How new state laws may impact NCAA's pursuit of a federal NIL bill

After NCAA President Charlie Baker and college sports leaders lobbied lawmakers on Capitol Hill this week for a federal NIL bill, it’s important to keep in mind the 30,000-foot view: This is all playing out in Washington, D.C., as an increasing number of states continue to propose or pass uniquely tailored NIL laws to protect and benefit in-state schools and athletes.

It’s a significant split-screen moment in college athletics – and it’s all intertwined. 

Consequential movement on the state law front came out of New York on Thursday when the amendment to the state’s NIL law officially passed the Senate. The bill now heads to Gov. Kathy Hochul‘s desk. The crux: It includes a section that appears to provide cover for state schools from being punished by the NCAA for any NIL-related violations, including any committed by donor-driven collectives set up to support student-athletes through deal facilitation.

One key question: Does the push by states to pass and propose legislation to protect and benefit in-state schools and athletes increase or decrease the chances that we’ll see a federal bill emerge from Congress in the coming months?

On one hand, the NCAA can point to all these new state-friendly laws and tell Congress, “See, we have complete chaos. We need help.”

On the other hand, would federal legislators defy their own states to create a federal bill that preempts their states’ new laws? With all the rah-rah cheering some legislators engaged in during the March NIL Congressional hearing, are they going to enact a federal law that rolls things back and makes it tougher for schools and student-athletes to engage in NIL activity in their states?

Short answer: It could cut both ways. 

“The new state laws and bills that supersede the NCAA’s NIL rules definitely give the NCAA something to point to in favor of a federal NIL law – and that may sway some federal legislators to take the NCAA’s side,” Mit Winter, a college sports attorney at Kennyhertz Perry in Kansas City, told On3 on Thursday.

“But I do think federal legislators from states that have recently amended their NIL bills may have some reluctance to vote against the interests of their state and their state’s universities. Some of the state laws and bills do give universities in those states an advantage because they allow a university or its athletics foundation to play a role in providing NIL funding. Do federal legislators feel strongly enough about the need for a national NIL standard to vote against their state’s interests? I don’t think many do or will.”

‘Screw the NCAA’

States nationwide, most notably Arkansas, Colorado, Missouri, Montana, New York, Oklahoma and Texas, have recently passed or are considering reform squarely aimed at bypassing NCAA NIL oversight. Some bills are designed to prevent the NCAA from launching investigations into NIL activities. Other pieces of legislation would protect third-party entities that support an institution providing compensation to athletes.

In reference to these in-state school-friendly laws, Baker said Thursday, “They say screw the NCAA. Screw the conference. Screw their rules.”

Sources pinpoint Missouri’s law as the most brazen.

HB 417 includes sweeping proposals eerily similar to what was recently signed in Arkansas and is on the table in Texas. Dan Greene, a NIL expert and associate attorney at Newman & Lickstein in Syracuse, N.Y., recently told On3’s Jeremy Crabtree that Missouri recognized that NIL continues to be an “arms race” at the state government level, while the NCAA and federal government try to figure out what they can do on the NIL bill front if anything.

The bill says conferences and the NCAA shall not penalize a Missouri school as a result of an athlete receiving NIL money, investigate a school for engaging in NIL activity, or penalize a school for an “institutional marketing associate” paying an athlete for their NIL. It also says that the law “shall not be construed to qualify a student-athlete as an employee of a post-secondary institution.”

Of particular significance is this: The state’s revised NIL law allows high school recruits to enter into NIL deals and start earning endorsement money as soon as they sign with in-state colleges. Interestingly, a contingent of Missouri Tiger coaches, including football coach Eliah Drinkwitz, were in the House chambers when the bill passed. 

Without guardrails, states continue to push the envelope.

To that point, Missouri Athletic Director Desiree Reed-Francois said in D.C. on Thursday, according to On3’s Pete Nakos, “If we’re left to our own devices right now, then we’re all going to be looking for that competitive edge.”

It remains an open question whether federal legislators would in fact move to defy their own new state laws with a federal bill that would preempt those laws.

At the recent LEAD1 Association spring meetings, CEO Tom McMillen asked Baker that very question. He asked if Baker thinks they’ll gain votes by the national preemption argument – that these new state laws are creating chaos, necessitating federal intervention – or lose more votes from federal legislators who want to do what’s best for the universities in their respective states.

Baker had no answer to that specifically.

Instead, he said, “There are very few conferences in college sports that are in one state. Most of them cover multiple states, and they are going to want and continue to want some degree of a level playing field with respect to the rules of engagement, whether it’s NIL or the rules on the field. And if you have every state in your conference out there doing something different with respect to how they’re trying to create what I would describe as the most positive way to manage NIL …

“The NCAA, the whole point behind it to begin with, was one set of rules for everybody. And I think most people still believe in that.”

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