New rules allow Oregon high school athletes to profit from endorsements

Oregon joined a number of states last summer in allowing college athletes to be compensated by companies for their name, image and likeness (NIL). Now, high school athletes can do the same — the Oregon School Activities Association released new guidance last month detailing how students can approach and benefit from NIL deals.

OSAA executive director Peter Weber joins us to talk about what went into that decision. We’ll also hear from University of Oregon sports business instructor Craig Leon about trends in the collegiate NIL landscape over the last year.

This transcript was created by a computer and edited by a volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Oregon joined a number of states last year in allowing college athletes to get paid by companies. Specifically, they can strike endorsement deals that use their name, image or likeness (NIL). Now Oregon’s high school athletes can do the same thing. The Oregon School Activities Association released new guidance just last month detailing how students can benefit from these deals. Peter Weber is the executive director of the OSAA. He joins us to talk about what went into this decision. Craig Leon joins us as well. He is a sports business instructor at the University of Oregon. Welcome to Think Out Loud.

Peter Weber: Thank you for having me. I appreciate it.

Miller: Peter Weber, first. What were the rules in terms of the kinds of deals that Oregon’s high school athletes could make before this recent change?

Weber: That’s a good question. That was one of the reasons that we wanted to make some changes, as our rules were unclear. They weren’t really designed to take into consideration that type of compensation. So ours were more centered around performance and not being able to receive cash for performance. Not so much anything to do with NIL. Again, that’s one of the reasons we wanted to try and clarify it and make some changes.

Miller: Can you help me understand this distinction? Because it’s hard to imagine that any company would want to give a student athlete money for some kind of endorsement deal using their name or a picture of them, or something that looks like them, if they weren’t good performers on the field or on the court.

So how do you distinguish between getting compensated for your performance or your participation or your achievement, and getting compensated because you’re a good athlete?

Weber: Yeah, it’s kind of a tricky line. But we look at it as a direct correlation. So for example, in our new language, allowing NIL activities at the high school level in Oregon, it prohibits a direct correlation, like If you score 30 points this weekend in a basketball game, then we’ll give you X amount of dollars. That type of compensation is prohibited. But the idea of a person’s name, image and likeness, their right of publicity, those activities are allowed.

Miller: So there was some gray area before. There are various ways to clear up that kind of a gray area. You could have, for example, said we’re not going to allow NIL deals for high school athletes, despite the fact that college athletes in Oregon and many other states can now do them. Why did the Oregon School Activities Association go in the other direction and codify the ways in which these deals can now be made?

Weber: I think, for us, it ended up being discussion with our membership, with our executive board, our delegate assembly - which is one rep from every league in the state - and reviewing language from other states and trying to figure out, is it something that we want to do? When we approved it through our delegate assembly on October 10, we were the 19th high school state association to approve NIL activities, so we’re not really out there on the cutting edge. We actually looked at a number of other policies from different states as we crafted our policy. But I think in the end for our schools and for our governance, it felt like it was something that was coming and that we needed again to clarify our policies and in the process, make sure that people understood what was allowed and what was prohibited.

Miller: Can you outline the basics there in terms of what is allowed and what’s not?

Weber: Yeah, there’s a few things that we go through. I mentioned before that the compensation can’t be contingent on a specific performance. I mentioned the points scored in a game. Compensation can’t be provided as an inducement for somebody to transfer to another school or stay at a school. That would involve undue influence, which is another rule we have that prohibits that. And then it can’t be provided by a member school or an agent of the member school either. Those types of things are prohibited. And then within the actual NIL activity, the students are not able to use their member school name, logos, marks, uniforms, etc. And then there’s also certain types of activities, alcohol, tobacco, gambling, those types of things that are prohibited as well.

Miller: Peter Weber, I want to hear more about how this is going to work in Oregon in terms of high school athletes.

But as I noted, Craig Leon is with us as well, an instructor of sports business at the University of Oregon. And I want to get a little bit more understanding of how this has already been working in terms of college athletes since they are ahead of high school athletes now. How many college athletes in Oregon or around the country have actually been making these kinds of deals?

Craig Leon: Thanks for having both Peter and I for this discussion today. On the college side of things, we’re just a little over a year into the name, image, likeness era and I’ll kind of break it down into two different categories. One, for the local viewers here, University of Oregon student athletes, there were about 700 NIL deals that were completed last year. And on average, student athletes received about $2,800 in compensation. That varies widely. I think, if you follow the Oregon Ducks, there were several high profile student athletes that did some big time deals that I think kind of skews that number a bit. But I think overall, if you look at, say, 700 athletes that were able to benefit from this new NIL, that’s a win for the student athletes for sure.

Miller: I have to say that that’s way more and that’s just for the University of Oregon. 700 student athletes at the University of Oregon in just one year have struck some kind of deal.

Leon: 700 deals. So it doesn’t have the number of how many, an athlete could have 10 deals. It doesn’t necessarily say how many student athletes, but the number of 700 deals were done. I mean it is a significant number, though. There’s roughly about 500 student athletes. Not every athlete is participating in NIL, but 700 is a lot for year one.

Miller: What kinds of deals are you seeing?

Leon: There’s a couple of third party vendors that help schools, in this case. I think middleman is maybe the wrong word, but they act as a platform for student athletes. And so they’ve actually tracked some of this data, everything from posting content on social media, to athlete appearances and autographs, camps and clinics. They are actually creating content. They’re selling products. It really varies and it depends on what the marketing and business objective is, of the deal.

Miller: Is it more likely, say, that these deals are going to be struck between a student athlete and a local car dealership, as opposed to an international car maker?

Leon: Yeah, I think that’s way more likely in year one of these deals, and really there’s, at the college level after year one is, there’s really two avenues and categories. There’s this kind of traditional, sponsorship marketing deal, that takes place with businesses to your point, local businesses, regional businesses and then national and global companies. Very much, it’s been more common for student athletes to sign local and regional deals, not just with the companies within the area that they’re based out of. But then think about all of these kids have a hometown somewhere else. They’re seeing deals come from those hometowns as well.

Miller: In other words, so a football player could go from Fresno, could go to Eugene, play there, do well, and you’ve actually seen examples - I mean, I’m making this up because I’m looking across the glass at somebody who came from Fresno - where a Fresno pizza parlor would say, ‘Hey, we people here still remember you, and so we’re gonna put your name on the front of our pizza shop?’

Leon: Absolutely. In fact, that student athlete may be more recognizable in their local communities where they’re from than even in the town, city, community, that they’re going to school.

Miller: Because they’re still a star in their hometown and they’re just one of many pretty good players at their new school?

Leon: Yeah, very much that, very much could be the case. So we’re seeing it on both sides, right? Student athletes are signing deals from here at the University of Oregon, from Oregon companies, local brands, but also from their hometowns. It’s really only the stars who are signing deals with these global and national companies that are what we would consider significant marketing deals.

Miller: Last year, or year and a half ago, when there was more of a national conversation about what these kinds of deals would mean, one of the issues that I remember people talking about was a fear that this could create an even more bifurcated financial world in terms of collegiate sports, where the few people who are playing in big money sports - especially college football and also college basketball - they would be likely to get deals and people playing badminton or field hockey would be way less likely. What are you seeing in terms of the sports that are actually getting these deals?

Leon: I think those are all concerns that were shared across the spectrum in the sports industry and certainly in the collegiate landscape. Football and men’s basketball is definitely driving a lot of activity. Although from some of these third party vendors, the ones that provide some of the statistics from year one, if you remove football from the equation, women student athletes are actually doing probably better than than a lot of the male student athletes there. By removing football, they account for 60% of the NIL deals. Some of the women here have in the first year been really savvy about how they use social media, how they brand themselves, how they go about creating value for companies, to where we maybe necessarily haven’t seen that on the guy’s side of things. I think the men have been kind of complacent and maybe relying more on their athletic ability than how they brand themselves as individuals.

Miller: This is obviously, in college, the year of data that we’re talking about and you’re digging into. What are you expecting to see now that high school athletes in almost 20 states, including Oregon, can now make these kinds of deals as well?

Leon: It’s an interesting time to be a student athlete, whether you’re at the college level or the high school level. As somebody who competed as a college athlete - I ran professionally for 10 years - I put on my athlete hat and I think, ‘Hey, this is great.’ I mean, it just provides somebody with the opportunity, if they want to pursue this route, with the ability to do that. That said, it’s scary. I think people can sign bad deals. They could give away some of their rights in high school, not knowing it, just signing a deal. And that deal could cover them in college, and if they were to make it to the professional level, that could cover them through that entire time period.

Miller: Oh, in other words, if in the fine print of that contract that they sign when they’re 16 and an up-and-coming basketball star, say, it may say we have exclusive rights for the next decade?

Leon: Yeah, there is potential for those deals and honestly some of the college student athletes, there’s been stories of that happening, early on in the window of when NIL deals were happening. It was kind of the wild, wild west. There were some companies moving in that we’re certainly taking advantage of the situation. And so I fear that that might be the case even at the high school level. I think there needs to be, the more education we can have both at the college level, at the high school level to really make student athletes aware of, what’s a good deal, what’s a bad deal?

I think there’s been a lot of discussion around the, both the positives and negatives of social media and what that does if you’re gonna build a brand on social media, you’re really putting yourself out there as an individual and, as a high school student, you may or may not be ready to take that on. But I believe in a free market system again, as a student athlete or a former student athlete, I would want to have the ability to make that decision for myself.

Miller: Peter Weber, back to this question that Craig Leon just brought up of the possibility that young people could be, in a sense, taken advantage of, or make decisions that could impact them financially for years to come. What kind of guidance could OSAA provide for families or students or schools to prevent that?

Weber: It’s a great question. Actually, one of the pieces as we talked with our delegate assembly and our board in making this decision, that was critical to us doing that. We’ve created a page on the OSAA website for NIL. We obviously have our rule listed there and links to the collegiate governing bodies. But also educational resources. We’re an education-based activities association. So we have links to some different resources for schools, for students, for parents, and even actually written into our policy is an encouragement for students and families to seek legal counsel. Tax advice is something that we’ve heard from other states. I think, depending on the size of a deal, that people may not understand the financial implications for them with taxes, but really strongly encouraging families and schools and students to seek that advice to avoid the situation that Craig was referring to.

Miller: And finally, Craig, back to you. I’m wondering if this could even be the connection between the high school and college level. How has the possibility now for these kinds of deals affected recruiting?

Leon: That’s been the elephant in the room, really, around this year one. In fact just in the last couple of weeks the NCA has provided some guidance around some of the language about what’s permissible and not permissible. And they’re really trying to get their hands wrapped around this idea that maybe some NIL deals are really more recruiting deals ....[pause]. The reality is it’s happening.

Miller: We missed you for a second. You said, I think you cut out, but you’re saying that the fear that some NIL deals (name, image, and likeness deals), the fear that they could actually basically be inducements to go to a school that are in disguise?

Leon: Yeah I think in year one the NCA has, just in the last couple weeks, put out this guidance to try and make clear what is permissible and not permissible. Because I think there was some concern that deals that were happening were certainly disguised as recruiting inducements. There’s been a lot of these collectives that have popped up. That’s been the kind of hot word in the in the industry of basically alumni who are trying to support NlL activities, with what I would probably consider not necessarily traditional marketing deals and sponsorship deals. So that kind of gets in that gray area of, was there a deal ‘guaranteed’ on condition of attending this school. It’s still kind of in process. It’s still very early on. I’m not sure how it’ll all shake out here, but there’s definite concern across the NCA landscape that not every NIL deal is a real NIL deal.

Miller: Craig Leon and Peter Weber, thanks very much.

Weber: Thank you.

Leon: Thank you.

Miller: Craig Leon is an instructor of sports business at the University of Oregon. Peter Weber is the executive director of the Oregon School Activities Association. We’re talking because of the recent change that will allow high school athletes in Oregon to sign certain kinds of endorsement deals.

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