Last month marked the first anniversary of the U.S. Supreme Court’s watershed decision, NCAA v. Alston, which opened the door for student-athletes to profit off their name, image, and likeness, or “NIL.” The Court held that the restrictions imposed upon NCAA member schools limiting the educational benefits they can provide to student-athletes violated anti-trust law. Following this decision, the NCAA’s Board of Directors voted to approve an interim NIL policy that permits all NCAA student-athletes to profit from their NIL, which will remain in effect until federal legislation or new NCAA rules are adopted.
Since the dawn of this NIL era, student-athletes throughout the country have begun navigating the legal and business landscapes and are seeking ways to leverage their NIL, whether through large social-media followings or being the star player on his or her team. A rapidly emerging market has been the result. Businesses such as Nike, Gatorade, and even Tom Brady’s apparel company, along with local restaurants and car dealerships, have all entered the fray.
So how might this affect you? More likely than not, Tom Brady will unfortunately not be knocking at your door looking to ink a deal with you or your child (although you never know –Villanova men’s basketball player Jermaine Samuels Jr., is from Franklin, Massachusetts and signed a deal with Brady’s company). Even so, by some estimates, hundreds of thousands of NIL deals have already been made, meaning thousands of student-athletes and businesses across the country have become players in the market.
From a parent’s perspective, suppose your child is a star volleyball player in high school and begins receiving offers from colleges across the country. The various schools make similar offers to your daughter, promising not only free education, but also variety of other benefits. One such benefit is the opportunity for your daughter to profit off her NIL.
How might the NIL opportunity affect such an important decision? There are many things to consider in asking this question. Some considerations include the exclusivity of any NIL contracts that are offered (binding you to one business in a geographic area, for example), who holds the intellectual property rights under such contracts (is this my daughter’s video, or property of the business?), and the length of the agreements. An additional consideration is whether the money earned on the NIL deal is taxed as income. If applicable, perhaps a school in a state where the deal is not subject to income tax looks more favorable with that in mind. There is no “one size fits all” for any deal, and being aware (and wary) of any NIL promises will ensure your daughter is protected under the agreements she enters into.
What about from a business’ perspective? Consider you are a small-business owner in or near a college town, such as Durham, New Hampshire or Chestnut Hill, Massachusetts. You do not have a large budget—if any—for advertising, except perhaps in the local newspaper. But with the advent of student-athletes being able to profit of their NIL, perhaps you might take note that the star hockey, basketball, or football player at the local school has a large social media following. Can you leverage that following to your business’ advantage?
While both New Hampshire and Massachusetts have introduced NIL bills, neither state has adopted laws that either prohibit or authorize student-athletes to profit off their NIL. While you want to be aware of any legislation in this area, a few social media posts from a local student-athlete might generate business from a previously untapped market.
For both parties presented in this article—the student-athlete (and his or her parents) and the business owner—NIL has the potential to play a part in the collegiate decision-making process and marketing opportunities, respectively. Being aware of how NIL can affect these areas and decisions, as well as the laws in this field, could have lasting ramifications. Because no legislation at the federal level has been passed, some states are passing their own laws on the topic, creating patch-work policymaking that may be difficult to navigate. Furthermore, as the parties entering into these deals and the contracts themselves continue to get more sophisticated, having an advisor on your team to negotiate and draft any such contracts or further the NIL decision-making process could prove an invaluable resource for you, your child, or your business.