Full-Court Vision: How Legal Counsel Can Help Student-Athletes Navigate NIL Deals

Aug 17, 2021 | Blog

As anyone who is connected to the realm of NCAA athletics (or who has watched ESPN in the last two months) probably already knows, as of July 1, 2021, the NCAA made the paradigm-shifting decision to allow college athletes in the U.S. to be compensated for use of their names, images, and likenesses (NIL).

In the past, student-athletes participating in the NCAA were held to a strict standard of amateurism which prohibited them from using their NIL or status as a college athlete for personal profit. While the NCAA has long withstood pressure to overturn this rule, the organization was recently forced to change its position in light of various impending state laws that would make such anti-NIL policies illegal.

While this rule change presents new and lucrative opportunities for student-athletes, it also exposes them to a legal landscape they are likely not yet familiar with. Getting your face on a Wheaties box requires more than just signing on the dotted line and collecting a paycheck—it’s a multi-step process that can often be convoluted and highly technical. On top of coursework and training, student-athletes must now also manage the financial, legal, and compliance considerations that come along with NIL dealings.

Knowledgeable legal counsel can help to smoothly facilitate these types of deals. And if you’re wondering whether a bunch of college kids really need lawyers, consider the ways in which legal counsel can benefit student-athletes:

1. Identifying NIL Opportunities

While attorneys aren’t talent agents, they can assist student-athletes in understanding their legal rights when it comes to what they can and should be getting paid for. They can also assist in determining which deals are going to be the most advantageous. Some examples of NIL-related moneymaking opportunities are:

  • Royalties: An athlete gets paid every time their NIL is used, such as on a jersey, a trading card, or in a video game.
  • Public Appearances: These can include events such as paid autograph sessions and meet-and-greets.
  • Attaching Their Name: Athletes can use their NIL to promote their own sports camps, personal companies, and monetized social media channels.
  • Endorsements/Sponsorships: Athletes can get paid to promote a company’s product or service, whether it be in-person, in a commercial, or via social media.

2. Negotiating NIL Agreements

While some schools are allowed to help arrange NIL opportunities for their athletes, many are restricted from doing so because of concerns that this practice could be construed as a recruiting tool. As such, it is helpful for student-athletes to be represented by someone who can negotiate and execute deals on their behalf and with their best interests in mind, which may or may not align with the school’s. This can prevent companies from taking advantage of young athletes who likely have little or no business experience.

3. Drafting & Revising Licensing Agreements

A licensing agreement is what gives a licensee permission to reproduce and use a licensor’s intellectual property— NIL in this case. As a legal contract, this type of formal agreement should set forth in great detail both the terms of property usage and the terms of compensation. Licensing agreements usually include such specifications as the time period during which the licensee can use the NIL; whether or not the NIL rights are exclusive; and what percentage of royalties the athlete is to receive.

Some schools have also already made arrangements in the way of group licensing, which will allow multiple players or entire teams to collectively enter into licensing agreements with outside entities.

4. Remaining Compliant with School and/or State Policies

As of the time of this writing, there are no federal policies governing NIL rules for NCAA athletes at the national level. Instead, many individual states have (or are in the process of) creating NIL policies for the athletes at schools in that particular state. Some of these state laws are leaving NIL policymaking up to individual institutions. Likewise, the NCAA has advised schools in states without NIL laws to create their own policies for the time being.

The result of this is that there is no single codified NIL regime. NIL rules will differ from state to state and from school to school. Student-athletes must be careful to note these differences and adhere to the regulations governing their specific college or university. An attorney can advise athletes on certain individual considerations, such as:

  • Can I use school intellectual property in my NIL deals? (e.g., uniforms, logos, mascots, etc.)
  • Are there restrictions on pursuing NIL opportunities during official team activities?
  • Are there restrictions on what kinds of products I can endorse? (e.g., alcohol, tobacco, lottery tickets, etc.)
  • Will my NIL deal conflict with any of my school’s pre-existing sponsorships? (e.g., Can I be a spokesperson for Nike if my school already has a sponsorship deal with Adidas?)
  • When and how do I need to report my NIL deal to my school?

While the prospect of NIL deals can seem exciting and overwhelming all at once, student-athletes need not get stuck in the mire. Retaining trusted counsel is a good first step to making sure that all legal and contractual bases are covered when entertaining a potential NIL opportunity.

If you have any further questions regarding NIL deals or policies, please contact Michael Ward.