College athletes in Pennsylvania can now earn compensation for name, image, likeness
With the stroke of a pen, the landscape and outlook for college athletes in Pennsylvania is drastically different — and, very likely, more profitable.
As part of the state budget Gov. Tom Wolf signed into law Wednesday is an article that will allow college athletes in the state to earn compensation for their name, image and likeness (NIL).
The section of legislation — Article XX-K of Senate Bill 381 — states a college athlete can profit for the use of their name, image or likeness, and that the payment shall be commensurate with the market value.
Individual colleges, as well as larger bodies like conferences or the NCAA, cannot uphold a rule or limitation that prevents an athlete from earning money through their name, image or likeness. Additionally, those entities cannot prevent athletes from obtaining professional representation — be it an agent, financial advisor or attorney — in relation to the use of the athletes' NIL rights.
The law, which takes effect immediately, requires that those who sell jerseys, video games and trading cards make a royalty payment to an athlete for the use of their name, image or likeness.
"I think folks feel that college athletes and college athletics, particularly in the football and basketball space, garner significant sums of money," Sen. Jay Costa, D-Forest Hills, said in a phone interview Monday. "They make a ton of money on the skills and personalities of the kids who play. There's a belief that, and I agree, that they need to be recognized and compensated for that. That's what this is about. That's why I think it's a bipartisan issue. People on both sides of the aisle believe that the sports are making a ton of money and it needs to be more equitably shared with the players who are helping them make the money. That's really what it boils down to."
Pennsylvania has joined a growing number of states that have passed similar legislation, a figure that is now at 25. Four months ago, that number was just six, illustrating what has become something of a race among states to provide the teams within its respective borders an important competitive advantage. In fact, the article's inclusion in the state budget came after representatives from Penn State and Pitt had reached out to legislators in hopes of getting NIL measures passed in Pennsylvania.
Some retrictions: For all the law provides, there are restrictions.
Colleges cannot arrange third-party, NIL-related compensation for an athlete or use a similar type of arrangement as an inducement to a recruit. An individual that represents a college cannot represent an athlete at that school in a business agreement.
As part of their NIL-related endeavors, an athlete cannot use a name, trademark, logo, symbol or other intellectual property of a school. Athletes cannot earn compensation from any company or organization tied to alcohol, gambling, tobacco or electronic cigarettes, prescription drugs, adult entertainment or controlled dangerous substances. A school can also prohibit an athlete's involvement in NIL activities that are at odds with existing institutional sponsorship agreements, as well as arrangements that "conflict with institutional values" as defined by the school.
An athlete has to disclose any contract to a school official at least seven days before the start of the deal.
The passage of the budget succeeded where other measures had stalled. In Oct. 2019, Pennsylvania House members Dan Miller and Ed Gainey, both of whom represent districts in Allegheny County and the latter of whom has since become the Democratic nominee for mayor in Pittsburgh, circulated the Fair Pay to Play Act, which included much of the same language as the article in the budget. After being introduced, it was referred to the House education committee on March 4 but hasn't received further action.
NCAA's interim policy: On Monday, the NCAA's Division I Council recommended that the organization's Board of Directors adopt an interim policy that would suspend rules restricting athletes from earning compensation off of their name, image and likeness. The board was meeting Wednesday, where it would review the recommendation one day before NIL laws are set to take effect in several states.
It stands as a temporary solution for schools in states in which NIL legislation hasn't been passed yet. Even for the states in which laws are now on the books, or soon will be, there's a preference that some sort of federal legislation or permanent NCAA rules be put in place.
"This is a good starting point for Pennsylvania," Costa said. "It puts us in line with what some of the other states are doing that creates some consistency across the country. What I'd really like to see is Congress enact something in this space or the NCAA promulgating very specific rules about what can and cannot be done in this space. Those are the two next logical steps."