- Denis Braham, Shareholder and Co-Chair of Sports Business & Public Venues Industry Group, Winstead PC
- Mike Perrin, Of Counsel and Former University of Texas Men’s Athletic Director, Winstead PC
- Stewart Whitehead, Shareholder and Chair of Universities & P3 Industry Group, Winstead PC
- Winstead University Industry Group Information and Client Alert: College Athletes May be Paid for Name, Image & Likeness, May 5, 2020
- Copy of House et al v. National Collegiate Athletic Association et al, 4:20-cv-03919, California Northern District Court, Filed: 06/15/2020
On Wednesday, LEAD1 Association (“LEAD1”) hosted a webinar discussing some of latest hot issues in college sports. The panel, moderated by Stewart Whitehead (Chair of Universities & P3 Industry Group at Winstead PC), featured Dennis Braham (Co-Chair of Sports Business & Public Venues Industry Group at Winstead PC) and Mike Perrin (Of Counsel at Winstead PC and former University of Texas Men’s Athletic Director). Braham opened by the panel by emphasizing that the nature of business deals between athletics departments and vendors and other concessionaires (e.g., sponsors) may change dramatically as a result of COVID-19. Because previous contractual agreements may need to be adjusted based on the pandemic, Braham’s advice for athletics departments is to proactively examine the strengths and weaknesses of all current contracts. In this vein, athletics departments should be open-minded with respect to changing current agreements with sponsors (at least for temporary changes). Such possible changes may be based on a number of considerations including available amenities and allowable attendance figures in venues (largely influenced by state and university regulations).
Whether fans are sitting in the stands or not, due to the pandemic, there may now be additional opportunities for athletics departments to monetize their virtual content. Sponsors, for example, may ask for virtual advertising (that was not necessarily agreed to in the original contract). In addition, increased social justice activities may now have an impact on sponsorships. To this end, athletics departments should be cognizant of all sponsorship branding and agreements may need to be modified accordingly. Furthermore, sponsors that have been impacted by COVID-19 (that may have had certain revenue expectations) may have walk-away rights and thus athletics departments should be flexible in terms of compromising with such sponsors.
Braham also made the critical point that most current contracts likely inadequately address the issue of force majeure, a common clause in contracts that mitigates legal liability to parties from an obligation when an extraordinary event occurs. Moreover, many types of insurance coverages may not cover loss of income due to COVID-19 because the pandemic does not involve the common sort of physical damage to facilities (as a result, athletics departments should address force majeure in their current and future contracts). In addition, despite some capital markets being in turmoil, with respect to public-private partnerships, as it relates to venues, Braham encouraged athletics departments to continue planning so universities, from a marketing standpoint, can remain competitive in all aspects of the higher education experience.
Perrin then discussed the current legal and legislative landscape as it pertains to the issue of student-athlete name, image and likeness (NIL) compensation. To highlight some of Perrin’s comments, there are now 37 states that are considering passing NIL models and there have been several introduced bills from Congress (including from Sen. Rubio this past week). In addition, other than groups such as LEAD1 and the Knight Commission, the Uniform Law Commission (ULC), a body that aims to bring stability to key areas of state statutory law, is analyzing the NIL issue and the various potential guardrails that may be needed within a regulatory structure (see more on this below). It is also worth mentioning that, just this past week, a new lawsuit was filed against the NCAA and several conferences on the NIL issue.
Finally, Perrin highlighted some of the guardrails that may be needed within an NIL regulatory structure including establishing fair market value, addressing channel conflicts between preexisting team contracts and potential student-athlete NIL deals (included in many of the state bills), concerns with regard to boosters, and the possibility of establishing a third-party (separate from the NCAA) where NIL deals could be disclosed.