Mississippi and Tennessee Amend NIL Laws to Allow Schools to Facilitate NIL Deals

Mississippi and Tennessee have each amended their name, image, and likeness (“NIL”) laws to allow schools to facilitate NIL deals.

Mississippi’s NIL Amendment

Mississippi amended its NIL law to give institutions and their athletic departments more involvement in NIL. Mississippi Governor Tate Reeves signed Senate Bill 2690 on April 18, 2022. The amendment provides for the following changes:

• Revising the definition of “student-athlete” to include a “prospective student-athlete,” meaning student-athletes do not need to be enrolled at a school prior to entering into a NIL deal.

• Allowing institutions to facilitate NIL opportunities for student-athletes with third parties, and permitting communication with third parties interested in providing NIL opportunities to student-athletes.

• Modifying the warning language that is required to be included in NIL contracts.

Tennessee’s NIL Amendment

Similar to Mississippi, Tennessee’s state legislature adopted an amendment to the state’s NIL law to allow more involvement by institutions in facilitating NIL deals. The amendment was signed by Tennessee Governor Bill Lee on April 20, 2022. The Tennessee state legislature posted a summary of the bill which provides the following changes:

• Removing the reference that a student-athlete must be “at an institution” to earn compensation for the use of their NIL and removing the provision that NIL compensation may only be provided by a third party.

• Eliminating the prohibition against an institution and its athletic department officials from being involved in the development, operation, or promotion of a student-athlete’s NIL, and instead allowing the school to be involved in the support of NIL activities, provided that the school does not coerce, compel, or interfere with the athlete’s decision to earn compensation from or obtain representation in connection with a specific NIL opportunity.

• Removing the provision that prohibited an entity whose purpose includes supporting or benefitting the institution or its athletic program from compensating or causing compensation to be provided to a current or prospective student-athlete for the athlete’s NIL if the arrangement is contingent on the athlete’s enrollment or continued participation at an institution.

• Adding that parents, siblings, grandparents, spouses, and legal guardians of a student-athlete who represent the athlete for the purpose of NIL deals are not considered to be athlete agents, and are not subject to the requirements for an athlete agent.

• Adding that an athletic association’s (e.g., NCAA) governing actions, sanctions, bylaws, and rules must not interfere with a student-athlete’s ability to earn NIL compensation and must not otherwise impact a student-athlete’s eligibility or full participation in athletic events, unless the athlete has violated the rules of the school or the athletic association or the law is invalidated or rendered unenforceable by operation of law.

Key Takeaways

Collectives operating in Mississippi and Tennessee now have the ability to communicate and interact directly with the school’s athletic department officials and coaches in order to facilitate NIL deals. Previously, collectives were not permitted to contact the school’s athletic department officials and coaches in order to facilitate NIL deals.

• Prospective student-athletes in Mississippi and Tennessee are now permitted to enter into NIL deals without being enrolled at an institution. Previously, athletes could not sign a NIL deal until they were enrolled in the school.

• Tennessee now allows NIL deals that are contingent on the athlete’s enrollment or continued participation at a particular school. However, according to the NCAA’s Q&As for its interim NIL policy, NIL compensation contingent upon enrollment at a particular school is prohibited.

What’s Next?

• Schools located in Mississippi and Tennessee should update their NIL policies and internal procedures in light of these changes. For example, Ole Miss’s FAQs on NIL provide that “[Ole Miss] may not be involved in any form of brokering NIL-related contracts.” Tennessee’s general rule on NIL tracks the language of the NCAA’s interim NIL policy, which prohibits NIL compensation contingent upon enrollment at a particular school.

• To maintain a competitive edge in recruiting, other states will adopt similar NIL laws or amend existing NIL laws. For example, the Louisiana State Senate passed Senate Bill 250 to help schools and their boosters facilitate NIL deals and the bill will now move to the House of Representatives. Illinois State Senate and House of Representatives have also passed an amendment to House Bill 1175 to, among other things, (i) permit institutions to facilitate and negotiate NIL deals on behalf of their student-athletes with third parties, (ii) provide a definition of “booster,” which is defined as a person or entity who within the last five years has donated more than $1,000 to the school’s athletic department or booster organization, (iii) allow NIL deals to be conditioned on attendance at a school (but NIL deals conditioned on athletic performance are still prohibited), and (iv) encourage educational programming for student-athletes. Schools in states with more restrictive NIL laws will continue to have a recruiting disadvantage against those with more permissive NIL laws.

• States will likely continue to pass NIL laws that permit institutional involvement, allow prospective athletes to benefit from NIL, and authorize schools to condition NIL deals on attendance at a school. If that trend continues, the NCAA may be forced to revise its NIL interim policy until federal legislation or new NCAA rules are adopted.

Ryan Whelpley is an Associate at Morse in Waltham, Massachusetts, where he is a member of the firm’s Corporate Practice Group and focuses on venture capital financings, M&A transactions, and general corporate work for startup and emerging growth companies. He is a graduate of Albany Law School (2019) and Union College (2016). At Union, Ryan was a member and three-year captain of the Men’s Basketball Team. You can connect with him via Twitter (@Whelpley_Law) and LinkedIn.