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The Federal Landscape of Student Athlete Compensation


Luke A. Fedlam

Taéylor M. Stanley

Porter Wright Morris & Arthur LLP

It has been just over a month since the NCAA suspended its rules that previously prohibited student-athletes from earning money for the use of their name, image and likeness (NIL). Over the past month, student-athletes have entertained offers from various companies and brands that have reached out to them across various social media platforms. Some student-athletes entered into their first NIL contracts as soon as the clock struck midnight on July 1. Several states enacted laws, and two governors signed executive orders, allowing student-athletes to earn compensation on their NIL. However, there is still no federal law governing NIL.

There have been numerous bills proposed in Congress to address NIL. Yet, none of them have been brought up for a vote. The consensus in the industry is that the federal government will have to step in to establish a national NIL standard. The timing of such a national standard being voted on and signed into law by the President is unknown. What is known, however, when it comes to potential NIL federal legislation is the type of information it will need to address, such as:

  • Establishing a federal right for college athletes to market the use of their NIL or athletic reputation;

  • Establishing, or identifying, a third-party organization to provide oversight and enforcement of the NIL laws; and

  • Preemption of more restrictive state laws relating to NIL.

To fully understand the challenges faced by the NCAA and individual institutions when it comes to NIL, it makes sense to take a look back to the early 1980s to NCAA v. Board of Regents of the University of Oklahoma, et al, 468 US 85 (1984). The NCAA had brokered deals with major television networks to air NCAA football games on their networks. The deals gave the television stations rights to air a certain number of games on live television each season. In exchange, participating schools received compensation. The deals prohibited schools from contracting with networks outside of the NCAA’s agreement. However, a few schools within the College Football Association (CFA) argued that they should have a greater say in televising football games. Hence, some colleges brokered separate deals with outside networks.

The NCAA threatened disciplinary action against the schools for violating the agreements. Eventually, the question presented to the U.S. District Court for the Western District of Oklahoma was whether the NCAA violated the Sherman Antitrust Act. Finding that the NCAA’s plan violated the Sherman Antitrust Act, the lower court ruled in favor of the schools and granted injunctive relief. Although the Supreme Court agreed with the lower court’s ruling that the NCAA’s television agreement constituted an antitrust violation, the Court held that the standard for college athletes is lower than what was used for the NCAA’s television plan. Hence, the NCAA maintained that prohibiting college athletes from earning compensation on their NIL did not rise to antitrust concerns, because such prohibition is necessary to maintain the amateurism of collegiate athletics. The NCAA argued this idea for nearly forty years following this case. Yet, this summer, the U.S. Supreme Court took a stand against the NCAA.

On June 21, 2021, the U.S. Supreme Court ruled against the NCAA in NCAA v. Alston 141 S. Ct. 1231 (2020). Alston reflects a cumulative trail of lawsuits initiated by student-athletes against the NCAA over the organization’s restriction on compensating student-athletes for expenses unrelated to their education. Previously, the U.S. District Court for the Northern District of California held that limiting education-related expenses posed antitrust concerns but that limiting compensation for other expenses unrelated to education was necessary to preserve amateurism in collegiate athletics. The U.S. Court of Appeals for the Ninth Circuit affirmed this ruling, and, after a long history of debate, the case finally made its way to the U.S. Supreme Court. Yet, the student-athletes failed to request an additional review from the Court, and the Court ultimately upheld the lower court’s ruling. Consequently, the U.S. Supreme Court affirmed that the NCAA violated U.S. antitrust laws by placing limits on compensation for education-related expenses. Hence, this decision is limited in scope.

The Alston decision only addresses the implications on education-related benefits, such as laptops, study abroad programs, and internships. In other words, the Court essentially held that the NCAA cannot limit compensation in regard to education-related expenses, such as the items listed above. In past years, student-athletes have generally sued the NCAA regarding three categories of compensation. First, student-athletes have initiated lawsuits regarding limits on education-related expenses. Second, student-athletes have brought suit regarding compensation for their NIL. Third, student-athletes have sued regarding pay to play. Essentially, the Alston decision addresses the first category of compensation by restricting the NCAA from placing limits on how much schools spend on their student-athletes’ education-related expenses. Accordingly, elite schools could begin offering top-of-the line education-related products and services, such as expensive laptops, high-paying internships, and lavish study abroad programs. Consequently, this decision could impact recruiting efforts for colleges. Now student-athletes are not just concerned with what school will give them the best athletic opportunities or the best academic experiences, but also what school will provide the best education-related products and services.

As previously mentioned, it remains important to understand that the Alston decision is very limited in scope and deals with education-related benefits and a school’s right to offer products and services for educational benefits. NIL, while not dealt with directly in this case, concerns student-athletes’ right to contract with a third party to license their NIL in exchange for compensation. While Alston does not address the exceedingly popular NIL discussion, the Court’s decision remains important for student-athletes.

Not all student-athletes have the privilege of arriving on campus with the materials and resources they need to achieve academic success. The Alston decision solidifies colleges’ right to provide such materials and resources to their student-athletes, no matter the cost. It is also important to recognize that the Alston decision affects all student-athletes. Alston permits schools to provide all of their student-athletes with the latest and greatest products and resources to enhance their academic experience. In contrast, compensation in the NIL space primarily concerns student-athletes with large social media followings or student-athletes who can market their extraordinary athletic skills to receive compensation for hosting training camps.

Hence, there are still unanswered questions surrounding compensation and student-athletes. Colleges paying for education-related expenses is merely one facet of student-athlete compensation. Yet, this is the area that the Supreme Court addressed in Alston. Schools, companies, and student-athletes alike will still require guidance on NIL compensation rules. Accordingly, Congress will likely enact federal legislation to provide a national standard for NIL.


Luke Fedlam is a partner in Porter Wright Morris & Arthur’s Corporate Department leading the Sports Law Practice Group. Luke regularly advises a range of clients on matters including marketing contract analysis, agent and advisor selection due diligence, investment opportunity due diligence, asset protection, real estate development, brand and mark protection, as well as trust and estates. He is also the host of the podcast, Protecting Your Possibilities and leads the educational advisory firm, Anomaly Sports Group.

Taéylor M. Stanley is an associate at Porter Wright Morris & Arthur. She focuses her practice on corporate and securities matters, and mergers and acquisitions. Taéylor draws experience from both the private and public sectors. Her coursework, coupled with her experience working with corporate boards and non-profit organizations, gives her a unique understanding of the interconnectedness of commerce and community.


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