Illinois Passes Student-Athlete Endorsement Rights Act

Illinois Governor, JB Pritzker, signed into law Senate Bill 2338, effective on July 1, 2021, which allows student athletes to be compensated for the use of their name, image, likeness, or voice (NIL). The Student-Athlete Endorsement Rights Act (the “Illinois Act”) essentially prevents organizations like the NCAA and post secondary educational institutions from upholding any rule, requirement, standard, or other limitation that prevents a student athlete from earning compensation for the use of their NIL. Previously, NCAA rules prevented student athletes from earning compensation for the use of their NIL. The NCAA’s Division I Council is also expected to suspend its long-standing prohibition that prevents athlete’s from earning compensation for the use of their NIL on Wednesday, June 30, 2021, which will clear the way for several state laws to take effect on July 1. Many state laws, including the Illinois Act, would essentially make it illegal for the NCAA to continue to enforce these rules. While the NCAA action is considered an interim action, it will likely stand until federal legislation or new NCAA rules are adopted. While the NCAA has been studying the NIL issue for some time, they were essentially forced to deal with the issue following the Supreme Court’s decision in NCAA v. Alston which found that the NCAA rules that limit education-related benefits that schools may make available to student-athletes to be unlawful. The Illinois Act provides that while a student athlete may earn compensation in exchange for the use of their NIL, they cannot earn compensation based upon the student-athlete’s athletic ability or their agreement to participate in intercollegiate athletics. In other words, the agreement cannot be conditioned upon the student athlete attending a specific institution or participating in athletic programs. The Illinois Act also allows institutions to protect their own brands and logos by allowing the institution to control when and where a student athlete may wear apparel with the name and logo of the institution. More specifically, the Illinois Act also allows institutions to prohibit a student-athlete from wearing any item of clothing, shoes, or other gear or wearables with the name, logo, or insignia of any entity during an intercollegiate athletics competition or institution sponsored event. Student-athletes must disclose when they enter into an agreement with a professional agent for the purpose of exploring NIL compensation opportunities and must disclose all compensation agreements as required by the institution. Any compensation agreement entered into by a student-athlete must also be consistent with the contracts, rules, regulations or other requirements of the institution. The Illinois Act prevents institutions, and boosters of the institution, from entering into compensation arrangements with a student-athlete for the use of their NIL as a condition of attending an institution. Certain endorsement contracts related to the promotion of gambling, sports betting, controlled substances, cannabis, tobacco, alcohol, electronic nicotine, performance-enhancing supplements, adult entertainment or other products or services that are reasonably considered to be inconsistent with the values or mission of the institution or that negatively reflect on the institution, are all prohibited. Institutions, like the University of Illinois, have been quick to respond to the potential NIL endorsement opportunities for student-athletes by launching INFLUENCE powered by Opendorse Ready, a market-leading NIL readiness program. INFLUENCE is a comprehensive student-athlete NIL development program that assists student-athletes with their NIL opportunities. For more information on student-athlete endorsement opportunities and the new legislation, please feel free to contact Steven J. Thayer, at Handler Thayer, LLP.

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