WNBA investigation into player sponsorship could prevent enforcement

The WNBA’s investigation into the Las Vegas Convention and Visitors Authority’s (LVCVA) new $100,000 sponsorships for each Las Vegas Aces player will likely hinge on whether the sponsorships are more akin to endorsement deals or unauthorized pay-to-play.

The sponsorship dollars in some cases exceed the players’ WNBA base salary, which is just $67,249. The highest WNBA salary is approximately $252,000, a figure set by the CBA that does not include income from third-party endorsements.

Steve Hill, president and CEO of LVCVA, described the contracts as “sponsorships” and as presented by the Las Vegas Review JournalThe contracts require players to participate in “promotional appearances on behalf of Las Vegas” and wear Las Vegas-specific gear.

In a meeting with the players whose team won the WNBA title in 2022 and 2023, Hill said: “The offer is really simple. We want you to just play. We want you to continue to enjoy Las Vegas. And if you do a three-peat, there’s icing on the cake.”

An arrangement in which a player is paid to engage in promotional activities on behalf of a company – in this case, a government agency that has historically paid athletes and celebrities to travel to Las Vegas and participate in business activities in Las Vegas to promote – an agreement is an advertising contract. Athletes who are paid through endorsements are compensated for the use of their right of publicity, which prohibits commercial use of another person’s identity without their consent.

Many WNBA players have endorsement deals, some of which dwarf their WNBA salaries. Indiana Fever rookie sensation Caitlin Clark only makes $76,535 with the Fever but has an endorsement deal with Nike worth a reported $28 million.

In the higher education context, referrals are often referred to as name, image and likeness (NIL) deals. NIL is the removal of NCAA restrictions on college athletes exercising their right to publicity, meaning college athletes can now endorse, influence and promote in return for compensation without violating the amateur rules.

But the line between an endorsement deal and a pay-to-play program can prove difficult to draw.

NIL collectives are primarily payments from third parties, mainly boosters, for the use of the recruits’ NIL. Reality tells a different story. Some collectives pay recruits to attend a school or not transfer. Although the pay could be presented as a referral or “zero deal,” it is more akin to a signing bonus funded by a third party (the collective) rather than the beneficiary or de facto employer (the school).

In the gray area between support and pay-for-play, the WNBA could find the LVCVA deals problematic. Given that every Aces player, whether star or benchwarmer, is paid the same amount – regardless of the commercial value of her fame – paying for membership in the Aces could amount to a bonus. Hill’s suggestion that the Aces winning the title in 2024 as three-peat champions would mean more money for the players (“icing on the cake”) also suggests that compensation is tied to on-court performance or player work is.

To the extent that the LVCVA sponsorships are functionally payments for signing and remaining with the Aces, the WNBA may find that they conflict with the WNBA and CBA’s standard player contract.

The standard player contract states that it reflects “full compensation for their services.” The CBA, on the other hand, defines “base salary” as the salary included in the standard player contract. The CBA makes it a violation for a team or team affiliate to coordinate with a third party to pay players for basketball services, “even if such compensation is purportedly for non-basketball services.”

The LVCVA says it negotiated with players’ agents and did not communicate with the Aces. This approach will help the LVCVA determine that coordination with the team has not occurred. Still, the WNBA will likely want to confirm this. Hill entering the Aces’ locker room to meet with players is a factor the WNBA will likely ask about.

The WNBA also has to balance competing interests. WNBA player salaries have been widely criticized as being too low, even though the salary structure is determined through collective bargaining between the league and the players’ union. A move by the WNBA to deny pay to female athletes might seem outlandish or even sexist.

WNBA owners could also benefit if third parties, including government agencies, essentially subsidize athletes’ salaries. If the LVCVA agrees to pay Aces players, equivalent agencies in Chicago, Washington DC and Seattle may do the same for Sky, Mystics and Storm players. WNBA owners could see an increase in player salaries without having to fund it.

On the other hand, the WNBA is like other professional leagues. It limits the way teams compete to promote competitive equality and parity. The WNBA knows that fans want their teams to have a legitimate chance to succeed, which in turn provides real opportunities to sign top players. If a team can actually buy out all the good players, the league could suffer as fans in other cities might tune out, which could lead to lower ticket sales and TV ratings. Players also agree to the competition rules through their union.

The WNBA may also have concerns about regulating third-party payments, especially in a world of legalized sports betting. It’s one thing for a government agency to pay for it; The situation is different if the payer is a company or a group of investors, possibly also foreign companies. If players are compensated more by an external party than their team, their loyalty could swing in favor of the third party.

To withstand WNBA scrutiny, it would be prudent for the LVCVA to enforce its contractual rights in sponsorship deals. The LVCVA should document meaningful efforts to compel players to live up to their end of the sponsorship agreement. The more it seems like players are just being paid to be on the Aces, the more the pay will look like a bonus rather than a referral.

The issue of third-party payers for professional athletes is not new and even predates NIL. For more information, see a legal review article I co-authored with the late Dan Markel and Howard Waserman in 2014, “Catalyzing Fans,” published in Harvard Journal of Sports and Entertainment.