A Look at Gender Equity in the NIL Era (Issue #11)

The advent of NIL has created a new world of opportunity for college athletes. However, in the midst of this new economic frontier, a longstanding legal framework—Title IX—has re-emerged as a central issue.

This federal civil rights law, which prohibits sex-based discrimination in any education program receiving federal funding, now intersects with NIL in complex and contentious ways.

While NIL has provided unprecedented platforms for female athletes, it has also brought a renewed focus on the financial disparities that still exist in college sports, raising serious questions about compliance and legal risk.

The Earning Gap and the Role of Collectives

Initially, many believed NIL would be a great equalizer, and in some areas, it has been. Female athletes with large social media followings in sports like gymnastics and women's basketball have secured high-profile individual brand deals.

However, a deeper look at the data reveals a stark gender gap in overall NIL earnings. Recent reports indicate that a vast majority of NIL compensation, in some cases over 70%, goes to male athletes.

A primary driver of this disparity appears to be the NIL collectives. These organizations, which are often heavily funded by boosters and alumni, tend to funnel a disproportionate amount of their resources into revenue-generating sports like football and men's basketball.

This funneling of money, which is legally separate from the university but often closely affiliated, has created a significant financial imbalance that critics argue violates the spirit, if not the letter, of Title IX.

The Legal Challenges & New Guidance

A group of female athletes have filed a legal challenge against the House settlement, arguing that its proposed distribution of the $2.8 billion back-pay fund violates Title IX.

The settlement's formula allocates approximately 90% of that money to male athletes in football and men's basketball. The plaintiffs contend this is an unlawful disparity based on gender, and their appeal has temporarily suspended the payout of the back-pay damages.

The legal landscape is also being shaped by federal guidance. The U.S. Department of Education's Office for Civil Rights (OCR) recently issued guidance on this topic.

This guidance, which was subsequently rescinded by a new administration, initially stated that compensation provided by a school directly to an athlete for their NIL would be considered "athletic financial assistance" subject to Title IX's proportionality requirements. The guidance also warned that third-party payments from collectives could trigger a school's Title IX obligations if they created a disparate impact.

However, the rescission of this guidance does not mean universities are free from legal risk. While the OCR's current official position on this specific issue is now less prescriptive, the underlying legal principles of Title IX still apply. Universities remain responsible for ensuring they provide equitable benefits, opportunities, and treatment

The Compliance Imperative for Universities

For universities, this means that turning a blind eye to NIL is no longer a viable strategy for mitigating legal risk. While they cannot directly manage every third-party deal, they must proactively ensure that their overall athletic program provides equitable opportunities and benefits for both male and female athletes. This includes:

A university's athletic collective, heavily funded by football boosters, announces a new "NIL for All" initiative that provides every football player a flat annual payment of $25,000. In an effort to appear equitable, they also offer every female basketball player a "first-come, first-served" opportunity to earn up to $5,000 in promotional deals.

The Legal Edge Insight for Athletes & Families:

This is a classic example of a potential Title IX violation. While the collective's actions are not direct institutional aid, the stark disparity in both total funding and opportunity (guaranteed payments for one group versus a limited, competitive opportunity for another) could be viewed as a disparate impact that the university may have a legal obligation to address.

This week's tip for athletes and families is if you notice significant disparities in how your team is treated or how opportunities are provided compared to a team of the opposite sex, document it. This includes differences in facilities, promotional support, and access to NIL education. Your records could be valuable if a legal challenge is ever needed.

You often hear the term "disparate impact" in legal discussions about discrimination. But what exactly does it mean in a Title IX context?

Disparate Impact (in NIL context):

‘Disparate impact' is a legal theory that a policy or practice, while appearing neutral on its face, has a disproportionately negative effect on a protected class—in this case, on the basis of sex. In NIL, a university or an affiliated entity's seemingly neutral policy (like funding based on revenue) could create a disparate impact if it results in a clear and measurable gender disparity in financial benefits.

We're always striving to provide the most relevant insights. What do you think needs more attention for sports less known?

Don't just read – join the conversation!

Share your insights in the comments. Let's tackle this together!

We get a lot of great questions about NIL. Here's a common one we hear (and a general answer to help everyone understand!):

Question:

Can my university control my NIL deals to ensure they're 'fair' for all athletes?

The Legal Edge Answer:

Generally, institutions do not have a right to directly control an athlete's third-party NIL deals. However, they do have a legal obligation under Title IX to ensure that their overall athletic program provides equitable opportunities. This is a crucial distinction.

It means that while they may not be able to stop your deal, they may be compelled to provide comparable support or opportunities to other athletes to avoid a Title IX violation.

Have a general NIL question you'd like us to address in a future issue? Hit reply and let us know!

Disclaimer: This newsletter provides educational insights and general information related to the legal side of Name, Image, and Likeness (NIL). It does not constitute legal, financial, or professional advice, and should not be relied upon as such. This content is for informational purposes only, and you should always consult with a qualified professionals for advice tailored to your specific situation.

NIL laws are constantly evolving, and the information provided might not be the most current at all times.