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Understanding Ohio's New Executive Order - What College Athletes and Businesses Should Know About NIL

in Business, News

If you follow college sports, you will have heard that Ohio Governor Mike DeWine signed an Executive Order that permits college athletes to profit from licensing their name, image, and likeness (“NIL”). This means that college athletes can now monetize their fame by licensing their name, image, reputation, face, etc., without forfeiting their eligibility. Per the NCAA’s guidance, NCAA member-schools and athletes in Ohio must follow Ohio’s NIL laws. As of July 1, states such as Alabama, Florida, Georgia, Kentucky, Mississippi, New Mexico, and Texas all have effective NIL laws.

Navigating these new NIL rules can be complicated, and athletes and businesses in Ohio should ensure that they thoroughly understand Ohio’s NIL rules before entering into NIL contracts. This blog outlines some key considerations:

Considerations for Athletes:

  • What can I do? Ohio’s NIL provides that a student-athlete may receive NIL compensation for use of the student-athlete’s name, image, or likeness. “Name” means the first name, last name, or nickname of the student-athlete when used in a context that reasonably identifies the student-athlete with particularity. “Image” means a picture of the student-athlete. “Likeness” means a physical, digital, or other depiction or representation of the student-athlete.
  • You cannot be paid or promoted by your school. NCAA rules and Ohio’s NIL prohibit athletes from being paid by their schools. 
  • You cannot use your school’s facilities or trademarks. Ohio’s NIL permits colleges and universities to protect their intellectual property (think school logos, among other things) in connection with your NIL activities.
  • Do I need to pay taxes? Yes. Your compensation will be taxed at the federal and state level.
  • Can I form a business entity? Yes. In fact, it is generally better to have a corporate entity, like a limited liability company, in place to avoid personal liability, if possible. You can also procure insurance or require the other contracting party to procure insurance that covers you.
  • Can I engage professionals to assist me? Yes. Ohio’s NIL authorizes using “professional representation.” Between school and athletics, you already have two full-time jobs. Working with professionals, including sports agents, accountants, and lawyers will help ensure that you are in compliance with the NIL rules and that you have time to focus on school and sports.
  • You must disclose your potential NIL contract to your school. Before signing an NIL contract or taking money for licensing your name, image, and likeness, you must disclose to your school the NIL contract in a manner designated by your school. The college or institution “shall designate an official to whom the student-athlete is to disclose the proposed contract” and if that contract is in conflict with a contract to which the college or institution is a party, the student-athlete must negotiate revisions to avoid the conflict.
  • Your school can veto your NIL contract. Ohio’s NIL allows colleges to maintain some level of control over NIL endorsement contracts. For example, student-athletes must not display a sponsor’s product during official team activities or any other time where such sponsorship would be “in conflict with a provision of a contract to which a state institution of higher education or private college is a party.” Student-athletes also must not enter into endorsement contracts to endorse marijuana, alcohol, tobacco, electronic smoking devices, vapor products, adult entertainment, or casinos.

Considerations for Businesses Entering into NIL Contracts with Athletes:

  • Understand “compensation”. If you hire an athlete under Ohio’s NIL law, it is critical that you understand what “compensation” means, and that you must pay “wages and benefits at a rate commensurate with prevailing rate for similar work.”
  • Make required disclosures. Boosters whose businesses intend to enter into NIL contracts with athletes should pay particular attention to this requirement. For example, The Ohio State University’s NIL guidelines state that a “failure to disclose an NIL Activity in advance could lead to eligibility consequences.”
  • Understand what you are paying for. College athletes are not allowed to use school intellectual property in connection with NIL activities. As a result, your NIL athlete cannot use a school’s trademarks to suggest that his or her school endorses your goods or services. 

If you have any questions about this topic, please contact Matthew Miller or your Weston Hurd attorney.

Contact Information

Matthew C. Miller – 216.687.3236 – mmiller@westonhurd.com