NIL Compensation or Salary? Depends on the Contract

Footnotes for this article are available at the end of this page.

As name, image, and likeness (“NIL”) deals dominate high school and collegiate sports, it is increasingly important to have an airtight contract for high school and college athletes to preserve NCAA eligibility. Just ask Matt and Ryan Bewley, twin brothers and former five-star basketball recruits from Fort Lauderdale, Florida. The NCAA deemed the brothers ineligible to play college basketball at Chicago State University, an NCAA member, for the ’23-’24 season based on a few words in the contracts they signed in 2021.

The Bewley brothers’ saga started on July 1, 2021, when the NCAA instituted an interim policy allowing student athletes to sell their NIL rights for money. The Bewley brothers signed contracts with Overtime Elite (“OTE”), a basketball league for 16- to 20-year-olds, during the summer of 2021 after this interim policy was adopted, to play in OTE’s first season. After playing for OTE for two seasons, the Bewley brothers enrolled at Chicago State University intending to play college basketball during the ’23-’24 season. However, on October 31, 2023, the NCAA denied the Bewleys from playing on the basis that they had played for a professional team when playing for OTE. The crux of this decision was based on the contracts the Bewley brothers signed with OTE in 2021, which the NCAA stated were “agreements to compete in professional athletics for a professional team with pay-for-play compensation.”1 Specifically, the Bewley brothers’ contracts stated, “During the course and scope of employment, the Player shall work and perform duties and services at the direction of the Company.”2 Accordingly, the NCAA also concluded that the brothers received payment from OTE for professional services, instead of scholarship or NIL compensation.

Subsequently, the Bewley brothers brought a federal lawsuit against the NCAA with one of the claims being that the NCAA had violated the Student-Athlete Endorsement Rights Act, Illinois’ version of an NIL law for student athletes. The brothers claimed that the compensation they received from OTE was in exchange for use of their NIL and not salary for playing on a professional team. The Bewley brothers further alleged in their complaint that former OTE players Rob Dillingham and Kanaan Carlyle have remained NCAA eligible (both are currently playing collegiate basketball at NCAA member schools) despite playing basketball for OTE with similar contracts. Specifically, the brothers alleged that the NCAA denied the brothers’ eligibility despite them having “the same duties and obligations as Mr. Dillingham under their respective contracts with OTE” for allegedly comparable compensation.3

The judge in their federal lawsuit denied the brothers’ request for a temporary restraining order in November 2023, which would have allowed the Bewleys to play for most of Chicago State’s season. On January 10, 2024, the judge denied a preliminary injunction against the NCAA’s enforcement of its determination, guaranteeing that the Bewleys would miss the entire season. Among other things, the judge sided with the NCAA’s argument that the Bewley’s contract was an “employment contract with a professional league . . . [and was] much more than just an NIL contract.”4 Further, the judge distinguished Rob Dillingham and Kanaan Carlyle’s contracts from the Bewleys’ contracts and agreed with the NCAA’s argument that “Dillingham and Carlyle’s contracts do not change the contract that the plaintiffs signed here.”5 The NCAA also argued that OTE instituted a different model in 2022, the year in which Rob Dillingham and Kanaan Carlyle joined OTE. The new model offered athletes scholarships, rather than a salary (with wording that did not tie compensation to services), preserving NCAA eligibility for those athletes. Dillingham and Carlyle’s contracts expressly provided for “financial aid for ‘actual and necessary expenses,’ ‘educational related expenses,’ and permission to engage in ‘name, image, and likeness’ opportunities.”6

The Bewley brothers played in the same league as Dillingham and Carlyle during the same points in their respective high school careers for presumably comparable payments. However, the Bewley brothers likely will never play collegiate basketball, while Dillingham and Carlyle each just completed their first year of college basketball at high-profile schools. The reason that the Bewleys cannot play, while Dillingham and Carlyle can — not having proper language in the Bewleys’ contracts tying their payment to NIL. As trivial as it may seem, any contract binding a high school athlete or having to do with NIL, should always be reviewed by an experienced lawyer.

Unfortunately, the Bewley brothers have not, and likely will not, suit up for Chicago State University, and it all turned on some words in their contracts.

 

[1] Bewley and Bewley v. NCAA, Case No. 23 CV 15570, Northern District of Illinois, Eastern Division, NCAA’s Opposition to Plaintiff’s Motion for Temporary Restraining Order and Preliminary Injunction (Nov. 13, 2023), page 6.

[2] Bewley and Bewley v. NCAA, Case No. 23 CV 15570, Northern District of Illinois, Eastern Division, Memorandum Opinion & Order (Jan. 10, 2024), page 3.

[3] Id. at 3.

[4] Id. at 6.

[5] Id.

[6] Id. at 9.

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