New York Governor Signs NIL Legislation Into Immediate Effect

Two days ago, New York Governor, Kathy Hochul, signed into immediate effect the “New York Collegiate Athletic Participation Compensation Act” (S.5891F)[1]. This legislation gives student-athletes in New York the ability to be compensated for the use of their Name, Image, and Likeness. This bill, introduced by Senators Parker, Bailey, and Jackson in late March 2021, was expected to be effective in January 2025. New York becomes the 32nd state to propose and enact a Collegiate Name, Image, and Likeness Bill since the NCAA started allowing amateur athletes to profit from their NIL in July of 2021.

The New York bill is similar to other state NIL legislations, including provisions such as “no athletic association, conference, or other groups shall prevent student-athletes from earning compensation from the use of the athlete’s name, image, or likeness,” and “an athletic association, conference, or other groups shall not prevent student-athletes from obtaining professional representation in relation to name, image, or likeness contracts or legal matters….” Provisions of the bill also restrict students from entering into contracts with brands that are similar to or compete with school partnerships or with brands that the school is already partnered with. Additionally, students cannot formulate deals that conflict with their responsibilities and time commitments as student-athletes.

There are two provisions of note included in New York’s NIL bill. 1. Requiring any professional representation obtained by a student-athlete to be registered pursuant to article thirty-nine-E of the general business law[2] or to be a licensed attorney. And arguably, more importantly – 2. a provision requiring any student-athlete who enters into a NIL contract to disclose the contract to the designated college official IN ADVANCE of the contract being executed.

Currently, only Pennsylvania, South Carolina, Virginia, Illinois, and Michigan have provisions similar to this one. Other states require students to disclose their deals to their respective colleges but do not specify when the contract must be disclosed by. This provision in combination with the state’s requirements to provide financial literacy training will be a great preventative measure working to protect student-athletes from signing predatory contracts. As of August 2022, at least “450,000 student-athletes across the United States entered into NIL deals by partnering with businesses and promotions.”[3] That is 450,000 students who went from having no ability to profit from their NIL in 2021, to signing some sort of contract to be compensated for the use of their rights with little to no contractual or financial training. New York requiring student-athletes to disclose potential NIL contracts to a college compliance official prior to signing will help make sure the deals they are making are legit and follow both state and school regulations.

However, it is also interesting to note that the New York bill does not say anything about contract duration extending beyond the student’s participation in an athletic program at a postsecondary educational institution. One of the initial concerns revolving around NIL rights was companies structuring their contracts so that if a college athlete becomes professional the company will receive cheap endorsement or might even take a cut of any subsequent contracts the athlete signs. It is so important that student-athletes and their guardians are educated on the dangers of signing some of these contracts and the full weight of what “legally binding” can mean. Thankfully, more and more schools are starting to provide NIL contract education and financial literacy training for their student-athletes. States like Texas and Florida require this training to be completed at the start of the athletes’ first and third years of eligibility.

Prior to the NCAA’s “change of heart” in 2021, prohibiting students from receiving payment for competing and working for the school was often regarded as unfair and exploitative. Student-athletes take significant risks to benefit their colleges and were not allowed to be compensated for those risks beyond scholarships. Which was often below their cost of living and far below the revenue they produced for the school.[4] The passage of the New York bill will open the door for so many athletes who might not have had the ability or resources to make ends meet solely relying on scholarships to close that gap. Assemblymember Michaelle Solages said, “Today, we stand with student-athletes, former student-athletes, their families, and legislators in taking a giant step in the right direction for our student-athletes.”

Holly A. Summers is a 2L at New York Law School and a Junior Staff Editor for the New York Law School Law Review.

Sources:

[1] https://www.nysenate.gov/legislation/bills/2021/S5891?intent=support

[2] https://law.justia.com/codes/new-york/2015/gbs/article-39-e - Requires that athlete agents register with the State of New York.

[3]https://en.as.com/ncaa/how-much-money-can-college-athletes-make-with-nil-marketing-endorsement-deals-n/

[4]https://www.governor.ny.gov/news/governor-hochul-signs-legislation-allow-collegiate-student-athletes-receive-compensation