New NIL Opportunities for Student-Athletes Require Diligent ReviewClient Alert
On June 28, 2021, Governor Mike DeWine signed Executive Order 2021-10D, “Establishing the Duties of Colleges and Universities as to Name, Image, and Likeness Compensation of Student-Athletes.” The Executive Order was motivated by the passage of similar name, image, and likeness (“NIL”) regulations in seventeen (17) other states; Ohio followed suit to avoid a significant competitive disadvantage in attracting student-athletes to the state.
The Executive Order permits NIL compensation which opens a financial industry for student-athletes to leverage – but with these new opportunities comes new significant concerns. Student-athletes should be cognizant of common contract clauses that, if overlooked, could hold serious future ramifications.
Does your NIL contract contain commercially unreasonable terms?
NIL sponsorship and licensing agreements will pose unique considerations and applications as the industry continues to expand. Below are some of the potential contractual provisions that should garner special attention and legal review before signing:
- Term of Agreement – specifies the duration of the agreement (e.g. how long the agreement will be in effect)
- Termination Rights – details each party’s ability to terminate the agreement
- Non-Competition – may require the student-athlete only negotiates with or partners with a specific company in a specified geographic area for a period of time (which may include a tail period that extends beyond the agreement’s term)
- Exclusivity, Non-Solicitation, and/or Non-Circumvention – may bar the student-athlete from negotiating with a potential partner after the duration of a specific agreement
- License Details – may allow a company permission to use a student athlete’s NIL for an indefinite period of time and an unbounded area with unfettered discretion
- Confidentiality – may restrict the student-athlete from sharing or otherwise using any information received or provided under the agreement, which may include compensation terms
- Severability – allows for the removal of provisions that are later deemed preempted or disallowed by statute, while the rest of the agreement remains intact
- Force Majeure – allows for nonperformance from a party if an act of God or other event outside the control of a party precludes the performance of the contract’s terms, which could include an injury to the student-athlete.
Please contact one of the following BMD Corporate Attorneys for assistance on any NIL matters, including review of the underlying NIL agreement: