NCAA Takes Action to Address “Collectives” and “Booster” Involvement in NIL Activity
Posted on: May 10, 2022
Tags:nft, blockchain, digital assets, howey test, securities, sec
In: Sports Law
By Gregg E. Clifton & John Long
The NCAA Division I Board of Directors has issued long-awaited guidance to provide clarity and address specific recruiting activities being conducted by “collectives” and “boosters” regarding name, image, and likeness (NIL) opportunities for prospective student-athletes and current student-athletes. While issuing guidance, the existing NCAA restrictions and limitations regarding the specific prohibitions against “Pay for Play” that were contained in the NCAA’s Interim NIL Policy remain and have not changed as a result of this new guidance.
Specifically, the NCAA directive defines a booster as any third-party entity, including an individual, an independent agency or corporate entity that promotes an intercollegiate athletics program, assists with recruiting or assists with providing benefits to recruits, enrolled student-athletes, or their family members. This definition could also include "collectives" that have been created to funnel name, image, and likeness deals to prospective student-athletes to encourage them to attend a specific school or to dissuade enrolled student-athletes from entering the transfer portal and consider leaving their current school for another collegiate athletic opportunity motivated by NIL opportunities.
NCAA recruiting rules preclude boosters from recruiting and/or providing benefits to prospective student-athletes for a specific school. They further preclude members of any college or university staff from being involved, directly or indirectly, in providing any benefits to a prospective student-athlete.
The guidance is effective immediately. For any potential violations that occurred prior to May 9, 2022, the Board directed the enforcement staff to review the facts of individual cases but to pursue only those actions that clearly are contrary to the published interim policy, including the most severe violations of recruiting rules or payment for athletics performance.
Commenting on the announcement, Jere Morehead, the President of the University of Georgia and Chair of the NCAA Division I Board of Directors stated, "Today, the Division I Board of Directors took a significant first step to address some of the challenges and improper behaviors that exist in the name, image, and likeness environment that may violate our long-established recruiting rules.”
Morehead further clarified the NCAA’s position that it will only pursue the most outrageous violations that directly contradict the NCAA’s interim policy, which was adopted last summer. Morehead concluded, “The new guidance establishes a common set of expectations for the Division I institutions moving forward, and the Board expects all Division I institutions to follow our recruiting rules and operate within these reasonable expectations.”
Seeking to create some legal protection for its directive, the NCAA Board emphasized continued support for student-athletes to be ability to benefit from the marketing of their name, image, and likeness and that this new directive is not intended to question the eligibility of current student-athletes or future student-athletes from participating in NIL deals. The Board’s announcement further limited the strength of its directive by stating that the guidance is only “intended to provide clarity for those engaging in a rapidly evolving NIL environment, acknowledging that the environment will continue to evolve, and ongoing attention will be needed to ensure student-athletes are able to benefit from these opportunities.”
The Board’s directive reminded member schools of their obligation pursuant to NCAA bylaws reinforced the NCAA mandate that schools should investigate, detect, and self-report any potential violations through the traditional self-reporting process and cooperate with the NCAA enforcement staff as part of any investigation of any alleged violative conduct.
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