Chairman Williams, Committee Members Hold Hearing on NIL’s Impact on Entrepreneurial Collegiate Athletes
Washington, September 20, 2023
WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a full committee hearing titled “Athletes and Innovators: Examining NIL’s Impact on Entrepreneurial Collegiate Athletes.”
Chairman Roger Williams’ opening statement as prepared for delivery:
Good morning, and welcome to today’s hearing which will focus on the impact of the NCAA’s name, image, and likeness policy across college athletics. I’d like to thank all four witnesses here today for their time, as we discuss this important issue.
For the first 115 years of the NCAA’s governance over college sports, the individual college athlete had no legal right to earn a profit from their athletic performance, and were entitled to nothing beyond room and board, meals, and an education.
In 2021, after a series of court cases forced the NCAA to change their policies, college athletes were allowed to monetize their name, image, and likeness without affecting their playing eligibility or resulting in sanctions against their university.
While we are still in the early years of this new NIL era, I think it is necessary to take a look at the positive and negative consequences of this drastic change in policy.
To start with the obvious good: student athletes can now profit during their time playing college sports. Of the roughly 480,000 student athletes, fewer than 2 percent go on to play professional sports, and in the first full year of NIL, there were almost $1 billion dollars in deals made. NIL has opened up fantastic new opportunities for entrepreneurial college athletes to look for different avenues to partner with big and small businesses. This not only allows these students to earn money, but also teaches them valuable business lessons that they can utilize after their time playing college sports. Whether it be negotiating contracts, navigating regulations, or being exposed to paying taxes for the first time, all of these skills are extremely valuable as we build up a new generation of entrepreneurs.
Additionally, small businesses have been able to utilize the student athletes as a new way to market their business. While we often hear about high profile athletes with their massive deals, this is not the norm. Many of these deals are made between small businesses in the community and athletes that do not have a national presence. This symbiotic relationship helps strengthen the bonds that tie together many of these college towns.
While there has been a lot of good that has come of these changes for athletes, it has not come without some negative repercussions. Since there is no uniform set of regulations, individual states are stepping in and passing their own rules governing their universities. This patchwork approach is putting all the colleges who compete in different states in the awkward position of choosing to comply with state law, NCAA guidelines, or conference regulations that all might be conflicting. I am glad that we have two athletic directors here today that understand the complexity that this is forcing their universities and students to navigate, and will hopefully be able to shine light on what will happen if we continue without an overarching set of rules and regulations that everyone follows.
Additionally, with so much money changing hands, there has been an increased number of bad actors looking to take advantage of these high school and college athletes. NBC News conducted an investigation where they reviewed dozens of written NIL contracts offered to high school athletes. They described many of the deals as exploitative, where commissions were upwards of 40%, along with complex fee structures meant to confuse the athlete. In one instance, the contract that was put in front of the student was simply a $100,000 dollar loan. While I am wary whether the federal government will be able to step in to stop some of these bad actors, I think it is important to bring attention to this side of the issue to show that there is real damage being done to these kids when promises are being made but not kept. Without transparency surrounding these deals, it is hard to know who is truly working in the best interest of the student athletes.
I played college baseball myself and take this issue very personally. When I was in college, I received $10 a month that they called laundry money. I am not angry that the system has changed and think it has opened the door for many positive developments for student athletes. But I am passionate about keeping this system functioning for generations to come so that students will be able to experience what it means to truly be a student-athlete. There are many reasons for having this hearing, but I want to list out a few.
· I want to know how we can inspire student athletes to utilize the skills they learned navigating NIL to start their own small business.
· I want to hear about the best practices that universities are doing to teach the student athletes everything they need to know to take advantage of this amazing opportunity that wasn’t available for millions of athletes that came before them.
· I want to discuss the appropriate role the NCAA should play moving forward.
· I want to know how collectives are helping student athletes and allowing their schools to compete.
· I want to know how non-revenue generating sports will fare if all the money gets funneled to the sports that make money.
· I want to know if Olympic and women’s sports are going to be negatively affected if revenue sharing models are implemented.
· I want to understand how these changes are affecting the student athlete graduation rates if they are constantly changing schools in search of the largest NIL deal.
· I want to know how smaller market schools will fare if they are constantly having their players lured away by NIL deals.
· I want to know what we can do to stop predatory agents and bad actors from taking advantage of student athletes.
· And finally, I want to know the appropriate role the federal government should play in all of this.
I greatly look forward to today’s discussion that I hope will bring to light the different challenges and opportunities presented by NIL, and it is my hope that all NIL policy changes are beneficial for student athletes above all else.
With that, I would like to yield to the distinguished Ranking Member from New York, Ms. Velazquez for her opening statement.