NIL FAQs: Group Licensing
1. What is an NIL group licensing deal?
NIL group licensing deals entail athletes pooling their NIL rights and licensing them collectively as a group.
Group licensing deals are typically defined in an agreement in which a licensee (i.e., the party who pays for and receives the license) uses a certain minimum number of player names, images, or likenesses in conjunction with or on products that are sold at retail or used as promotional or premium items, such as trading cards. For example, the NFLPA group licensing program for NFL players is defined as the use of a total of six or more NFL players on or in conjunction with retail or promotional items like EA Sports’ Madden NFL Games. At the same time, each NFL player retains the right to engage in individual NIL deals.
Group licensing deals with a company typically exclude athletes who are committed by contract individually to endorse a competitive product or service. For example, if an athlete has an endorsement contract with Coke, then that individual would be excluded from a group license deal with Pepsi.
The first reported group license in professional sports was during the 1960’s in a deal between Major League Baseball players and Coca-Cola that placed a series of 500 player pictures on the underside of bottlecaps. An example of a modern group license deal is Topps Major League Baseball Trading Cards.
2. Why are group licenses used? Why not just negotiate deals with each individual athlete?
It is more efficient for third parties to negotiate one deal for all players’ NIL rights instead of negotiating with each individual athlete for their rights. Group licensing deals provide “one-stop shopping” for companies seeking multi-player product or promotional lines. A group licensing deal also allows revenue to be shared among all athletes in the group. Many athletes lack the popularity and renown to sign individual NIL deals, but their NIL has value as part of a group because the licensee wants to depict an entire team, league, etc. (as might be the case with trading cards and video games).
3. Is a sports video game, like “Madden NFL 20”, an example of a group license deal? What are some other examples of group license deals?
Yes. Madden NFL 20 and other similar sports video games include a group license from the NFL players. The group license permits the video game company to use all of the NFL players’ names, images, and likenesses. The video game company also negotiates a license with the NFL and its teams to use their trademarks, logos, and other intellectual property in the game.
Other examples of group licensing deals can include trading card sets, jerseys, bobbleheads, or any other products that use a minimum specified number of athletes.
4. How are group licenses done in professional sports leagues?
Typically, the players in a league grant their union or a similar entity the right to use their NILs as part of a group license. The players’ group NIL rights are then either licensed to a third party or licensed to the league, which then licenses them to a third party.
5. What are the concerns about NCAA institutional or conference involvement in group licensing deals?
If institutions and conferences are allowed to engage in group licensing of athletes’ NIL rights, the concern is that group licenses will become a new tool for recruiting college athletes and will morph into a form of pay for play. NIL rules must protect the opportunity for fair sports competition among institutions and be designed to permit only legitimate transactions of market-based value between third parties and college athletes for use of their NIL. Rules must be put in place to avoid pay for play, impermissible benefits, and improper recruiting or retention arrangements (e.g., endorsement with a shoe company linked to future enrollment at a specific institution).
The Knight Commission recommends in its Principles for New Rules on the Use of College Athletes’ Name, Image and Likeness that “Conferences, institutions, and their employees and independent contractors must be barred from providing or arranging for compensation to college athletes and prospective college athletes for the use of their NIL, including through group license deals.”
6. Under a group licensing agreement, would college athletes be able to use institutional or conference logos or trademarks?
Knight Commission principles prohibit college athletes from using institutional or conference marks in individual and group licensing deals, such as team jersey sales. However, group licensing can be done without the use of institutional or conference marks or logos. For example, as illustrated in the Examples Applying Knight Commission Principles to NIL Opportunities for College Athletes (April 3, 2020): Gruff (Overbridge University’s famous power forward) and his teammates can develop and own a trademark together – “The GOAT and the Herd” – and earn pay through a group licensing deal with an apparel maker for apparel sales using their likenesses. Institution and/or conference marks or logos may not appear at any time in connection with “The GOAT and the Herd.”
The Knight Commission believes that prohibiting the use of institutional and conference logos or trademarks by college athletes is key to ensuring that the relationship between the athlete and institution does not become a pay for play arrangement.
7. What would need to happen for NCAA video games to return?
Rules would need to permit group licensing and allow use of institutional marks in conjunction with college athletes’ names and likenesses. As long as any recruiting advantage is mitigated, the Knight Commission may consider group licensing that utilizes institutional or conference marks at the national level (not at the conference or institutional level) and in an arrangement where all college athletes in that sport would receive an equal share of revenue.
8. Under the current Knight Commission principles, would a group of college athletes be permitted to enter into a group licensing deal?
Yes, when both conditions below are met:
- The deal is not arranged by the players’ conference, institution or their employees and independent contractors; and,
- There is no use of conference or institutional logos.
9. Do the Knight Commission recommendations allow college athletes to arrange deals for the sale of “official” game jerseys with institutional marks and their names on them?
No. To mitigate any potential recruiting advantage, the Knight Commission recommends that college athletes be prohibited from using institutional or conference logos or trademarks in any NIL deal. The Commission may consider the use of institutional marks if it is a national deal in which every college athlete in that sport benefits equally. Every athlete, and indeed every college student, has an individual right of publicity for the use of their own name, image, and likeness but that individual right does not extend to using logos and trademarks owned by institutions and conferences.
However, a player could enter into a licensing deal with an apparel manufacturer to produce a jersey with the athlete’s name on it without institutional marks.
10. What does the NCAA Report say about group licensing?
While there are many details left to be worked out on this issue, the language from the April 17, 2020, NCAA Board of Governors Federal and State Legislation Working Group Final Report and Recommendation states:
“At this time, the working group is also not recommending any changes to NCAA rules to permit group licenses of student-athlete NIL in what are characterized as group products (like video games). There are legal hurdles to such activity that preclude it as a realistic option for implementation at this time. The working group recommends that the NCAA continue to explore whether those legal hurdles can be overcome… so that this issue can be revisited in 2021 or later.”
“The divisions should continue to explore whether it is possible to support institutionally managed group licenses for athletically related activities.”
11. Is congressional action needed to permit group licensing?
No. As long as the NCAA permits group licensing, college athletes can pool their NIL rights together and license them to third parties, like any group of individuals.