Sen. Ted Cruz's NIL draft bill provides state law preemption, ensures athletes not employees

Sen. Ted Cruz, Republican of Texas, has long been known to be working on a piece of federal legislation aimed at addressing NIL in the current state of college athletics.

A day after three U.S. Senators released a bipartisan NIL discussion draft, a source has provided On3 with a draft of Cruz’s legislation. The bill, dated July 3, does not have a title yet but would nearly check off every item on NCAA President Charlie Baker‘s wishlist.

Along with a section focused on liability – all but granting the NCAA an antitrust exemption – the proposed legislation states athletes are not employees and includes a state law preemption. The proposed bill ensures states are barred from enacting laws on compensation, employment status, athlete eligibility or NIL.

It’s a surprising move, especially in the context of Texas Gov. Greg Abbott – also a Republican – signing an advantageous state NIL law last month. The new Texas state law was also crafted with significant feedback from both Texas and Texas A&M athletic officials. Additionally, in recent months, a wave of advantageous state NIL laws has been enacted. Texas joins a list that includes Missouri, New York and Oklahoma. The legislation specifically bars the NCAA and conferences from taking action against institutions for NIL activities.

Earlier this week at SEC Football Media Days, Commissioner Greg Sankey bemoaned the need for a federal mandate. He repeatedly mentioned athletes deserve better. Those same state bills also give athletes the chance to work more closely with their institutions, which could provide an advantage in signing more deals or compensation.

Cruz’s bill would knock out all of those state bills, along with any hope of California’s revenue-sharing bill being enacted. As for athletes, the legislation would create a stricter version of NIL. The final clause of the eight-page document outlines athletes are not employees.

“Notwithstanding any other provision of Federal or State law, a student-athlete shall not be considered an employee of an institution, conference, or interstate intercollegiate athletic association for purposes of (or as a basis for imposing liability on or awarding damages or other monetary relief under) any Federal or State law based on the student-athlete’s participation in, or status as a member of, any varsity sports team,” the bill states.

A ranking member of the U.S. Senate Committee on Commerce, Science and Transportation, Cruz has the position and political clout to push through legislation. But deeming athletes not employees could hold up the bill’s process.

The draft gives institutions, conferences and the NCAA cover from any fallout from enforcement, stating the parties that, “complies with this Act and the amendments made by this Act shall not be subject to liability under Federal or State law.”

For various reasons over time, certain industries and organized groups have been exempted from the operation of US antitrust laws. These include organized labor, insurance companies, and baseball. The NCAA has long pushed for the same exemption, which would not limit the governing body’s power in the collegiate market.

The NCAA would be given the power to establish and enforce rules around recruiting and the transfer portal while knowing state laws would not preempt its ruling. Cruz outlines that the NCAA can remove member institutions, plus restrict an athlete’s participation in competition and eligibility.

Ted Cruz does not stop there, though.

NCAA member institutions would be required on an annual basis to provide anonymized data on all NIL deals, specifically the description of services rendered and the amount of compensation provided.

From there, a database would be constructed. As the drafted bill states, “An interstate intercollegiate athletic association shall use the anonymized data provided by member institutions … to establish and maintain a publicly accessible, searchable database for student-athletes and their agents to estimate the fair market value for name, image, and likeness agreements.”

The NCAA would be required to “take reasonable technical measures” to ensure athletes would not be identified.

Agents would also be required to register with an intercollegiate athletics association. Any representation that does not register would be required to receive written consent from the athlete.

Will Congress make NIL progress?

Thursday’s news of a bipartisan bill led by three senators was encouraging news for the NCAA. The “College Athletes Protection and Compensation Act of 2023” included a state preemption and would establish a federal agency to oversee college athletics.

All of this could be coming too late in the term, though.

Congress is set to begin its August recess on July 28 and is not set to return until Sept. 5. Multiple sources have indicated to On3 the bipartisan bill could just be the first sign of activity aimed at placing NIL guardrails seen from the Hill in the next seven days.

Cruz’s drafted bill has yet to be introduced, but it does deliver on many pieces the NCAA has been looking for. Sens. Tommy Tuberville (R-AL) and Joe Manchin (D-W.V.) could introduce their bill in the coming days, too.

Baker, who took over for Mark Emmert in March, has made repeated trips to Washington, D.C., since taking the job. Democrats and Republicans continue to remain far apart on much of the language being introduced in these bills. One of the main arguments between the two parties has been over classifying athletes as employees.

That could make a path to Cruz’s bill generating a real movement tough to predict. Some believe the flood of bills focused on college athletics could cause confusion and create too much debate. The NCAA’s NIL subcommittee is set to meet next week in Indianapolis to discuss a Plan B.

But the NCAA and Congress are operating with the presidential election looming. The 2024 election cycle is starting to pick up and party lines will surely be drawn for good by this fall or winter.

“Tuberville should save his time and energy on rushing his own piece of legislation to be introduced before the close of the session,” said attorney Darren Heitner, who works on NIL for schools, brands and collectives. “The more bills to be debated, the more distraction if the goal is to actually have a bill passed and put in front of the President.”