Pay for Play

A number of recent developments are blurring the lines between amateur and pro sports, both at the collegiate and Olympic levels. If the trend continues, it may open significant opportunities for the licensing community.

California enacted the Fair Pay to Play Act, which allows college athletes to receive money for endorsements without jeopardizing their scholarships or National Collegiate Athletic Association (NCAA) eligibility. The law goes into effect in 2023. No other state has enacted a similar law yet, although the conversation has come up in at least 10, with some going even further in the direction of paying athletes. A bill has also been proposed in the U.S. House.

There are some questions about the real impact of the California law, since the NCAA has not said what its response will be. The NCAA has come out against the law but has acknowledged that changes are needed to its rules regarding compensation and has set up a working group to discuss. Current rules allow students to receive tuition, room, and board, a stipend for some basic costs, and other non-monetary benefits, but no royalties or fees from endorsements or licensing or any other revenue from commercial activities.

In the wake of the California law and the movement in this direction in other states, the NFL Players Association announced it would partner with the National College Players Association to look into potential opportunities for licensing and marketing on behalf of college athletes. NFLPA’s affiliate REP Worldwide will handle the representation for any deals that come out of the partnership in the future.

Also as a result of recent events, video game maker Electronic Arts said it would enthusiastically return to the collegiate licensing sector if the legal landscape made it possible. The company ended its collegiate licensing arrangements in 2013 after settling a lawsuit filed against it in 2009. In the suit, Ed Bannon and other former college athletes had demanded payment for their past appearances in video game titles.

As these changes are ongoing in the world of collegiate licensing, Olympic governing bodies are also making it somewhat easier for athletes to profit from their achievements in the Games. This is occurring through a loosening of the International Olympic Committee’s Rule 40 regulations. The more flexible stance by the IOC gives athletes a slightly increased ability to exploit their own IP and more control over their personal marketing efforts during the prime window before and during the Games.

Rule 40 was meant to protect sponsor exclusivity by allowing only official IOC marketing partners to utilize any Olympics-related IP—barring athletes from even thanking their personal sponsors—during the period leading up to and through the Games. After Germany’s regulatory body that oversees competition in that country ruled that the restrictions were too far-reaching, the IOC changed its policy, giving each country the flexibility to apply Rule 40 as it wishes.

As a result, the U.S. Olympic and Paralympic Committee recently loosened its adherence to the rule. To take advantage of the change, Team USA athletes have to register their personal sponsors with the USOPC, and their sponsors must sign a document barring them from ambush marketing or other USOPC violations. Once this is done, athletes will be able to acknowledge their personal sponsors (up to seven times) during the former blackout period, through their personal web and social channels, and the sponsors will be able to congratulate them once. None of these messages can mention the sponsor’s products or use any USOPC or IOC intellectual property.

The Olympic governing bodies in Germany, Australia, and Britain have taken similar steps. But just last week, 20 British Olympic athletes, led by sprinter Adam Gemili, took legal action against the British Olympic Association, demanding it go even further. Among other concerns, the athletes say that simply being granted more freedom to create sponsor-athlete thank-you messages does not give them any additional meaningful rights or commercial value. The BOA’s position is that it needs to be able to offer real exclusivity to its sponsors in order to fund athletes’ participation in the Olympics and other events.

The specifics in the cases involving college athletes and Olympic athletes are different, of course, but both underscore a trend toward giving amateur athletes more freedom to market themselves and to benefit financially from their performance in sports. In both cases, the steps taken acknowledge the reality that “amateur” athletes help their institutions or governing bodies benefit financially. They also reflect the fact that the athletes are already paid to some extent—in the form of apparel, food, and other training needs—albeit with limitations in keeping with their official status as amateurs. If the trend toward allowing amateur athletes to have more participation in commercial activities continues, it is likely to be a boon for not only the athletes themselves but also for colleges and Olympic sports in general when it comes to licensing.

We will not be publishing this Thursday, November 28, 2019, due to the U.S. Thanksgiving holiday. We will be back to our twice-weekly schedule on Monday, December 2.

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