VIII. The NCAA’s Last-Minute Attempt to Nullify State NIL Laws

Before and during the summer of 2021, many states passed NIL laws to avoid the appearance of being at a competitive disadvantage in recruiting.

Most of these laws had amateurism-based “guardrails” similar to Florida’s that substantially limited NIL compensation.

Still, schools wanted to say their state had a NIL law that permitted “compensation.”

For example, on April 15th, 2021, Alabama passed a state NIL law that was among the most restrictive in the country. Like the Florida bill, it is built on amateurism-based “values” and “bad actor” limitations. The law included draconian credentialing and reporting requirements targeted to athletes, agents, boosters, and NIL companies.

The bill made a violation of the law by an agent, booster, or NIL company a Class C felony under Alabama criminal laws.

A prior version of the bill targeted athletes for criminal liability. Athletes who violate the law would be guilty of a Class A misdemeanor.

The Alabama law failed to offer meaningful NIL opportunities for athletes and channeled the worst instincts of the athlete-agent regulatory era. However, schools in Alabama could claim to recruits that Alabama had a state law that permitted “NIL compensation.”

A few states without a NIL law entered the NIL regulation market through state governors’ executive orders. Governors in Kentucky, Ohio, and North Carolina issued orders following the Florida law’s basic template.

A primary purpose of each order was to prevent schools in those states from being at a “competitive disadvantage” unless NIL compensation was permitted by state law.

Like many other state laws and executive orders, state NIL laws and executive orders posed little threat to the NCAA because they were loaded with amateurism-based limitations.

Moreover, these state laws and orders were substantially similar across the board, undermining the NCAA’s and Power 5’s claims of needing a single national standard.

Indeed, when the ULC committee presented its’ NIL proposal to the full Commission in mid-July 2021, a representative of the committee said:

“We’ve had the benefit of seeing what the states want to do in this area, either the ones who have enacted laws already or have introduced legislation. And now it’s over 40 states. And the one thing that has been striking is that the laws are very similar. There are some differences, but most of the differences are not significant. And we were able to draw up legislation with the benefit of having these state laws out there. And one thing we noticed as the laws were getting passed or introduced is they were similar to the ones that have been passed before. And there was not an attempt, as one might expect here, for a state to one-up [the NIL law] before them—to provide more rights for their college athletes.

Much of the legislative history and the testimony was we just don’t want to get left behind. We don’t want the school next to us to have an advantage over us. So, we are going to implement something similar to what the state has next to us. Not that we want to jump over them.” (emphasis added)

Nevertheless, as the July 1st deadline approached when six state NIL laws would go into effect, the NCAA made an aggressive last-ditch attempt in Congress to get emergency preemption to eliminate all state NIL laws.

On June 9th, 2021, the Senate Commerce Committee held a hearing titled “NCAA Athlete NIL Rights” on federal preemption. The witness panel was stacked with five witnesses solidly in favor of preemption and only one opposed.

Sen. Roger Wicker (R-MS) isolated the lone witness opposed to preemption, Rod Gilmore: “Mr. Gilmore, you seem to be outnumbered on this panel 5-1…I want to give you an opportunity since five members of the panel have another view. Would you like to weigh in and respond to their testimony in that regard?

The hearing provided some momentum for the NCAA for a very narrowly tailored bill providing some form of relief to stop the state NIL laws from going into effect.

On June 14th, 2021, Sen Jerry Moran (R-KS), who also sits on the Senate Commerce Committee, made an impassioned speech on the Senate floor asking for preemption before July 1st.

However, on June 21st, the Supreme Court issued its 9-0 decision in Alston denying the NCAA antitrust immunity. The Court’s opinion required the NCAA to comply with free competition laws like all other industries in America. 

Contrary to the way it is often portrayed, Alston was not a NIL case. The athletes’ original claims in the suit sought to have all NCAA compensation limits struck down, which would have included NIL. However, on appeal, the athletes abandoned those claims and sought only to affirm the district court’s award of modest education benefits.

While the ruling was largely symbolic because of the narrow way the issues were framed in the appeal, it was perceived as a substantial body blow to the NCAA’s conceptualization and use of amateurism and amateurism-based compensation limits.

In this way, the Alston ruling threw cold water on the NCAA’s last-minute quest for preemption.