California has been at the forefront of this change, thanks to the Fair Pay to Play Act (California Senate Bill 206), which went into effect on September 1, 2021. We aim to provide a comprehensive legal overview of the Fair Pay to Play Act here – and how it has affected student-athletes in California’s universities and colleges.
What Is the Fair Pay to Play Act?
The Fair Pay to Play Act is a California piece of legislation that aims to put an end to the long-running debate on whether collegiate athletes should receive compensation or have the option to make money from endorsements.
With the exception of scholarships, players have historically been prohibited by The National Collegiate Athletic Association (NCAA) from profiting from their name, image, or likeness while participating in college sports. According to the NCAA, their “Never Pay to Play” policy was intended to maintain the amateur status of college sports and protect student-athletes from exploitation by universities and corporations.
The restriction, however, drew sharp criticism and sparked debates about its fairness, considering college sports programs generate billions of dollars in revenue annually from their athletes’ successes and sacrifices.
With the coming to law of the Fair Pay to Play Act, which was supported by many sports celebrities, including four-time NBA champion LeBron James, California college athletes can now earn from their NIL by endorsing products, signing autographs, participating in various commercial ventures, etc.
California became the first U.S. state to provide their collegiate athletes the legal right to compensation for the business use of their identities in 2019 – and 20+ states, including Texas, Arizona, Florida, New Mexico, and Alabama, have followed their lead.
What Are the Key Provisions and Limitations of the Fair Pay to Play Act?
Name, Image, and Likeness, Rights
The Fair Pay and Play Act’s key accomplishment is that it affords student-athletes the same freedoms that other college students, non-student athletes, professional athletes, or regular Americans enjoy when it comes to monetizing their personal brands.
As an illustration, before the law’s implementation, a student athlete’s non-sports-playing classmates could start a YouTube channel, grow their audience, and generate revenue from them, but the athlete was not allowed to use any social media platforms to market and make money off of their name, image, and likeness.
They now have the legal right, like many others, to profit financially from their athletic prowess.
The NCAA and universities are barred from punishing student-athletes who make use of their NIL to enter into endorsement agreements with businesses, launch their own ventures, charge for autographs and appearances, etc.
Therefore, athletes may engage in business dealings without worrying that their scholarship will be revoked or they won’t be eligible for one — or that their NIL activities will disqualify them from competing in sports.
The Fair Pay to Play Act permits collegiate athletes to work with licensed agents, a practice previously outlawed by the NCAA, to help them land endorsement and sponsorship deals. They can also hire legal counsel for advice on negotiating the most favorable NIL contract terms and to guarantee that they comply with every relevant college sports regulation.
However, the law makes it illegal for agents to lend money to athletes, give them presents, or use their influence to sway athletes’ choices.
Additionally, it forbids colleges and the NCAA from punishing student-athletes who exercise their legal right to retain the services of a sports agent or attorney.
A section of the California Senate Bill 206 states “A student-athlete shall not enter into a contract providing compensation to the athlete for use of the athlete’’ name, image, or likeness if a provision of the contract is in conflict with a provision of the athlete’s team contract.”
This provision can limit the brands that players may affiliate with. For instance, a college student-athlete can’t sign a deal with Coca-Cola or Nike if their team already has a contract with Pepsi or Adidas that obligates them to promote those companies’ products.
As a result, the law dictates that athletes inform their respective schools of any potential NIL contracts before signing them, primarily to prevent conflicts of interest.
An important thing to highlight is that the Fair Pay to Play Act is silent regarding the types of endorsements California university athletes may accept. NIL laws in southern U.S. states like Texas contain provisions that forbid athletes from partnering with corporations in the cigarettes, alcohol, gambling and firearms industries.
Get the Best Legal Representation in California for Your NIL Contracts
Are you a collegiate athlete or a relative of a student-athlete interested in learning more about the Fair Pay to Play Act?
Call Gallagher Krich APC at (858) 926-5797 or fill out our online contact form, and we’ll be glad to provide more information on this ground-breaking piece of legislation and outline how you may use it to protect your financial future and that of your family. When negotiating and reviewing NIL contracts, it’s essential to have a skilled law firm on your side.
If you have any sponsorship or endorsement deals lined up, Gallagher Krich, APC, would also be happy to help you with your NIL contractor negotiations.
Our attorneys have more than 30 years of experience in contract law and have assisted hundreds of people and companies in securing the best possible terms for their contracts — giving them peace of mind that their rights and interests are well taken care of.
If you choose to work with us, we’ll also make sure your NIL contracts address all the crucial points, leaving no room for exploitation or ambiguity, including:
- The scope of use for your intellectual property (name, image, and likeness)
- Term and termination
- Compensation structure
- Governing law
- Compliance with the Fair Pay to Play Act
At Gallagher Krich, APC, we recognize that NIL contracts can be confusing and complex. That’s why we provide a free consultation to go over your particular requirements and address any concerns you may have.
Get in touch with us today to arrange your no-obligation consultation to discover how we can champion your rights and interests in the world of college athletics with solid NIL contracts. We look forward to hearing from you!