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Is the Government About to Step in and Overhaul NIL in College Sports?

Last Updated: July 1, 2023
Sen. Lindsey Graham of South Carolina’s reported “College Sports NIL Clearinghouse Act of 2023” would both revolutionize and centralize the way college athlete monetization is regulated.

Ever since collegiate student-athletes first gained the right to monetize their name, image, and likeness rights nearly two years ago, the NCAA, college athletic conferences, and individual schools have complained about a lack of regulation, the transfer portal becoming a quasi-free agency of sorts, and a general Wild West attitude portrayed as a complete 180 from the way things were for decades.

Stories of players like All-American basketball player Hunter Dickinson transferring from Michigan to Kansas for seven-figure deals backed by millionaire (or even billionaire) donors, boosters, or NIL collectives are now commonplace; recently retired Syracuse head men’s basketball coach Jim Boeheim openly complained last season about teams like Miami, Pittsburgh, and Wake Forest allegedly “buying” their teams with NIL dollars.

US Senator Lindsey Graham of South Carolina has now drafted legislation, as reported Friday by On3, called the “College Sports NIL Clearinghouse Act of 2023” that would create a new NIL Clearinghouse governing body similar to the NCAA that would gain broad oversight over any and all NIL deals, from endorsements to recruitment. The bill would also reportedly give the new clearinghouse an anti-trust exemption that many US professional sports leagues enjoy.

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As On3’s report notes, a lack of compliance as determined by this federal NIL clearinghouse could result in penalties like fines, suspensions, or even permanent bans for individuals or third-party entities, as well as the ability to sue for damages or injunctions. Though the legislation would ban schools from limiting playing time or changing scholarships in retaliation for any NIL endorsement deal, schools would be able to prevent students from entering NIL agreements that would violate state law or school codes of conduct.

While this isn’t a full-on federal takeover, the clearinghouse would nonetheless provide US regulatory and enforcement agencies like the Department of Justice, Federal Trade Commission, or state Attorneys General with information regarding any potential wrongdoing.

Federal legislation, of course, would also overrule laws enacted in individual states that currently presuppose no direct NCAA oversight. Notably, Graham’s bill reportedly does not explicitly state one way or another if students are to be legally considered employees of their institution, a major battleground in the broader conversation around college athlete pay across the country.

Thursday, the National Labor Relations Board filed a complaint against the NCAA, Pac-12, and USC as to whether a school handbook with rules instructing athletes on how to conduct themselves in interviews and on social media falls under a level of control that the NLRB believes should classify Trojan athletes as employees. A hearing on the matter is scheduled for November in Los Angeles.

All told, the current NIL lacks a basic level of standardization between schools, conferences, and states, which was inevitably going to create headaches and legal issues given the lack of any over-arching guidance from the NCAA. Capitol Hill remains divided on countless key issues and there is a lack of consensus among lawmakers on how to proceed in this still relatively new space, but it’s clear that the NCAA, its conferences, and their schools are far from comfortable with the current paradigm of athlete monetization big-time college sports. That will continue to leave the door open for influential politicians like Graham to take up the task of using federal power to impose even a basic sense of institutional order back into major collegiate athletics — for better or for worse.

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About The Author
Shlomo Sprung
Shlomo Sprung
Shlomo Sprung is a Senior Staff Writer at Boardroom. He has more than a decade of experience in journalism, with past work appearing in Forbes, MLB.com, Awful Announcing, and The Sporting News. He graduated from the Columbia University Graduate School of Journalism in 2011, and his Twitter and Spotify addictions are well under control. Just ask him.