Controversial Big Ten MOUs Require Athletes to Sign Over NIL Rights and Limit Transfer Flexibility

Hold the phone! Just when I thought we were getting things resolved, "*!*&%" hits the fan! In a conversation with my friend Len Krichko yesterday, Len brought to my attention a significant new development that affects the relationship between athletes and their teams, and their NIL opportunities.

Apparently Big Ten universities are (either thinking about or implementing) agreements requiring student-athletes to sign over their Name, Image, and Likeness (NIL) rights, allowing the institutions to sublicense these rights to any third parties. Additionally, athletes must waive any legal claims to employee status as part of a planned revenue-sharing structure. A seven-page memorandum of understanding (MOU) viewed by Sportico outlines these stipulations.

Key Provisions of the MOU:

• NIL Rights Transfer: Athletes grant the university a license to use their name, nickname, voice, signature, likeness, image, and other personal identifiers. The university can sublicense these rights to entities such as the Big Ten Conference, the NCAA, or other third parties. This license persists even after the athlete is no longer affiliated with the school, though not for commercial product endorsements.
• Performance-Based Payment Adjustments: The agreement permits the university to modify payments based on the athlete's performance. For instance, winning a prestigious award like the Heisman Trophy or experiencing reduced playing time could influence compensation.
• Transfer and Reimbursement Clauses: If an athlete enters the transfer portal or moves to another institution, the university can seek reimbursement for a prorated portion of the NIL payments already made. This provision may deter athletes from transferring, similar to non-compete clauses in employment contracts.
• No Employment Relationship: The MOU explicitly states that it does not establish an employment relationship between the athlete and the university. Athletes must acknowledge they are not employees and waive any rights to claim employment status based on the agreement.
• Morals Clause: Athletes are prohibited from engaging in conduct that could harm their own image or that of the university, conference, or NCAA. Such clauses are common in professional sports contracts to protect the institution's reputation.

Context and Implications:

These developments occur amid significant changes in college athletics regarding athlete compensation. A U.S. District Judge recently granted preliminary approval to a $2.78 billion settlement allowing schools to establish a revenue-sharing pool, enabling athletes to receive payments. This settlement also permits athletes to continue securing independent NIL deals.

The MOU's clauses, particularly those concerning performance-based payment adjustments and transfer reimbursements, highlight the evolving dynamics between student-athletes and universities. While these agreements aim to provide financial benefits to athletes, they also impose restrictions that could impact athletes' autonomy and mobility.

Furthermore, the explicit denial of any employment relationship underscores the universities' intent to maintain the traditional amateur status of student-athletes, despite the introduction of compensation mechanisms. This stance is likely a strategic move to preempt potential legal challenges related to employment rights and benefits.

In summary, the Big Ten's approach to NIL agreements represents a significant shift in collegiate athletics, balancing the provision of financial opportunities for athletes with measures that protect institutional interests and maintain established structures within college sports.

This is not a good trend for student-athletes

The evolving landscape of Name, Image, and Likeness (NIL) rights in collegiate athletics has introduced complex dynamics between student-athletes and institutions. Recent developments, particularly within the Big Ten Conference, have seen universities requesting athletes to sign agreements that transfer their NIL rights to the schools. This trend raises significant concerns for student-athletes, especially those from less prominent sports who may have entrepreneurial aspirations. Here are five reasons why this movement is problematic:

1. Restriction of Individual Earning Potential

By signing over their NIL rights, student-athletes may forfeit the opportunity to engage in personal endorsement deals or entrepreneurial ventures. This is particularly detrimental for athletes in sports like swimming, golf, or volleyball, where institutional revenue-sharing may be minimal compared to potential individual earnings. For instance, the memorandum of understanding (MOU) from a Big Ten institution allows schools to sublicense an athlete's NIL to any third party without additional compensation to the athlete. This effectively limits the athlete's ability to capitalize on their personal brand.

2. Potential Misclassification of Employment Status

The agreements often include clauses where athletes waive any claim to employee status. While intended to maintain amateurism, this could prevent athletes from accessing benefits typically afforded to employees, such as health insurance or workers' compensation. The MOU explicitly states that it does not create a fiduciary relationship and that athletes are not employees, thereby waiving any rights to sue the institution on employment grounds.

3. Limitations on Transfer and Mobility

Some agreements contain provisions that penalize athletes for transferring to other institutions. For example, Wisconsin's dispute with former player Xavier Lucas highlights this issue. Lucas attempted to transfer to the University of Miami without entering the transfer portal, leading Wisconsin to allege a breach of a "binding two-year NIL agreement." The university suggested it might take legal action against both Lucas and Miami for alleged tampering.

4. Ambiguity and Lack of Transparency

The complexity and lack of transparency in these agreements can lead to misunderstandings and unintended consequences. The U.S. Justice Department has expressed concerns about the fairness of a proposed $2.8 billion settlement between the NCAA and student-athletes, suggesting that the settlement might not sufficiently compensate the athletes. Antitrust officials highlighted that capping the money available for schools to pay athletes could limit the benefits of free-market competition.

5. Ethical and Moral Implications

The inclusion of morals clauses in these agreements can be subjective and potentially infringe on athletes' personal lives. Such clauses may penalize athletes for conduct that the institution deems harmful to its image, even if the behavior is legal and personal. This raises concerns about the extent to which institutions can control athletes' behavior beyond their athletic performance.

In conclusion, while the intention behind these NIL agreements may be to streamline and regulate athlete compensation, they pose significant challenges to student-athletes' autonomy, earning potential, and rights. It is crucial for athletes to thoroughly understand the implications of such agreements and seek legal counsel before signing away their NIL rights. As the landscape of collegiate athletics continues to evolve, ensuring that student-athletes are protected and fairly compensated should remain a priority.

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