Steven Bank is the Vice Dean for Curricular and Academic Affairs and Paul Hastings Professor of Business Law at UCLA School of Law. Professor Bank, who received his B.A. from the University of Pennsylvania and his J.D. from the University of Chicago, is a frequent commentator on sports law issues, particularly in the context of soccer, applying his business and tax expertise in his writing and speaking for both scholarly and popular outlets. He explores these issues in more depth in his course on International and Comparative Sports Law as well as in his Perspectives seminar on Law, Lawyering, and the Beautiful Game.
With states passing legislation to permit college athletes to pursue payment for the use of their names, images, and likenesses (“NIL”) and the NCAA and several members of Congress pushing for a uniform law to govern this issue, the focus has shifted from whether college athletes should be able to profit from the use of their NIL to what that legislation should look like.
What the legislation and legislative proposals have in common is that they attempt to create a clear dichotomy between the brands of universities and the brands of their athletes. They do this in two ways. First, they prohibit college athletes from entering into contracts that would conflict with a provision of their universities’ team contracts, which are the deals universities sign with apparel manufacturers such as Nike, Adidas, or Under Armour to sponsor their team’s uniforms, casual wear, and other gear and equipment. Second, while they permit college athletes to enter into non-conflicting contracts providing compensation for the use of their NIL,  they do not permit universities to compensate their athletes for their use of the athlete’s NIL. They also do not require that colleges permit their names, logos, or other intellectual property to be used by the athletes in any contracts they sign relating to the use of their NIL.
The effect of this dichotomy is to meaningfully reduce what both the university and their athletes can earn from their brands. By not permitting universities to pay athletes to license their NIL, universities cannot guarantee that their star players will agree to license their names for use on the team jerseys sold by the apparel manufacturer as part of the team contract. That reduces the amount the apparel manufacturer might otherwise pay the university under the team contract, since they would need to retain funds to use toward convincing players to sign with them and to prepare for the contingency that the team contract’s value would be lower because they would be unable to do so. Conversely, by not permitting college athletes to enter into endorsement deals that would conflict with their university’s team contracts or that would portray them in their uniform or with their university’s logo, college athletes cannot maximize their NIL value by highlighting their association with their universities and at a time when the athletes’ visibility is at its highest.
The problem with this dichotomy is that it is based on the false premise that the brands of a university and its athletes are distinct and separate. The reality is that they are linked. Years ago, my young son wanted a UCLA basketball jersey with the number 1 on it because it was his favorite player Jordan Farmar’s jersey and number. By the same token, I am sure there are plenty of lesser-known college athletes who would be able to get paid for an endorsement, but only if they were able to use an image of themselves wearing the item during a game where the association with their college team was made clear. In each case, the value of the brands of the university and its athletes would be at least partially attributable to the embedded contribution of the other.
Not only is the dichotomy false, but also reinforcing it through the NIL legislation creates perverse incentives. A star player could wear the shoe brand required by his team contract during games, while signing a contract to endorse the brand’s competitor and wear those shoes during his off-time and on social media. That would likely comply with the no-conflicts provision of the team contract so long as it occurs when the player is not playing, practicing, or participating in team-related activities. Nevertheless, because of the star player’s high-profile personal brand, it would serve as a negative endorsement of the shoe required by the team contract. Moreover, the separation between university and athlete NIL provides a structural incentive for the player to at least threaten to do this to ensure a bidding war between the team sponsor and the team sponsor’s rival for his endorsement. That is because the player receives no money directly from the team contract. He needs to profit from the team contract indirectly by leveraging the existence of the contract to raise the value of his negative or positive endorsement. Apparel manufacturers would then have to reduce the amount they are willing to pay for sponsorship rights, which would effectively shift money away from the university and the average low-profile athlete, and toward securing the star athlete’s individual endorsement. Given that team contracts are long-term deals, though, and sponsors would not be able to anticipate when or how often this kind of negative endorsement bidding might occur, sponsors might reduce team contracts and what they would pay athletes for their separate endorsements, leaving both parties worse off.
Instead of strictly separating the brands of universities and their athletes, it might make more sense to embrace their interconnectedness and consider income sharing. It could be pareto optimal, for instance, if players would agree in advance to allow the university to license the player’s NIL rights for use in the team contract in exchange for the university’s agreement to allow the player to license the use of the university’s name, logo, and other rights in the player’s non-conflicting, separate NIL deals. If there is a market for a jersey with a player’s name on it or, conversely, for a player’s endorsement while wearing a university’s jersey, then it makes sense to share the income rather than blocking either the university or the athlete from profiting from it because of the presence of the intellectual property of the other.
Universities have resisted income sharing because of the concern that it will result in students being classified as employees, but there is precedent for income sharing with non-employee students. If a student creates valuable intellectual property by making substantial use of the university’s facilities, equipment, and intellectual property, the intellectual property the student creates is often owned by the university, but the student then is entitled to share in any profits generated if the intellectual property is successfully brought to market. If this practice was applied in the context of college athletics, NIL legislation could still protect against conflicts between team and individual licensing contracts, but the reciprocal licensing contracts could be structured to grow the economic pie for the university while allowing college athletes to benefit from the licensing of their NIL in a setting where it is likely to bring the greatest return—a true win-win.
 See Cal. Educ. Code § 67456(e)(1) (2020) (effective Jan. 1, 2023) (“A student athlete shall not enter into a contract providing compensation to the athlete for use of the athlete’s name, image, or likeness if a provision of the contract is in conflict with a provision of the athlete’s team contract.”); Colo. Rev. Stat. 23-16-301(3)(a), available at https://leg.colorado.gov/sites/default/files/2020a_123_signed.pdf [https://perma.cc/W2WN-3MG7] (“A student athlete shall not enter into a contract providing compensation to the student athlete if the contract conflicts with a team contract of the team for which the student athlete competes.”); Fla. Stat. Sec. 1006.74(h), available at http://laws.flrules.org/2020/28 [https://perma.cc/G9DR-8KXD] (“An intercollegiate athlete may not enter into a contract for compensation for the use of her or his name, image, or likeness if a term of the contract conflicts with a term of the intercollegiate athlete’s team contract.”). The proposed federal “Student-Athlete Equity Act of 2020,” submitted to Congress by commissioners of the so-called Power Five conferences, also prioritizes university contracts with apparel manufacturers, permitting colleges to prohibit their athletes from entering into endorsement agreements that would “conflict with institutional sponsorship agreements.” Summary of Student-Athlete Equity Act of 2020, available at https://www.keepandshare.com/doc5/27533/a5-summary-of-draft-legislative-language-21-pdf-178k?da=y [https://perma.cc/6U6H-4SUD] (accessed July 30, 2020), cited in Ross Dellenger, Proposed NCAA NIL Legislation Is A Restrictive First Step for Student-Athletes, Sports Illustrated (July 17, 2020), https://www.si.com/college/2020/07/17/ncaa-proposed-name-image-likeness-legislation-student-athletes [https://perma.cc/NEA6-RMBZ].
 Cal. Educ. Code § 67456(a); Colo. Rev. Stats. 23-16-301(2)(a), (b); Fla. Stat. Sec. 1006.74(2)(a).
 See Fla. Stat. Sec. 1006.74(2)(c) (“a postsecondary educational institution . . . may not compensate or cause compensation to be directed to a current or prospective intercollegiate athlete for her or his name, image, or likeness.”); Michael McCann, Legal Challenges Await after NCAA Shifts on Athletes’ Name, Image, Likeness Rights, Sports Illustrated (Apr. 29, 2020), https://www.si.com/college/2020/04/29/ncaa-name-image-likeness-changes-legal-analysis [https://perma.cc/6BJM-FVZZ] (explaining that under the NCAA proposals, “[n]o college will be allowed to pay their athletes for their NIL or their labor”).
 See, e.g., Guide to Intellectual Property as a Student at the University of California, U. Cal. Office President, https://www.ucop.edu/research-policy-analysis-coordination/policies-guidance/intellectual-property-ex/intellectual-property-as-a-student-at-the-university-of-california-faq.html [https://perma.cc/V9FC-LESK] (accessed Aug. 30, 2020).