New Texas NIL bill signed into law by Gov. Abbott, opening revenue sharing with athletes

(KBTX) – House Bill 126- which amends the previous name, image, and likeness (NIL) compensation legislation in Texas- was signed into law by Gov. Greg Abbott on Thursday.

The law goes into effect immediately, as the bill received two-thirds majority vote in both chambers of the Texas legislature.

This bill, authored by Rep. Carl Tepper (R-District 84) widens existing NIL legislation so that athletes can be paid NIL compensation directly from their universities, while they are performing team-sanctioned events or to be used as influence for enrollment at a school. It also contains a clause allowing new NCAA rules or court orders to supersede the state law, circumventing the need to update NIL law every two years.

“It’s more like satisfying that you might have had a small hand in saving college football in Texas,” Tepper told KBTX last week. “Of course, it’s something we had to do and it’s something that we worked with a lot of the institutions to get done, including their legal counsel.”

With a settlement waiting for approval in the House v. NCAA antitrust case in the coming weeks, the state was in need of the new language in the bill to comply. As it currently reads, the House settlement provides $2.6 billion in back payments for athletes who missed out on NIL from 2016 to the legalization of the payments in 2021. More important to this bill, the settlement allows universities to share revenue for the use of the athletes’ NIL in television broadcasts of games, among other things, which violates the previous law in the state.

Universities opting into the settlement are expected to enter into contracts with individual athletes with compensation varying by sport and position. Under the new law and the settlement, these contracts can be used as recruiting enticements for perspective athletes.

Legal counsel from the Texas A&M University System testified in front of both House and Senate committees for the bill.

“Well, the current law says we can’t do revenue sharing,” Texas A&M head coach Mike Elko said of the bill last week at Southeastern Conference Spring Meetings. “So, I would imagine that would be a significant disadvantage for our football programs if everyone else in the country can do revenue sharing and we couldn’t, and so, I think we’re going to need some help there.”

The Texas legislature passed NIL bills in the last two sessions, both of which sailed through the process without much friction.

However, a floor amendment in the Senate was necessary to appease the concerns of senators who worried that financially predatory actors might take advantage of talented children as young as middle school. Now, the law states that universities and third-party entities cannot enter into an NIL contract with an athlete until they are 17. The University Interscholastic League (UIL), the governing body for high school athletics in the state, also has a rule that high school athletes cannot earn NIL compensation.

General council from the A&M System, as well as the Texas Tech University System, confirmed that payments on NIL contracts with universities will not begin until the athlete is enrolled.

“This was one of the toughest bills I’ve carried yet onto the House floor,” shared Tepper. “I wasn’t expecting the challenges I had in committee, and then on the floor. A lot of concerns about the future of NCAA football- that’s not what this bill is about but it seems that a lot of the members wanted to vent their frustration with their concerns about college football, and where this is going.”

The new bill also provides some flexibility. If the NCAA or a new court order changes rules or laws around NIL compensation, the Texas law automatically conforms to those changes without the need for passing new legislation.

Now, athletic directors and coaches across the country wait to see if Judge Claudia Wilken approves the House settlement, making revenue sharing a national standard. However, with this law on the books in Texas, A&M athletic director Trev Alberts said the Aggies might start revenue sharing even if the settlement is not approved.

“I think the general sentiment is, we may just go forward and share revenue anyway,” he said at SEC Spring Meetings. “This is what we want to do. I think we’ve built something that makes a lot of sense, that brings some- stability is the wrong word all the time- but brings some common sense to what we’re doing.”

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