Ohio and Texas show that not all state NIL bills are equal
Matt Brown
May 26, 2021
Good morning, and thanks for your continued support of Extra Points.
As we creep closer to July 1, more and more states are fast-tracking NIL legislation. After all, lawmakers don't want their hometown squad to face a potential recruiting disadvantage, and as school administrators come to terms with the possibility that neither the NCAA or Congress will have a national policy ready by the 1st, they've shown a willingness to encourage lawmakers to step up.
As of late May, nearly every state with an FBS football program has at least introduced a NIL bill. Seven states in the SEC footprint have already passed laws, with Texas, Louisiana and Missouri set to join them shortly. Others on the West Coast, East Coast and Midwest have also passed laws.
But curiously, my native Ohio wasn't one of them. As of last week, only three states with multiple FBS institutions had yet to introduce a law. Utah, whose state legislative session is less than three months, Indiana, home of the NCAA...and Ohio.
Ohio, of course, is home to my alma mater, The Ohio State University, a football-mad institution as any other in the country. Ohio State recruits just as seriously as SEC schools. It has the local political clout that an SEC school might have. What was taking them so long?
Well, the Buckeye state has joined the NIL party, as State Sen. Niraj Antani, together with Ohio State AD Gene Smith, proposed a NIL bill that if passed, would go into effect on July 1, joining the Southern states, New Mexico, and others.
I spoke to my friends over at The Columbus Dispatch about what I think this bill will actually do, not just for Ohio State, but for the bevy of smaller institutions in Ohio.
All in all, I believe this proposed legislation would be a positive development for Ohio's college athletes and local businesses. But it also provides a useful case study for how not all state NIL bills are created equally. It's entirely possible that the Ohio law, in practice, could end up pretty restrictive...and Ohio isn't the only one.
Let's take a closer look at the bill.
As I read the bill, there's plenty to like, from an athlete's rights perspective. Not only does the bill allow for an athlete to hire an agent to help them with NIL discussions, but it explicitly points out that schools cannot penalize them for working with an agent. The law also explicitly states that schools cannot decrease scholarship amounts over NIL, an important provision for Olympic athletes who may only be on partial scholarships.
But there are three notable restrictions.
1) Athletes are prohibited from entering into agreements with a few industries. Specifically: firms that sell controlled substances, (like alcohol, vape-related products, tobacco, marijuana, etc), adult entertainment companies, or casinos and other gambling-promoting firms.
That's probably not too controversial, and honestly, alcohol and tobacco related companies likely wouldn't be big players in the NIL space anyway. The Distilled Spirits Council, for example, says that models or actors in alcohol-related ads should be at least 25.
Where this could become an issue is if, at a later date, an Ohio athletic department decides to secure official sponsorships with sportsbooks, Daily Fantasy Sports, or gambling. Colorado already has. I suspect if other schools follow suit, it will be harder to then tell athletes that they can't pursue similar deals.
2) The bill requires athletes to give schools a 15-day notice before entering into any potential agreement. That's longer than any state bill I've read. The reason, if I am reading it correctly, is to give schools time to see if the athlete's proposed deal conflicts with any existing university sponsorship deals. That matters because...
3) The bill also says that athletes can't enter into deals that would conflict with existing sponsorship deals.
How big a deal is that? Well, it depends.
I called ten different universities in Ohio, from Ohio State to multiple D-III schools, to get an idea for just how many exclusive sponsorships they actually have.
For some schools, the answer might be zero. I called up my old hometown school, Denison University, who competes at the D-III level. A university spokesperson told me that outside of apparel and equipment contracts, the school doesn't have a single corporate sponsorship, and that's by design. If the school doesn't have any sponsorships, there can't be a conflict...so Big Red athletes, feel free to try and lock down a deal to become a Whit's Frozen Custard spokesperson.
But not even every D-III school is like Denison. A spokesperson at Mt.Union, a football powerhouse at that level, told me the school has several exclusive sponsorships, mostly with businesses that provide in-kind services (i.e, the 'official' pizza of Mt.Union athletics will occasionally cater team events, etc).
Could that potentially limit the market for Raider athletes? Probably not, since the revenue that Mt.Union actually generates from sponsorships is tiny, and the spokesperson told me if that became an issue, the school could simply stop selling ads and be completely fine. The school also expected the bulk of their NIL activity to come from social media sponsorships or sport clinics, rather than local deals.
But at Ohio State, or Cincinnati? That could potentially be a bigger issue. An Ohio State spokesperson told me he's working on trying to track down exactly how many sponsorships Ohio State has, but it's safe to assume that number is slightly larger than whatever Mt.Union has lined up.
Could Ohio State, if they wanted, structure those deals to not limit potential NIL activity? Probably. But if they wanted to really enforce their IP and existing contracts, the NIL law, as currently stated, could give them the tools to substantially shrink the number of local industries and clients that could work with Buckeye athletes.
In my view, a better compromise would simply be to restrict athletes from securing NIL deals with competing firms that required them to advertise during official team activities. I think it's reasonable for a Nike school to tell their basketball players they can't wear New Balance during basketball games. But if a kid wants to do an ad for their local IGA, even though Kroger is the official grocery store of Ohio State sports? Well, maybe that doesn't have to be banned.
In my reading, Ohio's NIL law is not so permissive that it's likely to be a substantial recruiting advantage. But they're hardly alone in that space. Oklahoma's recent NIL law has similar language about competing with school contracts. And then there's Texas.
This provision, in the proposed Texas NIL bill, jumps out at me as one of the most restrictive, period.
The ability for an athlete to hire an agent is an absolute cornerstone in any NIL reform bill. After all, the ability to enter into sponsorship agreements depends on the athlete's ability to discover, understand and vet those potential deals, and without access to professional representation, many athletes will be forced to rely on the school.
This bill does not prohibit athletes from securing professional representation, but as I read it, it does give schools the ability to require athletes to only be represented by agents that are licensed to practice law in the state of Texas.
From talking to folks around the industry, that could be a very restrictive requirement. Plenty of agents aren't licensed attorneys, and not every licensed attorney is allowed to practice in Texas. Sam Ehrlich, a law professor at Boise State, told me that Texas also has particularly strict licensing requirements for agents.
So why add this clause at all? It could be a result of lobbying from the Texas Bar or local agents, since it would provide a significant business advantage for agents who also happen to be attorneys who passed the Texas Bar. It could be a result of schools, hoping to limit outside influences. It could be a mistake, a clause that essentially gets ignored, like the Georgia NIL law granting schools the ability to require athletes to pool portions of their earnings (every FBS school in Georgia said they do not plan to do this).
Whatever the reason, on paper, it could dramatically limit the options Texan athletes have to properly evaluate potential NIL opportunities. If Texas lawmakers are hoping their law gives their school a recruiting advantage, well, based on the text of the law, athletes may have an easier time securing representation in other Big 12 or SEC states.
Almost all of these laws are at least slightly different. It's not the end of the world, but it does complicate matters.
Most states have slightly different regulations, on everything from minimum wages to taxation to how they fund higher education. It can make it complicated to recruit, train and sell nationally, but large organizations make it work. I think college athletics can make this work too.
But these little differences will probably make it harder for athletes, especially high school athletes who already have so many other factors to consider in making a college choice, to figure out what state offers the best regulatory environment for their NIL needs...if they even think they have NIL needs. It might be years before the marketplace matures.
By that point, there's a good chance federal legislation will make a lot of these differences moot. Whether those regulations will be good for athletes will depend entirely on what sorts of NIL laws the feds try to emulate.
They're not all equal. And if the goal here is really to empower athletes, not just check a box to score political points back home, then getting those small details right...really matters.
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