Pending repeal of Alabama NIL law a sign of things to come

For a sense of what is starting to occur to level the playing field in the NIL space, consider this scenario.

Two highways lead you to the popular restaurant downtown. Road A has no speed limit signs, allowing drivers to cruise to the establishment at whatever speed they desire. Road B has signs displaying a strict 20 mph speed limit posted throughout the journey, leading to snarled traffic and consistent delays. Big advantage taking Road A, as long as you’re comfortable with continuous life in the fast lane.

In the fast-evolving NIL world, the state of Alabama is tired of taking Road B. So it is moving to remove all the speed limit signs. Less than a year after its NIL state law took effect July 1 — the day the transformative era began — the Alabama House voted in favor of repealing that law for one reason: It’s one of the most restrictive in the nation. In blunt terms, it puts the two blue-blood in-state football schools, Alabama and Auburn, at a competitive disadvantage in recruiting relative to states with looser NIL restrictions or with no restrictions at all.

“There tends to be a thought process that Texas and Michigan have had an advantage in the fall,” Rep. Kyle South, who sponsored the bill to get rid of the state’s 2021 law, told the Montgomery Advertiser. “Going into this upcoming recruiting season, we just didn’t want any conflict to be there.”

The about-face on NIL law in Alabama is significant — it will go to the state Senate for approval — because of what it may portend elsewhere. The state of Florida is considering revising its NIL law to allow schools to help facilitate deals with athletes. That comes amid an attention-grabbing announcement that Ohio State has altered its NIL policy and — because state law allowed — created an “Edge Team” to help facilitate deals with athletes.

Prominent sports attorney Darren Heitner tweeted, “This is a big reason why Florida is considering a change to its current NIL law that prohibits schools and athletic departments from ‘causing compensation.’ It’s a tough spot to be in when Ohio State and others have the ability to be more involved.”

Recruiting is the lifeblood of elite college football teams, and football-generated revenue fuels athletic department budgets throughout the FBS. Programs rightfully seek every and any legal advantage they can muster.

“State laws jumped out thinking they needed to get in front of it [NIL],” Bobby Bramhall, the president and co-founder of Athlete Licensing Company, which works with collectives, athletes, sponsors and donors, told On3. “But it started limiting people. And it started raising questions like, ‘Why is it fair market value in some states? Why is it market value in another? What’s the difference?’ In repealing some of those laws, it opens it back up for those schools that are under that state guidance to succeed again, against the nation. Because if there’s no state law in another state, they are able to do whatever they want. It’s hurting states that can’t. Repealing the law will make things more uniform.”

No Congressional NIL move yet

Some states last spring enacted NIL laws to provide some guardrails when the historic period began July 1. Others did not. To date, 28 states have NIL laws. Over the past seven months, there has been no federal legislation to level the playing field. And the NCAA has decided to take a much-publicized hands-off approach. 

Most recently, the space has evolved into what many deem “wild West” terrain. Some schools, like Ohio State, are loosening their NIL restrictions. New donor-led school collectives are launching weekly, with several aspiring to not only facilitate deals for athletes but also secure their own endorsement deals with them. And schools and state lawmakers are examining the landscape and considering what changes they can make to loosen restrictions and avoid any recruiting disadvantage.

NCAA president Mark Emmert told Sports Business Journal that “what is going on in the NIL space is very different than the spirit of NIL when it was first discussed.” He said people are concerned about what it may mean.

“We need Congress to act with us to change the legal environment,” Emmert said. “We’ve got multiple models all over the country with no one providing any enforcement at the state level. There are not enforcing their own laws.”

In the fall, the National College Player Association, an athlete advocacy group, debuted its “Official NIL Ratings,” which gave each state law a grade from 0 to 100. States with laws were ranked from least restrictive to most. The most restrictive laws received lower scores based on 21 criteria. The laws that least restricted athletes in the marketplace received higher scores.

The bottom group of most restrictive included Alabama (43 percent), Mississippi (43), Illinois (43), South Carolina (48), Oklahoma (52), Georgia (52), Florida (52) and Arkansas (52). The least restrictive group included New Mexico (90), Maryland (81), Missouri (81) and Oregon (81). 

Among the restrictive portions of the Alabama law, for instance, were a market cap, which could reduce athlete NIL compensation; restrictions on program boosters paying athletes; and no guarantee that athletes receive money if their NIL is used for video games, trading cards and jersey sales, among other limitations. 

All that is about to change with the anticipated repeal of the Alabama law. Not surprisingly, the University of Alabama and Auburn have issued statements supporting the bill to repeal of the law. Don’t be surprised to see other states move to amend or repeal restrictive state laws.

“I do think some type of federal legislation,” Bramhall said, “would really help at least protect the student-athletes in a way that if you’re dealing with a student-athlete, you have to do A, B, C and D. It’s not just a free-for-all.”

Until federal intervention arrives, a near free-for-all looks to be on the horizon. No guardrails. No speed limit. Buckle up.