletes who stay in college because of the ability to now be compensated while in college and not have to turn professional to gain compensation. We may even see an increase in the level of competition for NCAA hockey and baseball. Both NHL and MLB currently gather their players from the college ranks as a secondary option,¹²² but now with the ability to gain NIL compensation, athletes may opt for college instead ofjunior hockey or minor league baseball where their salaries are low, and opportunity to sell their NIL is not as high as compared to the NCAA.

A problem with NIL is that athletes and schools are using NIL to circumvent the restrictions that the NCAA has on bargaining for payment of services. The top four earners in NIL during 2023-2024 school year was Shedeur Sanders, Livvy Dunne, Bronny James, and Travis Hunter.¹²³ Those four can be seen in sponsorships, ads, podcast, etc., and are truly making money off of their name, image, and likeness. However, athletes like Arch Manning (quarterback at University of Texas) and Carson Beck (quarterback at University of Georgia) were both in the top 10 of NIL.¹²⁴ Both post minimally on social media.¹²⁵ An easy assumption can be made that the reason they have NIL money is more accurately attributable to their athletic ability and not NIL. NIL collectives have made that option happen.

The use of NIL to circumvent what student-athletes can bargain for payment of services may only be expanding. The NCAA has rules to stop colleges from using NIL to recruit athletes to their programs.¹²⁶ Although athletes are still committing to schools knowing they have million-dollar NIL deals, the programs are not allowed to directly recruit using NIL. Seven states are suing the NCAA to change this rule.¹²⁷ Depending on the outcome of that suit, it shows how NIL can be used to go beyond what is allowed from Alston. Essentially, college athletic programs are allowed to promise pay for play to athletes because the money is not being paid to the athletes by the school, but rather boosters and companies that are not associated with the university.

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While the natural consequences of NIL on intercollegiate sports may still be unknown, it appears that NIL has not affected the competitive balance of the Money Sports, or non-money sports. If anything, NIL may have helped even out competitive balance of Money Sports because athletes can now weigh how much NIL they will get at different schools when considering who to give their athletic abilities to. Before NIL, the biggest consideration for recruits were contending for a championship, quality of facilities, playing time, quality of coaching, professional playing career matriculation, and educational prestige. Athletes may sacrifice playing time and educational prestige, for a chance to win a championship and go to a school that has a reputation of sending players to professional leagues. However, now that millions of dollars may be on the table for athletes, schools who may have not had a chance of getting the high recruits, now because of NIL, are at the table and in the conversation of landing the high recruits.

III. CONCLUSION

Employment, bargaining for payment for services, and NIL each have had a unique path to how far they have gotten today. Each also have possible next steps that are to come in the future and will have natural consequences because of those steps. This article has looked deeper into employment, bargaining for payment for services, and NIL and covered the path of how each have gotten to where they are today, and more importantly what the next steps are for each, and the natural consequences of those steps.

Employment seems to be a dead end. Courts agree that amateurism is a procompetitive justification and if players would be paid wages, they would be getting cash payments to play, ending the amateur aspect that consumers demand.¹²⁸ To add, for the majority of athletes, especially who play non-money sports, or at schools where even the Money Sports operate at an economic loss, a requirement to pay the athletes wages could risk universities just ending the program altogether.

Bargaining for payment of services has been great for athletes and there has been continued expansion over the years. However, Alston seems to have made bargaining for payment of services self-limiting. Student-athletes can only bargain for compensation that cannot be considered cash payments for play.¹²⁹ After future education and life-long health insurance has been allowed to be given to athletes,¹³⁰ there may not be much left to bargain for down that route.

NIL is the opposite. How the collectives currently operate, and depending how the current litigation plays out, NIL may be able to be offered expressly in recruiting and would essentially circumvent the limits given in Alston because the payments are not being made by the university, ultimately, resulting in pay for play for the athletes. Not only has NIL helped solve the problem of allowing the Money Sports athletes to receive fair compensation for the labor they put into a billion-dollar industry, but it also has positive

[Page 80]

knock-on effects for non- money sports. As explained earlier, the ability for all athletes to make NIL compensation may bring Olympic-level athletes to college or keep them in college longer. Another potential knock-on effect is seeing more professional caliber NHL and MLB players in the NCAA, where currently college operates as a secondary feeder to the professional leagues, because of the ability to gain NIL compensation. NIL Compensation that may be more than if they were to play in junior and minor leagues. NIL has been and will continue to be used and expanded to give bargaining power back to the athletes that are making the NCAA billions where Alston cannot. However, we cannot know in advance if a high-dollar NIL environment actually preserves, in the eyes of the fans, the alleged pro-competitive benefits of amateurism. If the fans come to see NIL-compensated athletes as professionals, this may be true beyond football and basketball, to every sport with celebrity athletes representing universities, will consumer demand decrease for all intercollegiate athletics? Therefore, if amateurism, such as it is, truly represents an essential differentiator for college sports, will the NIL regime forfeit it far beyond the bounds of the two sports litigation has primarily addressed?

[Page 81]

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Notes:

^1. Samuel Smith is a 2025 J.D Candidate at Marquette University Law School.

^2. Thomas Burt is a partner at Wolf Haldenstein in New York.

^3. Ricardo Sandoval, USC Football: Caleb Williams Reportedly Made Millions in NIL Deals, Sports Illustrated (Feb. 28, 2024), https://www.si.com/college/usc/football/usc-football-caleb-williams-reportedly-made-millions-in-nil- deals-rks97.

^4. See Chuck Schilken, Q & A: Why Did Reggie Bush Lose His Heisman Trophy? How Did the Former USC Star Get It Back?, LA Times (Apr. 25, 2024), https://www.latimes.com/sports/story/2024-04-25/why-did-reggie-bush-lose-his-heisman-trophy-how-did-former-usc-star-get-it-back.

^5. On3 NIL 100, On3, https://www.on3.com/nil/rankings/player/nil-100/ (last updated Oct. 10, 2024).

^6. NCAA v. Alston, 594 U.S. 69 (2021).

^7. See Bloom v. NCAA, 93 P.3d 621 (Colo. App. 2004), O’Bannon v. NCAA, 802 F.3d 1049 (9th Cir. 2015), Alston, 594 U.S at 69-102.

^8. James V. Koch, A Troubled Cartel: The NCAA, 38 L. & Contemp. Probs. 135-50 (1973).

^9. NCAA Generates Nearly $1.3 Billion in Revenue for 2022-23. D-1 Payouts Reach 669M, Fox Sports (Feb. 2, 2024), https://www.foxsports.com/stories/college-football/ncaa-generates-nearly-1-3b-in-revenue-for-2022-23-d-i-payouts-reach-669m.

^10. Id.

^11. Id.

^12. Will Backus, Big Ten Remains Power Five Revenue Leader with $880 Million Haul for 2023 Fiscal Year, Per Report, CBS Sports (May 23, 2024), https://www.cbssports.com/college-football/news/big-ten-remains-power-five-revenue-leader-with-880-million-haul-for-2023-fiscal-year-per-report/#:~:text=Power%20Five%20conferences%20generated%20over,records%20obtained%20by%20USA%20Today.

^13. See id.

^14. Tommy Beer, NCAA Athletes Could Make $2 Million a Year If Paid Equitably, Study Suggest, Forbes (Apr. 14, 2022), https://www.forbes.com/sites/tommybeer/2020/09/01/ncaa-athletes-could-make-2-million-a-year-if-paid-equitably-study-suggests/?sh=305607db5499.

^15. Id.

^16. The top levels of the four American major team sports are not only professional, the players are unionized workforces, represented respectively by the NFL Player’s Association, the MLB Player’s Association, and so forth. NFLPA, https://nflpa.com/ (last visited Oct. 10, 2024). MLBPAA, https://www.mlb.com/mlbpaa (last visited Oct. 10, 2024). NBPA, https://nbpa.com/ (last visited Oct. 10, 2024). NHLPA, https://nhlpa.com/ (last visited Oct. 10, 2024).

^17. NCAA, Estimated Probability of Competing in College Athletics, https://ncaaorg.s3.amazonaws.com/research/pro beyond/2023RES ProbabilityBeyondHSFiguresMethod.pdf (last updated Apr. 1, 2024) (259 out of 259 NFL draft picks were from the NCAA in 2023).

^18. See NCAA v. Alston, 594 U.S. 69, 90 (2021).

^19. Agnew v. NCAA, 683 F.3d 328, 347 (7th Cir. 2012).

^20. Dawson v. Nat’l Collegiate Athletic Ass’n/PAC-12 Conf., 932 F.3d 905, 908 (9th Cir. 2019). Berger v. NCAA, 843 F.3d 285, 293-94 (7th Cir. 2016). Alston, 594 U.S. at 101.

^21. See Alston, 594 U.S. at 103-07. Steve Berkowitz, NCAA Sets New Benefits for Division 1 Athlete, Drawing Some Qualified Congressional Praise, USA Today (Apr. 26, 2023), https://www.usatoday.com/story/sports/college/2023/04/26/ncaa-sets-new-benefits-athletes-drawing-some-praise-congress/11747900002/.

^22. Jacob Lev & Kyle Feldscher, NCAA and Power Conferences Agree to Settlement Paving the Way for Schools to Pay Student-Athletes, CNN (May 24, 2024), https://www.cnn.com/2024/05/23/sport/ncaa-settlement/index.html.

^23. Alston, 594 U.S. at 109 (Kavanaugh, J., concurring).

^24. Id. at 74 (Gorsuch, J., majority).

^25. Id.

^26. Id. at 75.

^27. Id. at 75-76.

^28. Id. at 76-77.

^29. NCAA Generates Nearly $1.3 Billion in Revenue for 2022-23, ESPN (Feb. 1, 2024), https://www.espn.com/college-sports/story/_/id/39439274/ncaa-generates-nearly-13-billion-revenue-2022-23.

^30. NCAA v. Alston, 594 U.S. 69, 79-80 (2021).

^31. Id. at 82.

^32. Will Butcher, NHL Rosters Feature Heavy College Hockey Influence, College Hockey Inc. (Oct. 5, 2023) (234 out of 736 active players on opening-night played college hockey). Jeffrey May, Why Isn’t College Baseball a Bigger Deal?, Diario AS S.L. (Mar. 5, 2022), https://en.as.com/en/2022/03/05/mlb/1646501180 395427.html (In 2020, 47% of MLB players played college baseball).

^33. Colleges with the Most Players Drafted in 2024, NCAA (Apr. 29, 2024), https://www.ncaa.com/news/football/article/2024-04-27/colleges-most-players-drafted-2024-nfl-draft#:~:text=The 2024 NFL draft has,being selected across seven rounds (All 257 player in the 2024 NFL draft played college football and most came from FBS schools).

^34. Brad Crawford, Dabo Swinney, Kirby Smart Lead College Football’s 15 Highest-Paid Coaches in 2024, 247Sports (Feb. 9, 2024), https://247sports.com/longformarticle/dabo-swinney-kirby-smart-lead-college-footballs-15-highest-paid-coaches-in-2024-226807052/.

^35. Michael Calabrese, It Pays to Be the Head Coach: Highest Paid State Employees in the US, OLBG.com, https://www.olbg.com/us/blogs/it-pays-be-head-coach-highest-paid-state-employees-us (Feb. 19, 2024) (36 being college football coaches, 11 men’s basketball coaches, and 1 men’s hockey coach).

^36. NCAA v. Alston, 594 U.S. 69, 76 (2021).

^37. Matt Astbury, How Many Coaches Are in an NFL Team?, DAZN (Sept. 20, 2023), https://www.dazn.com/en-US/ news/american-football/how-many-coaches-are-in-an-nfl-team/1libbciiedtgg16st5jgmnbey5; 11.7 Limitations on the Number and Duties of Coaches and Noncoaching Staff Members, NCAA (Aug. 1, 2024), https://web3.ncaa.org/lsdbi/ search/bylawView?id=36976 (Usually 12 coaches are on an NFL team). 2024 Football Staff, Univ. Ala., https://rolltide.com/sports/football/coaches (last visited Oct. 11, 2024) (Alabama has 14 people designated to coaching football).

^38. Alston, 594 U.S. at 80.

^39. Current College Sports Television Contracts, Bus. Coll. Sports (last updated Mar. 19, 2024), https://businessofcollegesports.com/current-college-sports-television-contracts/.

^40. Id.

^41. O’Bannon v. NCAA, 802 F.3d 1049, 1054 (9th Cir. 2015).

^42. Kristi Dosh, How Much Did Schools Make from EA Sports’s NCAA Football Previously?, Bus. Coll. Sports (May 17, 2023), https://businessofcollegesports.com/name-image-likeness/how-much-did-schools-make-from-ea-sportss-ncaa-football-previously/ (Individual schools were roughly making between 50,000-150,000 for NCAA football licenses and between 18,000-27,000 NCAA basketball licenses).

^43. Kenneth Teape, EA Sports College Football 25 Putting Up Massive Sale Numbers, NIL Daily on SI (July 31, 2024), https://www.si.com/fannation/name-image-likeness/nil-news/ea-sports-college-football-putting-up-massive-salenumbers#:~:text=In%20two%20short%20weeks%2C%20more,%24500%20million%20in%20sales%20already.

^44. Dawson v. Nat’l Collegiate Athletic Ass’n/PAC-12 Conf., 932 F.3d 905, 907 (9th Cir. 2019).

^45. Id. at 915.

^46. Johnson v. NCAA, 108 F.4th 163, 167 (3rd Cir. 2024).

^47. Id. at 182.

^48. Id. at 180.

^49. Andrea Hsu, Dartmouth Men’s Basketball Team Votes to Unionize, Shaking Up College Sports, NPR (Mar. 5, 2024), https://www.npr.org/2024/03/05/1235877656/ncaa-dartmouth-mens-basketball-union-election-nlrb.

^50. Dawson v. Nat’l Collegiate Athletic Ass’n/PAC-12 Conf., 932 F.3d 905, 908 (9th Cir. 2019). NCAA v. Alston, 594 U.S. 69, 101 (2021). Berger v. NCAA, 843 F.3d 285, 293-94 (7th Cir. 2016).

^51. Alston, 594 U.S at 94.

^52. Id. at 92.

^53. Id. at 94.

^54. See Analysis: Who Is Winning in the High-Revenue World Of College Sports?, PBS (Mar. 18, 2023), https://www.pbs.org/newshour/economy/analysis-who-is-winning-in-the-high-revenue-world-of-college-sports.

^55. Mike Scarcella, Ivy Leaguers Blast Schools’ Bid to Dismiss Lawsuit Over Athletic Scholarship, Reuters (June 30, 2023), https://www.reuters.com/legal/litigation/ivy-leaguers-blast-schools-bid-dismiss-lawsuit-over-athletic-scholarship-bans-2023-06-30/ (The Ivy League scholarship ban is currently under litigation with the student athletes claiming the ban has no procompetitive purpose, rather it is only in place to benefit the universities bottom line).

^56. 2024-25 Men’s Basketball Schedule, Dartmouth, https://dartmouthsports.com/sports/mens-basketball/schedule (last visited Oct 11, 2024).

^57. It is beyond the scope of this article, but if student-athletes were employees possible unfavorable tax consequences to the student-athletes may happen, such as, all of their scholarships could be considered taxable income. Diego Areas Munhoz & Samantha Handler, College Athlete Unions Raise Specter of Scholarship Tax Hit, Bloomberg L. (Apr. 8, 2024), https://news.bloomberglaw.com/daily-labor-report/college-athlete-unions-raise-specter-of-scholarship-tax-hit.

^58. O’Bannon v. NCAA, 802 F.3d 1049 (9th Cir. 2015).

^59. Id. at 1055.

^60. Id.

^61. NCAA v. Bd. Regents, 468 U.S. 85 (1984).

^62. O’Bannon, F.3d. at 1063. Bd. Regents, 468 U.S. at 102.

^63. Bd. Regents, 468 U.S. at 91-94.

^64. Id. at 1069.

^65. See id. at 1070-76.

^66. Id. at 1052-53.

^67. Id. at 1053.

^68. Id. at 1079.

^69. Id. at 1073, 1076.

^70. Id. at 1074.

^71. Id. at 1063-64.

^72. Id.

^73. Id. at 1063.

^74. Id. at 1063-64.

^75. Id. at 1073

^76. Id. at 1075

^77. Id.

^78. Id.

^79. NCAA v. Alston, 594 U.S. 69, 74 (2021).

^80. Id. at 80-81

^81. Id. at 81.

^82. Id. at 81-82.

^83. Id. at 82.

^84. Id.

^85. Id.

^86. Id. at 83-84.

^87. Id. at 84.

^88. Id.

^89. Id. at 96.

^90. Id. at 86.

^91. Id. at 100.

^92. Id. at 100-01.

^93. See id. at 103-07.

^94. Id.

^95. Id. at 90.

^96. See id. at 106.

^97. Id. at 101-02.

^98. Id. at 92-93.

^99. Id. at 105.

^100. Steve Berkowitz, NCAA Sets New Benefits for Division 1 Athlete, Drawing Some Qualified Congressional Praise, USA Today (Apr. 26, 2023), https://www.usatoday.com/story/sports/college/2023/04/26/ncaa-sets-new-benefits-athletes-drawing-some-praise-congress/11747900002/.

^101. David Steele, NCAA to End Transfer Rules in Deal with DOJ, LAW360 (May 30, 2024), https://www-law360-com.us1.proxy.openathens.net/articles/1842664/ncaa-to-end-transfer-rules-in-deal-with-doj.

^102. Michelle Brutlag Hosick, NCAA Adopts Interim Name, Image, and Likeness Policy, NCAA (June 30, 2021) https://www.ncaa.org/news/2021/6/30/ncaa-adopts-interim-name-image-and-likeness-policy.aspx.

^103. Id.

^104. Tracker: Name, Image, and Likeness Legislation by State, Bus. Coll. Sports (July 28, 2023), https://businessofcollegesports.com/tracker-name-image-and-likeness-legislation-by-state/.

^105. See NCAA v. Alston, 594 U.S. 69, 101-02 (2021); O’Bannon v. NCAA, 802 F.3d 1049, 1075 (9th Cir. 2015).

^106. NCAA v. Alston, 594 U.S. 69, 101-02 (2021); O’Bannon v. NCAA, 802 F.3d 1049, 1075 (9th Cir. 2015).

^107. Bloom v. NCAA, 93 P.3d 621 (Colo. App. 2004).

^108. Id. at 622.

^109. Id.

^110. Id.

^111. Id.

^112. Id. at 627.

^113. Id.

^114. Id. at 622.

^115. See On3 NIL 100, On3, https://www.on3.com/nil/rankings/player/nil-100/ (Oct. 14, 2024).

^116. Pete Nakos, What Are NIL Collectives and How Do They Operate?, On3NIL (July 6, 2022), https://www.on3.com/nil/news/what-are-nil-collectives-and-how-do-they-operate/.

^117. Id.

^118. Id.

^119. Id.

^120. Id.

^121. NCAA v. Alston, 594 U.S. 69, 86 (2021).

^122. NCAA Generates Nearly $1.3 Billion in Revenue for 2022-23, ESPN (Feb. 1, 2024), https://www.espn.com/college- sports/story/_/id/39439274/ncaa-generates-nearly-13-billion-revenue-2022-23.

^123. NIL Valuation and Rankings, On3, https://www.on3.com/nil/rankings/ (last visited Oct. 14, 2024).

^124. Id.

^125. Arch Manning (@archmanning), Instagram, https://www.instagram.com/archmanning/?hl=en (last visited Oct. 14, 2024). Carson Beck (@carsonbeck), Instagram, https://www.instagram.com/carsonbeck/?hl=en (last visited Oct. 14, 2024).

^126. David Steele, Fla., NY, DC Join Suit Demanding Halt to NCAA’s NIL Policies, LAW360 (May 1, 2024), https://www-law360-com.us1.proxy.openathens.net/articles/1831844/fla-ny-dc-join-suit-demanding-halt-to-ncaa-s-nil-policies.

^127. Id.

^128. See Dawson v. Nat’l Collegiate Athletic Ass’n/PAC-12 Conf., 932 F.3d 905, 908 (9th Cir. 2019). NCAA v. Alston, 594 U.S. 69, 101 (2021). Berger v. NCAA, 843 F.3d 285, 293-94 (7th Cir. 2016).

^129. Alston, 594 U.S. at 105.

^130. Steve Berkowitz, NCAA Sets New Benefits for Division 1 Athlete, Drawing Some Qualified Congressional Praise, USA Today (Apr. 26, 2023), https://www.usatoday.com/story/sports/college/2023/04/26/ncaa-sets-new-benefits-athletes-drawing-some-praise-congress/11747900002/.