Lizzy Castano – Earlier this year, University of Miami quarterback D’Eriq King became the first collegiate athlete to sign a name, image, and likeness (NIL) agreement with a professional sports team after making a deal with the Florida Panthers. King is one of many collegiate athletes monetizing their personal brand since the Supreme Court unanimously held that the National Collegiate Athletic Association (“NCAA”) could no longer limit certain compensation benefits for student-athletes. Specifically, prior to this decision, student-athlete scholarship money and cash awards were capped at the cost of attending the school.
The Court rejected the NCAA’s argument that colleges and universities are exempt from antitrust regulations deriving from the Sherman Act. Under the Sherman Act, prohibition on restraints of trade turns on where such prohibitions are “undue.” Writing for the Court, Justice Gorsuch contends that the “rule of reason” analysis is the proper standard to gauge whether the NCAA’s compensation restrictions are “undue.” Under this standard, a court must “conduct a fact-specific assessment of market power and market structure” to determine the “actual effect in compensation.” The Court affirmed that the NCAA was, in fact, enjoying a monopoly control of the market and is not immune from the antitrust regulations, or as some economists may say, a “monopsony.” Justice Gorsuch explains these restrictions “depress compensation . . . below what a competitive market would yield.”
In his concurrence, Justice Kavanaugh asserts, “[t]he NCAA is not above the law,” reasoning that “traditions alone cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student-athletes who are not fairly compensated.” Justice Kavanaugh compares a school’s monetization of their student-athletes to that of a business, analogizing that just as companies cannot pay their employees an unfair market rate, schools cannot agree to restrict or unfairly compensate their athletes for pennies on the dollar compared to the income the athletes bring in.
For D’Eriq King and scores of other student-athletes this decision opens doors to new financial opportunities. King is considered a top contender for the Heisman Trophy in 2021 after leading Miami to an 8-3 record last season, so it is no wonder sponsors and partnerships are coming into fruition. In his new role with the Panthers, King will appear at games, develop merchandise, and promote the team.
This new flood of marketable young stars could not only ensure that student-athletes are fairly compensated for their on-field efforts, but these deals can also help small businesses attract clientele that they may have lost during the pandemic. The Wharf Miami, a local hangout spot with drinks and food trucks along the Miami River, took advantage of this opportunity to sign King. King also inked deals with Panini America, College Hunks Moving Company, and Murphy Auto Group. From College Hunks alone, King obtained a five-figure signing bonus. King also partnered up with Florida State University quarterback McKenzie Milton to co-found Dreamland, a company that assists college athletes in coordinating meet-ups, signing, and speaking events. Altogether, King is expecting around $20,000 from this newly legalized market.
Although King is currently one of the top earners in college sports, other superstar college athletes—like Auburn quarterback Bo Nix who signed a deal with Milo’s Sweet Tea— can likely expect similar endorsement opportunities. Forbes highlights other collegiate athletes to look out for, like Louisiana State University Gymnast Olivia Dunne, the only NCAA athlete with over one million followers on Instagram and TikTok. A recent study from the National Bureau of Economic Research found that if top collegiate stars could benefit from similar collective bargaining agreements as professional athletes, those players could share 50% of revenue with the league. This would mean that top athletes like Clemson’s 2020 quarterback Trevor Lawrence could have earned around $2.4 million last season.
While it remains to be seen just how lucrative endorsement deals for student-athletes like King will be, the Court’s decision helps even the playing field between the nation’s top college sports programs and the athletes who make those programs great.