NIL playbook: understanding the deal
GSE Money in the Making08/04/23
THE NIL BASICS
What is an NIL deal?
A Name, Image and Likeness (NIL) deal refers to college athletes’ right to capitalize on their identity and personal brand. In other words, it lets you profit from endorsements, sponsorships, and other opportunities. That wasn’t always the case. Until recently, the NCAA prohibited student-athletes from making a single dime off their NIL. But now that they allow it (cue applause), you have the ability to make waves off the field as well as on it.
What’s in it for me?
Ownership of (and the right to control) your name, image and likeness. And yes, of course, money. But it really goes deeper than that. NIL deals offer you a chance to build your personal brand, and your professional team, like never before. It's like being the CEO of You, Inc. You get to shape your image, tell your story, and connect with fans in ways that transcend on-field performance. You get to consult with Financial Advisors, accountants, lawyers, and others who can help set you on a path for success. The impact can actually go beyond your college years, too. Because NIL deals can open doors to exciting collaborations, networking opportunities, and even potential career paths for when your athletic journey comes to an end.
What are the basic rules and policies?
Rule #1: It doesn't matter if you're at a big-name school or a lesser-known institution. All NCAA, NAIA, NJCAA, and USCAA student-athletes, regardless of state, institution, or division, are allowed to participate in the NIL arena.
Rule #2: Student-athletes are allowed to hire Financial Advisors, lawyers, agents, and other professionals. So if you want pro guidance to help make sure you're making the right NIL moves, go get it.
Rule #3: The NCAA doesn’t require you to report your NIL activities. But most colleges and universities do. So check with your institution to figure out what’s what.
Rule #4: "Pay for play" is still a big no-no. Student athletes are not permitted to engage in NIL activities that incentivize on-field performance. In other words, no one can slip you wads of cash or sweet deals just because you scored that winning touchdown or dropped a triple-double.
Where is the full rulebook? And who makes the rules?
When it comes to the NIL Rulebook, it’s really more rulebooks plural.
Rule Maker #1: College Athletic Associations. To date, the NCAA has published the Interim NIL Policy along with additional resources. But they’ll likely update these rules going forward, so keep an eye out. The NAIA’s NIL resource center can be found here. The NJCAA NIL policy can be found here. The USCAA NIL Resource Center can be found here.
Rule Maker #2: State Governments. Here it's a bit of a mixed bag. Some states have already enacted NIL laws, others are still in the proposal phase, and some have yet to address NIL at all. You can check out this state law tracker on the NIL marketplace Opendorse, but double check on your state's government website. And to be clear, it should be the state where you go to school (i.e. not the state where you’re from, if it’s different).
Rule Maker #3: Colleges & Universities. Ultimately, your school has final authority on matters like rule compliance, deal reporting, and even whether you can participate in certain NIL activities. They'll consider factors like a company's product category and whether the school has any existing conflicts. So check in with your athletic department for the full policy.
YOU GOT AN OFFER. NOW WHAT?
How do I know if an NIL deal is the right fit?
Remember, just because a NIL deal offer rolls in doesn't mean you have to jump on board. Before getting caught up in money talks, take a moment to step back and assess the overall fit.
Assessment #1: Does it vibe with your personal brand and values? In other words, does it resonate with you as a person and athlete? If not, then you’ll likely want to pass.
Assessment #2: Is the timing right? For example, you probably don’t want to be shooting a commercial when you also have playoffs and final exams on your plate. So make sure the deal won't overwhelm your schedule or sideline your performance.
Assessment #3: Will the opportunity boost your reputation and open doors for future endeavors? Often, the best NIL deal is the one that helps you set yourself up for success beyond the field.
Assessment #4: Does it violate any rules from the NCAA, state government, or my university? If so, then it’s out.
How will I be compensated?
There are various types of compensation, it can range from receiving free or sponsored products and services, to direct payment in cold, hard cash. You might also come across affiliate payment structures, where you earn a percentage based on sales generated through your promotion. If that’s the case, it’s important to be realistic about how many sales you can expect to generate.
There are also different options for how payments are actually paid out. Recurring Payments are where you receive regular installments over a set period. Alternatively, there are Lump Sums, where you get a one-time payment upfront. And for some deals, you might even have residuals, meaning you continue to earn a portion of the revenue over time.
The key is to be aware of the compensation types and payment options during negotiations, and to ensure it all aligns with your financial goals. (This is also something a Financial Advisor can help you figure out.)
What else is in the fine print?
Rights and usage: To prevent any surprises down the line, you want to have a clear understanding of how your name, image, or likeness will be used. So ensure that the agreement clearly outlines the scope of the rights granted to the company.
Endorsement obligations: Clarify the expectations and requirements for endorsing the product, service, or brand. This might mean the number of appearances, social media posts, or other promotional activities involved. Finding the right balance that fits your schedule is important.
Exclusivity and conflicts of interest: Many contracts have exclusivity clauses that restrict you from partnering with competitors. That said, you’ll want to make sure the deal allows you the flexibility to explore other opportunities that don't conflict with the current endorsement.
Duration and termination: Understanding how long the deal will last and what could lead to its termination is crucial for any contract. You may want flexibility to reassess the deal after a certain period, for instance. And for sure you’ll want clear terms around early termination, contractual breaches, or changes in circumstances.
Legal considerations: There are bound to be a slew of other legal considerations involved. But it can all turn into legalese pretty quickly, so you might want to bring in your representation, whether it’s an attorney or an agent, to review the nitty gritty and help ensure the terms are fair. You can also check out our NIL Jargon Dictionary here.
What else do I need to consider?
Tax implications: While making money is never a bad thing, you have to be mindful of the tax implications involved. They can get pretty complicated, so consider consulting with a tax professional for guidance.
Financial aid considerations: As a student-athlete, you also have to figure out how an NIL deal could impact your financial aid status. Will making more mean you won’t get as much aid, of disqualify you from your particular scholarship? Maybe not, but reach out to your university's financial aid office to make sure.
You have the power to say NO: Whether it’s an NIL deal that’s misaligned with your personal brand or a family member wanting you to invest in an outlandish business idea, you have the power to say No.
Protecting your Name, Image and Likeness: Just because you have an NIL deal doesn’t necessarily mean you’re protected. If you have a popular nickname, catch phrase, or logo, you should consider registering for a trademark. You’ll likely want to hire a lawyer to help.
In the era of Name, Image, and Likeness (NIL) deals, collegiate student-athletes can add to their hyphenated reputation with a third word: entrepreneur. From brand endorsements and social media partnerships to merch, NFTs and even instruction—you now have the opportunity to profit from your talent. But it can be complex. To land the right deal for your personal brand and future, you need to understand the rules, where to find different opportunities, and how to weigh whether a deal is worth pursuing. Once you land it, the key is to review the fine print. Consider the tax and financial aid consequences and double check the legalese. And don’t forget, it’s ok to ask for help!