Navigating College Athlete Endorsements Around School Sponsorships

By Campbell Sode. Full Text.

Colleges generally resist formal employment relationships with their athletes. But pending NCAA rules that will allow college athletes to solicit third-party endorsements are a game-changer. College athletic departments have lucrative partnerships with companies like Nike. These school sponsors derive significant intrinsic value from the fact that millions of fans will see college athletes using their gear during games and in team-related posts on personal social media accounts, which can accrue countless followers. Yet college athletes might soon be able to solicit competing endorsement offers and accept financially superior partnerships with university sponsor rivals such as Adidas. Nike does not want to give Alabama, Clemson, or LSU big contracts, only to see their athletes endorse Adidas. Under these circumstances, school partners could sue for breach of contract if star college athletes promote their competitors. State legislatures and athletic departments may violate the federal Constitution’s Contracts Clause if they try to solve this new “conflicting sponsor” problem by retroactively forcing college athletes  to take inferior deals with existing university endorsees. However, colleges can manage that emerging legal issue by signing independent contractor agreements with athletes holding partnership offers, and employing their other players at will. Since employers do not control independent contractors, this solution will help college athletes secure market-value sponsorships, and protect schools from potential breach of contract litigation grounded in player endorsements.