Lawmakers aim to expand NIL direct payments to CU, CSU and other Colorado schools

Student-athletes at Colorado colleges and universities could soon be paid directly by their schools under a bill in the state legislature that would build on their ability to profit from their name, image and likeness.

The proposal, House Bill 1041, reflects the seismic shifts running through college athletics since the NCAA’s authorization of name, image and likeness, or NIL, payments in 2021. That landmark decision, forced by a California law, allows college athletes to be paid after years of strict prohibitions on them profiting from their talents.

But it also initially restricted the source of compensation to outside entities instead of schools themselves — until the landscape in the multi-billion dollar college sports industry shifted again with another landmark decision last year.

That decision, which came through a settlement in the class-action lawsuit House v. NCAA, set the stage for schools to be able to pay their student-athletes directly. Colorado lawmakers’ new bill builds off an existing Colorado law allowing NIL payments so that universities can comply with the new rules established by the settlement.

“Our universities cannot pay our athletes directly,” said Senate President James Coleman, a Denver Democrat and sponsor of the bill. “They get paid by businesses, and now that’s a disadvantage we have with universities around the country.”

Some states already allow universities to directly pay their athletes, while others are considering similar laws to allow the practice.

The potential of direct NIL payments could add a potent variable to the mix when athletes shop their talents to other schools through the transfer portal, in effect creating bidding wars between colleges.

House sponsor Rep. Lesley Smith, a Boulder Democrat, formerly served as a University of Colorado regent, which gave her a “front-seat view” of the rapidly changing landscape.

“Basically, we’re in a new era of intercollegiate athletics,” Smith said. “It’s a bit of the Wild West, with the rules shifting frequently.”

She sees the bill as a fairly straightforward response to the NCAA settlement and hopes to have the option of direct payments in place by the fall semester. In short, the bill would allow colleges to bypass third-party organizations, such as collections of boosters, to compensate the student-athletes. 

CU started using NIL collectives 2022. In March, it merged two of the collectives — one focused on football, the other on all athletes — into one. The new 5430 Alliance was intended to support 350 student-athletes across 11 programs, according to a CU news release. The athletics department also helps athletes with other NIL opportunities. 

The university has since cut ties with the collective as it prepares to pay athletes directly, in compliance with the House v. NCAA ruling.