On September 15, 2020, New Jersey Governor Phil Murphy signed the New Jersey Fair Pay Act (the "Law") into law, which grants collegiate athletes in the State the ability to profit from the use of their names, images, and likenesses. New Jersey is the latest in a wave of states making major changes to athlete marketing rules that apply to their respective colleges and universities. The Law provides colleges and universities with a lot of time to adjust their practices, as it will not apply to athlete marketing agreements until "the fifth academic year following its enactment."
What does the new Law do?
New Rights of Publicity for Athletes
Under the Law, four-year colleges and universities in New Jersey may not prevent athletes from earning compensation for the use of their names, images, or likenesses – their "rights of publicity." Importantly, institutional scholarships are not considered compensation under the Law. Further, colleges and universities may not revoke scholarships where athletes hire representation and/or profit from their rights of publicity.
As we have reported, multiple states have recently passed laws allowing collegiate athletes to profit from their names, images, and likenesses. While New Jersey's Law resembles other states' laws, the Law also imposes some important and unique limitations, including:
- Collegiate athletes may not use their names, images, or likenesses to promote adult entertainment products and services, alcohol, casinos, gambling, sports or video game betting, the lottery, tobacco and electronic smoking products, prescription pharmaceuticals, controlled dangerous substances, or weapons and ammunition;
- Athlete marketing agreements may not conflict with any existing marketing agreements applicable to the students' colleges or universities;
- Collegiate athletes must disclose any marketing contracts that they enter into to their respective colleges or universities; and
- Attorneys representing collegiate athletes must be admitted to the New Jersey State Bar.
Shift to Athlete Marketing Compensation
As we have blogged, states across the nation are proposing and passing legislation that allows collegiate athletes to share in the profits associated with the use of their names, images, and likenesses. Collegiate athlete marketing will be big business, and the emerging regulatory changes will only speed things up. While the National Collegiate Athletic Association ("NCAA") has only recently begun petitioning for Congressional action, states have taken the lead.
Some lawmakers in Washington are strongly opposed to name, image, and likeness compensation for student athletes, however. Indeed, some senators recently expressed concern about "federaliz[ing] college sports." Sen. Richard Burr (R-N.C.) went so far as to say that compensating college athletes would be a " huge mistake." Congressional opposition will likely delay, but not prevent, federal legislation. Given the clear trend toward state leadership on this issue, businesses should expect a patchwork of different laws until Congress steps in. This will likely result in unclear obligations and may expose businesses to potential liability. Accordingly, businesses should work with experienced counsel to ensure compliance with new and changing state laws. If you need assistance developing or reviewing an athlete marketing agreement or a sports marketing campaign, please e-mail us at firstname.lastname@example.org, or call us at (212) 246-0900.
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Originally published by Klein Moynihan, September 2020
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