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Why Congress Is Struggling to Tame the ‘Wild West’ of Student-Athlete Pay

Lawmakers want to fix the frenzied name, image and likeness system but with more than seven competing bills, compromise will be hard to come by.

Michigan quarterback J.J. McCarthy
Michigan quarterback J.J. McCarthy runs past Washington cornerback Dominique Hampton during the College Football Playoff championship game. Eric Gay/AP Photo

When lawmakers watched Michigan and Washington compete for the college football championship earlier this month, some had much bigger worries than which team would win: They feared the end of college sports as we know it.

College athletes have been able to receive compensation for the use of their names, images and likenesses — NIL, for short — since 2021, a right many members of Congress support and want to affirm in federal law. Three football seasons into this new era, though, a frenzied and lucrative NIL environment has emerged — and Congress appears no closer to consensus on how to regulate it.

“The purchasing of players has set college athletics on an unsustainable path,” said Florida Republican Gus Bilirakis at a House hearing last week, calling the student-athlete industry a “Wild West.”

In 2020, athletics officials publicly asked lawmakers to override the growing patchwork of state NIL regulations. Now, with corporate deals flowing to players and schools vying for athletes in barely-veiled bidding wars, the stakes are even clearer. While the debate unfolds in the nation’s capital, men’s college football and basketball, in particular, are operating more like professional leagues every day.

Bilirakis and some of his colleagues want to bring order (and a lot more paperwork) to NIL deals. But congressional action won’t be easy, and new questions keep cropping up for members to address. With more than seven competing bills from lawmakers across the ideological spectrum and an election season quickly approaching, the window for compromise in this Congress is closing.

Thanks to dozens of state laws in recent years and high-profile court decisions against the NCAA, student-athletes — who aren’t directly paid for their contributions to the booming college sports industry — can now strike deals to appear in advertisements, sell signed merchandise and tout products on social media. It’s a seismic shift: Players used to get suspended for selling their autographs to make a few bucks, and now they appear in commercials that air during their games.

Take, for example, the quarterbacks who played in the College Football Playoff championship game: Washington quarterback Michael Penix Jr. has signed deals with Adidas and trading card company Panini America, and Michigan quarterback J.J. McCarthy has deals with Beats by Dre and Tom Brady’s apparel company, among others. Those are exactly the kind of arrangements lawmakers expected when NIL rights became available to athletes. But what they didn’t anticipate is the other way players on the two teams are being compensated: collectives.

A network of NIL organizations informally associated with schools has sprung up across the country, many of them intended to lure recruits or to keep current players in place, rather than seeing them transfer to other teams or move up to professional competition. Some of these collectives primarily rely on wealthy donors for funding, while others raise money by selling autographed memorabilia or experiences with players to fans, according to the New York Times.

NCAA rules prohibit schools and collectives from using NIL deals to induce players to transfer. Yet the organization hasn’t made much of an attempt thus far to enforce its own rules. For now, it’s a free-for-all.

Some coaches are open about it: “A good quarterback in the portal costs $1 million, $1.5 million, $2 million right now, just so we’re on the same page,” Matt Rhule, head football coach at the University of Nebraska-Lincoln, said late last year. “Let’s make sure we all understand what’s happening. There are some teams that have $6-$7 million players playing for them.”

Bilirakis has introduced a bill that would ban collectives from inducing players to transfer or enroll at a given school. It prohibits inducements outright and targets sly workarounds like “promises or indications of covered compensation to be provided in the future.” It also blocks collectives from promising money to student-athletes who are in the “transfer portal,” meaning they are seeking to play for a different school, or are enrolled at an institution the collective in question isn’t affiliated with.

The bill would establish a nonprofit organization to oversee the registration of collectives and agents — and to collect data and copies of every NIL deal.

Democratic lawmakers last week questioned the bill’s reporting requirements as onerous for student-athletes and raised concerns about its liability protections for the NCAA. Still, they said they would continue working with Bilirakis to reach a bipartisan agreement.

Collegiate athletic organization executives are sworn during a senate judiciary committee hearing
Collegiate athletic organization executives are sworn in during a Senate Judiciary Committee hearing last year. Mariam Zuhaib/AP Photo

The Senate is likewise focused on trying to fix the issues that have cropped up.

“If this committee does not act within a year,” Republican Sen. Lindsey Graham of South Carolina warned at a Judiciary Committee hearing in October, “this thing is going to be an absolute mess.”

Senators at that hearing raised similar fears as their colleagues in the House. Players are increasingly leaving their schools at the end of the season, some of them signing major NIL deals with collectives shortly after. The NCAA reported that more than 2,900 football players sought to switch schools in 2022, up from about 2,500 in 2021.

“These collectives, they’re pay-for-play. That’s what they are. Everyone knows that,” Jackson Zager, an NIL agent who represents football players, told NOTUS.

Zager said he used to negotiate deals with collectives before clients enrolled in a school, but now that the NCAA has banned it, he is careful about the timing to keep his clients out of trouble. Zager said he thinks Congress doesn’t need to intervene: He argued athlete transfers and collectives are making teams more competitive.

“Even if it’s the Wild West, even if everything is a complete mess and guys can do whatever they want, the portal’s blowing up, what has been the massive issue with that?” Zager said. “What has been the impact on college sports? You’ve seen Alabama not win a title since NIL. You’re seeing a bunch of new schools at the top.”

Some lawmakers are alarmed that amateur sports may be turning into an open bidding war. Flashy moves, like a Utah collective giving every University of Utah football player a Dodge Ram truck last year, got attention on Capitol Hill. Several other bills introduced would ban inducements for players to transfer, lay out legal penalties for violations and require collectives to register with the Federal Trade Commission. There may be too many cooks in the kitchen, however.

Sen. Ted Cruz, the top Republican on the Senate committee that oversees commerce, has offered a measure that would legally empower bodies like the NCAA to enforce their own rules about inducements. Cruz’s legislation, like most NIL proposals, would override state laws and include national NIL protections. NCAA President Charlie Baker praised Cruz’s plan in October.

One Senate aide, who is familiar with discussions about the bill and asked for anonymity to share details, told NOTUS that Cruz hopes to advance a compromise bill with Democratic Sens. Cory Booker, Richard Blumenthal and Republican Sen. Jerry Moran — who have introduced their own bill — before Congress becomes preoccupied with the 2024 election this summer.

There are a lot of differences between Cruz’s bill and Booker’s proposal, though, and combining the two may be a heavy lift.

Booker’s legislation is broader. It has a national NIL provision and bans inducements, but it also creates a new non-governmental entity to enforce rules, manage agent certification and arbitrate contract disputes. The bill also requires academic institutions to cover out-of-pocket health care expenses for injuries and illnesses to athletes related to their participation in sports for several years after they’ve stopped competing. It also creates a separate trust fund financed by the most profitable schools to pay for athletes’ uncovered health care needs and treatment for long-term conditions. It’s not clear how many of those provisions would make it into a compromise deal.

Cruz feels an urgency to move a deal this year, hoping to get ahead of a potential National Labor Relations Board decision on employee status for college football and basketball players. His bill states that student-athletes are not to be considered employees of their schools. A decision otherwise would be even more disruptive for college sports than NIL changes over the past few years. Testifying in October, Baker emphasized the NCAA’s desire to avoid designating student-athletes as employees. Schools fear it would open up a raft of legal questions and logistical problems that may be time-consuming and expensive to address.

But some progressive lawmakers see no problem with that fight. They want a sweeping expansion of athletes’ power to negotiate with schools.

A different bill, sponsored by Sen. Chris Murphy and Rep. Lori Trahan, would codify student athletes’ right to collective representation and block institutions from using the name, image, or likeness of any group of college athletes for promotions — including for media rights — unless they obtain a license from the group of athletes to do so.

Trahan told NOTUS in an interview that while she hopes to see a consensus bill emerge, she doubts there would be “bipartisan support for preempting what’s going to happen in a lot of different court decisions” related to employee status.

Trahan, who played volleyball in college, doesn’t feel the same angst other lawmakers have about collectives and student-athlete transfers.

“There’s no shortage of people on Capitol Hill whose biggest problem with the current landscape of college athletics is kids driving around in nice cars because of big NIL deals,” she said. “I just don’t share that perspective at all. Colleges are moving conferences in pursuit of the highest dollar. Coaches get to leave for their next highest-paid position. Why are we acting like athletes transferring for their best opportunity is the problem?”

But Trahan does have concerns about collectives. She said they are “a way for money to flow directly to football and men’s basketball,” instead of through official channels, where it would be subject to federal laws ensuring equal treatment for women’s sports.

A few of the highest-paid NIL recipients in college sports are women, but not much data is available on the gender distribution of deals, and it’s obvious most collectives focus primarily on high-earning men’s sports. Trahan’s bill includes non-discrimination rules for school-affiliated collectives. It would also require collectives to maintain data about the number of deals they facilitate by gender, race, and sport, and submit annual reports to the FTC.

Trahan sees room for Congress to clarify the law and pass a national NIL standard, but she doesn’t feel as much urgency as her colleagues.

“The system of college athletics is far better today than it was two years ago,” Trahan told NOTUS. “Athletes have more power than they’ve ever had. And while that may be scary to some folks, most of us who actually played college sports will tell you that that’s a good thing.”

Haley Byrd Wilt is a reporter at NOTUS.