What is NIL? A Guide for NCAA Athletes
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What is NIL? It stands for name, image, and likeness, and represents a big change in the world of college athletics.
For decades, the NCAA and its member schools pocketed billions from the labor of student-athletes.
Meanwhile, athletes themselves pocketed limited scholarships and stipends—due to NCAA restrictions.
Now, those restrictions are gone.
In a 9-0 unanimous decision, the U.S. Supreme Court ruled that NCAA restrictions on “education-related benefits” violated antitrust law. While this ruling did not directly address NIL or direct compensation also known as “pay to play”, it was a strategic victory for the plaintiffs that led to the NCAA ceding authority to govern NIL to individual state legislation and the schools themselves.
As a result of the NCAA stepping aside, in some states student-athletes are now free to earn money by selling rights to their name, image, and likeness through lucrative endorsement deals and public appearances.
We spoke with Doug Fillis, founder of Accelerate Sports Ventures and seasoned expert on sports marketing, to learn more about what NIL means to student-athletes.
With additional insight from our years of experience helping professional athletes unlock the full potential of their wealth, we’ve put together this guide.
The world of college sports no longer looks the same. This article will explore how you can adjust to and profit from this new NIL reality.
Let’s dive in.
Staying Eligible: Amateurism Rules
As a student athlete, your academic and sports career comes first. While the NCAA has lifted restrictions on compensation, it still requires Division I, II, and III athletes to meet some amateurism requirements.
In the pursuit of NIL money, don’t compromise your future. You must follow all state laws, school and conference policies, along with NCAA guidelines, if you want to stay in the game.
Colleges are very concerned about keeping their elite athletes eligible, and that’s a big focus of your school compliance office. Make sure your school compliance office is aware of your business activities as their NIL rules will be specific to their institution and unique to you.
One of the most empowering changes for student-athletes is the fact that they are now allowed to have professional representation. Doug recommends hiring an experienced agent to help you negotiate marketing deals while operating within the NCAA guidelines.
But they've taken a hands-off approach. They've been clear that there are still certain rules within the NCAA guidelines that you can't veer from. But as it relates to NIL, you're allowed to cut deals and you're allowed to work with agents.
– Doug Fillis
If you decide to work with an agent to secure NIL opportunities, make sure the agent you hire has experience working with NCAA athletes in your sport.
Will NIL Money Ruin My Financial Aid?
It all depends on the type of financial aid package you received.
If you’re suddenly flooded with NIL money, you may have to adjust your financial aid package, especially if your package is need-based.
That’s why you need to get ahead of the game. Before collecting marketing money, speak with your school’s financial aid office. Make sure you understand how additional income will impact your financial aid package.
One of the grants you should monitor is the Federal Pell Grant. The Pell Grant is for students who deeply need financial aid. NIL money could jeopardize the status of that grant.
Even if the money you make through marketing deals is enough to replace your financial aid, there may be tax consequences. Doug hears this concern from athletes and their families as they consider NIL opportunities:
And basically, the example that the parent walked me through was, "Well, what if I take away my Pell grant and I exchanged it for revenue, but now I'm getting taxed on the revenue?"
– Doug Fillis
Again, that’s why you should examine your financial package before doing marketing deals.
In addition to an experienced marketing agent, ensure you have a well-versed CPA on your financial team to help you make informed decisions.
Overall, here are some of the factors you should consider and discuss with a qualified expert:
Whether you should have a business entity like an LLC
If it makes sense to lower your taxable income with something like an individual 401K
In short, here’s the crucial question you should ask yourself:
Will my NIL money (after taxes) surpass the money I receive from my need-based financial aid?
Do You Need an Agent for NIL Opportunities?
Before you tackle marketing deals, you may first want to hire a good NIL marketing agent, and we’ll share some tips on how to find one.
Since the rules have evolved, many athletes have made NIL deals on their own, with local businesses and people they know. Some are taking advantage of marketplaces that make it easy to set up deals online.
Whether to get an agent or not depends on how intentional you want to be in pursuing marketing deals and how much help you want navigating the risks and opportunities.
It’s important for young athletes and their families to take responsibility, educate themselves, and seek advice from qualified advisors when they need it:
They have this great opportunity to generate revenue for themselves. It's an opportunity for them to really start to understand the basics of business, and I'm hopeful that they do. And for those that need help, there are companies like us to help people navigate this space so that they don't stumble and fall.
– Doug Fillis
When you’re ready to step up from amateur to professional, finding the right sports agent can help you get the best possible contracts, signing bonuses, and endorsements.
While you’re in college, however, look for a marketing agent with a track record of helping college athletes maximize their earning potential.
A marketing agent is someone who builds your brand. Your name, image, and likeness are all part of your brand. Essentially, a marketing agent acts as your intermediary, negotiating deals on your behalf.
A great marketing agent supports your interests, not theirs. But it’s up to you to hold your agent accountable.
Agents work for you, not the other way around. They should never bully you into doing deals you hate.
Never compromise your values.
Ultimately, you’re the one who’s in charge of your brand and your money. Make sure you continue to educate yourself about finances – our Athlete CEO podcast is a great place to start.
How to Find a Qualified NIL Agent
If you’re ready to engage with a marketing agent, make sure you find someone with demonstrated experience helping college athletes generate revenue.
There are a few ways you can evaluate an agent’s track record and skill.
One thing you should do is ask the prospective agent questions. It sounds obvious, but you’d be shocked by how often athletes ignore this step, especially when they are being approached by multiple agents who want their business.
We've heard so many horror stories of relationships with either agents or advisors that have just gone down the wrong road and people that have had really bad experiences. So how can we make sure that you're asking all the right questions, so you get aligned with the right people, right people who have a track record of success in their given field?
– Doug Fillis
Here are some questions you can ask:
How long have you been an agent?
What type of deals have you done?
What brands have you worked with?
How many clients have you had?
Can you describe your most recent success?
When did your most recent success occur?
These questions can help you discover if the agent is truly an expert.
So, what are some other ways to probe an agent’s track record?
Well, you could read the testimonials and case studies on their website. But that’s not enough. You can’t be 100% certain those testimonials are authentic.
Instead, take a comprehensive approach. Head over to third-party sites like Google. Check to see if your prospective agent has public reviews, or any negative publicity around their past work. Ask for personal references of their current and past clients and contact them to ask them questions about their experience working with the agent.
Remember to contact more than one agent. Then select the agent with the better track record and skills.
Treat the process as if you were hiring a potential employee. It’s not just about competency – you also want your agent to understand your values and long-term mission.
Doug Fillis urges athletes to remember that every deal they make, including which agents and advisors to work with, can affect their brand and long-term success.
Athletes need to understand they are a brand and they need to do everything they can to take care of their brand and be really strategic and intentional about the people they partner with, the agent they're going to work with, the brands that they're going to be a part of, the businesses that they're going to start and who they're going to work with… Everything affects their brand.
– Doug Fillis
What About Team Deals?
Teams have started making NIL deals that involve compensation for every player on the team. However, it all depends on state law and your school’s policy.
The University of Miami partnered with American Top Team, an MMA gym based out of Florida. American Top Team gave every athlete $500 per month as part of that deal.
Another example of a NIL team deal is Brigham Young University.
Brigham Young University made a deal with Built, a protein bar maker. Built pays the full tuition for each BYU football player, including the walk-ons. In exchange, Built sponsors BYU’s football team. Each athlete wears a Built decal on their practice jersey.
Interesting examples of partnerships, right?
The NCAA found them interesting as well. So, they decided to take a closer look.
According to Sportico, NCAA Enforcement is investigating both the University of Miami and BYU to determine if these deals qualify as pay-for-play setups.
At this time, it’s unknown if the NCAA is investigating other NIL partnerships as well. The University of Miami and BYU deals are considered the most “high-profile” NIL team deals.
Meanwhile, there’s much confusion about rules and enforcement. As it stands, the NCAA only has an interim policy in place. This policy grants student-athletes basic compensation rights.
If you’re involved in marketing deals, you should track all the latest NIL developments and make sure you stay compliant.
So, next, we'll cover a few simple financial concepts to consider as you start earning money as an athlete.
Cash Flow, Taxes, and Financial Literacy for Student-Athletes
As you know, NIL deals offer students a huge opportunity to make money. But with this opportunity comes the responsibility to improve financial literacy.
Unfortunately, the education system does not prioritize financial literacy and college athletes don’t always have support in making financial decisions.
The great thing is that you’re getting real-world business experience by having access to NIL deals. This experience itself will increase your financial knowledge.
If you’re looking to go pro, experience with NIL deals gives you a head start on learning how to manage money. Financially-educated athletes will be better prepared for decisions with an even bigger financial impact later in their professional careers.
I know it'll help a lot of the elite athletes just get better educated earlier than when you become a professional at 22 years old. And you're given the multimillion dollar signing bonus. And then that's when you scramble to hire a financial planner or investment advisor to actually help you out.
– Zach Miller
So, what are some of the financial concepts NIL athletes should start studying?
One of them is cash flow. Think of cash flow as the tracking of money that goes in and out of your bank account.
The money that enters your account may be the money you receive from marketing, financial aid, or work-study. The money exiting your account includes immediate expenses like food and rent, and expenses you’ll need to plan ahead for, like taxes and tuition.
One of the worst situations for a student athlete to crash into is a huge, unexpected tax bill. If you haven’t set aside some of your earnings for taxes, that can spell financial disaster.
You don’t need to have all the answers – just make sure you turn to the right people when you have questions. A lot of young athletes turn to coaches when they need advice, but for financial decisions, find unbiased, qualified experts to answer your questions:
A CFP® (Certified Financial Planner) for questions about investing, saving, and cash flow.
A CPA for questions about taxes.
In the meantime, learn how to budget your money, avoid credit card debt, and plan ahead for taxes and other major expenses.
Can Students Use a School’s Logo and Brand?
Some schools allow students to use school logos and trademarks in NIL deals. According to Journal-News, the University of Dayton is one of the schools that permit this.
In November 2021, the University of Dayton announced a licensing agreement with The Brandr Group (TBG) to cover all 16 of UD’s varsity sports.
Before this agreement, Dayton athletes couldn’t appear in school uniforms while profiting from their NIL deals.
This is another example of why it’s important to check with your school’s compliance office and make sure you understand the rules before signing any marketing deals.
Do You Have a Competent Team?
A huge reason that athletes go broke is that they either had a horrible team of advisors, or no team at all.
Take the opportunity now to prepare yourself for the bigger decisions ahead in your professional career.
If you’re earning money as an elite athlete, even at the college level, you should surround yourself with a competent financial team. By doing so, you can avoid financially-damaging mistakes.
Some student-athletes decide to make endorsement deals without an agent, and they may choose to manage their money without qualified wealth advisors.
But why take those risks when you can get experienced guidance?
If you are making significant income through NIL deals, make sure you work with qualified wealth advisors who have experience helping athletes.
Always do your homework and ask the right questions before you hire a wealth management team.
NCAA Athletes: Start Thinking Like a CEO
What NIL means for you, as a college athlete, is that YOU are an asset. Your name, image, and likeness are a big piece of the human capital you own.
You can leverage your human capital to achieve any goal you decide to pursue, in professional sports, business, and life. Like any asset, if you protect it from risk and manage it well, you can increase its value over time.
That means thinking like the CEO of your life. When you do, you’ll discover that owning your name, image, and likeness is just the start of owning your wealth as an elite athlete.
Article by Will McGuffey, CFP® - Private Wealth Advisor at AWM Capital, Licensed Attorney