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🏅 Interview with Ryan Mulvaney
Hey there,
Today’s interview is with a burgeoning force in NIL’s legal industry, Ryan Mulvaney. Ryan wears a lot of caps — from basketball agent to sports litigator. This versatile perspective, combined with mastery of NIL’s legal workings, made him one of our favorite interviews yet.
We took a slightly different approach with Ryan. Instead of the usual Q and A format, we asked him to give us what he sees as the top eight NIL misconceptions currently. That sent this interview in eight very interesting directions, some of which were surprising, and all very insightful. We hope you enjoy it.
If you want to follow Ryan Mulvaney on Twitter, do it here. He’s always providing great commentary on the NIL world.
Oh, and one last thing: Check out our sponsor today, RunDot! We really appreciate your support. Now, on to the interview!
— Cole, Justin and Collin
First Misconception – Collectives Are Not Owners or GMs
This comes from coaches with whom I have spoken since the advent of NIL. The purpose of Collectives is laudable. Donations to Collectives are appreciated and valued. Collectives, however, are not owners or general managers of the teams, and should not inject themselves into issues of roster management and playing time, which must be left to the sound, sole and absolute judgment and discretion of the coaches.
Second Misconception – Collectives Engaging with Recruits About NIL Opportunities
As I posted on X on March 17, 2024, Selection Sunday was immediately followed by the opening of the basketball transfer portal – “Movement Monday.” Weeks earlier, on February 23, 2024, the U.S. District Court for the Eastern District of Tennessee entered an Opinion and Order preliminarily stopping the NCAA from enforcing its Interim NIL Policy and NCAA Bylaw 12.11.4.2, which prohibited student-athletes from discussing potential NIL opportunities with Collectives during the recruiting process. The plaintiffs alleged that the NCAA’s prohibition constituted an unlawful restraint on and suppresses price competition resulting in harm to student-athletes in violation of antitrust laws. The court preliminarily agreed, and the NCAA has paused pending investigations and will not commence new investigations concerning the specific bylaw at issue. As a result, the basketball transfer portal “season” has been a free-for-all.
Notably, one of the NCAA’s rules taking effect on August 1, 2024, still prohibits Collectives from engaging in any contact or communication with a prospect or potential transfer until the prospect signs a national letter of intent, participates in permitted summer activities or practices with the team, or enrolls at the school and attends class. To the extent that the new rule (adopted in January) is not already enjoined by the Eastern District of Tennessee’s decision, it is arguably another antitrust violation waiting to happen because it reinforces the impermissible restraint placed on student-athletes.
Third Misconception – No-Show Jobs; Payments by Collectives
“No-show jobs” are prohibited. Student-athletes must perform their contractual obligations to earn the compensation provided by Collectives – the “quid pro quo” factor required by the NCAA. If, for example, a student-athlete contracts with a Collective for that student-athlete’s appearance at an event or a series of events in exchange for compensation, then that student-athlete must appear at the event or events to earn that compensation. Contractual consideration and the parties’ duties and obligations must be set forth in NIL agreements and must be performed. Furthermore, Collectives must pay the student-athletes for their services.
Fourth Misconception – Communicating with Compliance
The lack of compliance, both within the structure of Collectives and the Collectives seeking guidance from independent outside counsel and from schools’ compliance departments, has been an issue. I have encountered situations where Collectives are well-intentioned but lack knowledge of the ever-changing NCAA rules and state laws. Unfortunately, lack of knowledge is not a defense and jeopardizes a student-athlete’s eligibility and a school’s standing with the NCAA.
The NCAA’s NIL rules never prohibited Collectives from seeking guidance from a schools’ compliance departments. Although my representation of schools, Collectives, and student-athletes includes providing guidance on applicable state laws and NCAA Bylaws, I often encourage Collective and student-athlete clients to seek additional guidance in writing (email) from the schools’ compliance departments. Doing so, coincidentally, could provide a Collective or a student-athlete with an advice-of-compliance “defense” in a NCAA investigation – “we checked with compliance, and they said it was ok.”
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Fifth Misconception – Cooperating with Investigations
Another misconception is that Collectives do not have to and should not cooperate with NCAA investigations. Obviously, investigations into certain NIL-related issues are presently paused due to the Eastern District of Tennessee’s order. However, the preliminary injunction does not enjoin NCAA Enforcement from commencing (or continuing with) investigations into other areas involving NIL such as those prohibiting pay-for-play for athletes’ performance, prohibiting direct institutional payments for NIL, and the necessity for a quid pro quo in NIL agreements and actual performance of services.
That said, the only persons who or entities that have an affirmative obligation to cooperate with a NCAA investigation are schools, current and former staff members, and prospective and enrolled student-athletes. Cooperation from them includes encouraging boosters and Collectives to fully cooperate. Notably, the breadth of NCAA Bylaws does not require Collectives and/or boosters to cooperate. Furthermore, the NCAA lacks subpoena power to compel cooperation. The NCAA, however, backdoors “voluntary” cooperation from boosters and Collectives under the threat of ordering schools to disassociate with them as an additional penalty for certain violations.
There is, however, a price for cooperation. Having guided clients through NCAA investigations, the process can be costly – from defending interviews of client witnesses conducted by NCAA Enforcement; preparing client witnesses for interviews; participating in other interviews; reviewing NCAA Enforcement’s document requests; and compiling, reviewing and producing and/or redacting and/or objecting to the production of documents in response to NCAA Enforcement’s requests.
Anticipating the next question – must Collectives and others still cooperate (assuming they have been) with now-paused investigations following the Eastern District of Tennessee’s preliminary injunction – the short answer is, presently, no because there is technically nothing with which to comply. NCAA President Charlie Baker issued a memo on March 1, 2024, advising that the NCAA would “pause and not begin investigations involving third-party participation in NIL-related activities.” What the memo did not say, however, is that the NCAA was ending, terminating, dismissing, or closing those investigations. Depending upon the ultimate outcome of the Eastern District of Tennessee case – for example, if, in the unlikely event, a permanent injunction is not entered – then the pause could be lifted.
Most of us believe that either a permanent injunction will be entered (because the plaintiffs had to show that they have a strong likelihood of success on the ultimate merits of their antitrust claims to get the preliminary injunction in the first place), or a settlement incorporating the Eastern District of Tennessee’s preliminary findings about the Interim NIL Policy and Bylaw 12.11.4.2 will be reached. Notably, pursuant to an Amended Complaint filed on May 1, 2024, New York, Florida and D.C. were added as plaintiffs.
Sixth Misconception – Need-To-Know Basis: NIL Contracts
Disclosure has different meanings and forms. The first is whether a student-athlete must disclose a proposed NIL contract with a Collective, brand or other third party to a school’s compliance department. Today, the short answer is it depends on state law – hence the need for a lawyer – because many states require that student-athletes disclose NIL contracts to compliance departments for review (some require disclosure before the contracts become effective). States requiring disclosure do so to ensure that NIL contracts do not conflict with respective statutory prohibitions such as contracts cannot be for adult entertainment products and services, alcohol, gambling, tobacco, pharmaceuticals, and weapons.
Notably, however, with the NCAA’s rules that take effect on August 1, 2024, student-athletes must disclose NIL contracts exceeding $600 in value to the schools. Schools, in turn, must disclose “de-identified” data and information related to those contracts to the NCAA. What does “de-identified” mean? Pursuant to respective states’ general data privacy laws, for example, schools will have to take reasonable steps to ensure that the data and information disclosed to the NCAA cannot be associated with a specific student-athlete.
In agreements that I have drafted on behalf of both Collectives and student-athletes, I have included at least some form of a confidentiality clause (though consistent with any state law) because I believe both sides of the transaction have a compelling interest in maintaining the confidentiality of and protecting what I consider to be proprietary, sensitive and otherwise non-public business and pricing information from disclosure and dissemination. Disclosure affords competitors a substantial unfair competitive advantage.
The second form of disclosure is whether the Collective, brand or third-party and/or the student-athlete must disclose to the NCAA in an investigation the amount of compensation paid to the student-athlete. When NCAA Enforcement has inquired about the amount of compensation during an investigation, I have objected citing confidentiality and proprietary and sensitive business concerns. Student-athletes and NIL collectives have an interest in maintaining the confidentiality of that specific, non-public information. Additionally, the NCAA is not the arbiter of a student-athlete’s “fair market value,” which is left to negotiation and the exercise of business judgment by NIL collectives, brands and other third parties.
Seventh Misconception – Lawyers and/or NIL Agents
Student-athletes often do not realize that they may hire a NIL agency or a law firm (or both) to negotiate, draft, and review and revise agreements with Collectives, brands, and other third-parties.
In their truest and purest form, NIL agents have highly specialized marketing and social media management education, professional training and backgrounds, and proven results who can analyze and understand the marketplace, can lead, manage and assist with growing a student- athlete’s personal brand and brand positioning in marketplaces, and can secure brand deals from third parties. NIL agents typically charge a percentage of the value of those NIL opportunities(from what I have seen, anywhere from 5% to 30%). By “NIL opportunities,” I do not mean contracts with Collectives. I mean actual endorsement deals: think Shedeur Sanders (deals with Beats by Dre, Nike, Gatorade, Mercedes, etc.); Livvy Dunne (Vuori, American Eagle, Body Armor, etc.); etc. NIL agents who identify those opportunities often engage lawyers to assist with memorializing contracts because they and the student-athletes value the legal expertise and oversight. There are far too many legal issues involved – from intellectual property rights to complex contractual issues to fiduciary duties to compliance issues – that lawyers are specially trained to identify and resolve.
What has become a touchy subject is whether a student-athlete in the transfer portal needs a “NIL agent” to shop him or her to schools and negotiate a contract with a Collective in exchange for a percentage of the NIL collective contract. The short answer: not necessarily. In fact, I have been asked by an ever-increasing number of student-athletes and/or their parents to terminate “NIL agent” agreements or “understandings” with “NIL agents” who shop players in the portal. Student-athletes should understand that, although there may be negotiating room when negotiating with brands and other third parties, there is not a lot of negotiating room with budget-conscious Collectives that operate on donations from alumni. Moreover, although there are several good NIL agents who recruit players in the portal, many of them are also either NBPA agents who have negotiated NBA standard player contracts with teams or are also lawyers. Those NIL agents who are not also NBPA agents and/or lawyers often engage the services of lawyers to address many of the legal issues that arise during the negotiation and contract-drafting stages.
Eighth Misconception – Right to Counsel
Collectives, student-athletes, and coaches are entitled to their own independent counsel to represent them during NCAA investigations. I will say that again for the student-athletes because far too often they believe that they have no other alternative but to sit for interviews with NCAA Enforcement simply because they are scheduled on a moment’s notice – no, you do not have to sit down for an interview simply because it is scheduled; although you have an affirmative obligation to cooperate, you can (and should) retain a lawyer and have your lawyer present when you meet with NCAA Enforcement. In fact, the NCAA Bylaws expressly permit those attending interviews to be represented by counsel.
I have also learned that many student-athletes and coaches do not understand the scope of legal representation in NCAA investigations. The school’s lawyer in an NCAA investigation is not also the lawyer for the student-athletes and coaches – that lawyer’s attorney-client relationship is with only the school. Simply because the student-athlete competes for the school and the coach coaches for the school and is an employee does not mean that the school’s lawyer is also their lawyer. I therefore strongly recommend that student-athletes and coaches retain their own counsel to represent them and only them in NCAA investigations.