College NIL Deals Explained: A Comprehensive Guide

College sports are undergoing a monumental transformation, largely driven by the debate surrounding whether college athletes should be paid. The answer, in many ways, lies within the concept of Name, Image, and Likeness (NIL). This article delves into the intricacies of NIL deals, exploring their origins, impact, and future in college athletics.

Introduction to Name, Image, Likeness (NIL)

Until recently, college athletes were considered amateurs, prohibited from receiving monetary compensation for their athletic abilities. However, athletes have long sought compensation, and coaches have sometimes attempted to incentivize players with gifts or cash. While the NCAA and universities have profited from the name, image, and likeness of their student-athletes for decades, athletes are now beginning to receive a portion of the revenue pie.

The NCAA's board of directors suspended rules prohibiting athletes from selling their NIL rights, marking a significant shift in the definition of an "amateur student-athlete." While the NCAA has historically resisted paying students, athletes now have some protection to profit from their NIL rights.

NCAA president Mark Emmert stated that this decision has long-term implications, but in the short term, college athletes can start making money. The new guidelines provide a somewhat ambiguous framework that is still being interpreted, but athletes can take advantage of the opportunities afforded by NIL rules. The NCAA has indicated that the current rules are temporary until Congress creates national laws for clearer regulations. Currently, all athletes have the opportunity to profit from NIL as state laws take effect.

What Does NIL Mean and Where Did It Come From?

Name, Image, and Likeness (NIL) refers to how college athletes can receive financial compensation through marketing and promotional activities. This includes autograph signings, product endorsements, and social media posts.

It's important to note that NIL does not mean schools can directly pay players. Coaches cannot offer money to incentivize high school athletes, nor can athletes receive compensation from their university based on athletic achievements. The NCAA aims to maintain its amateur sports status, so paying athletes for on-field performance is not allowed. NIL offers a way for athletes to get paid without being considered professional athletes.

NIL's origins can be traced to a class-action lawsuit filed in the late 2000s by former UCLA basketball player Ed O’Bannon, who argued that college athletes should be compensated for the use of their name and image in video games. A judge ordered the NCAA to pay $44.4 million in attorneys' fees and $1.5 million in costs to the plaintiffs' lawyers. This case opened the door for more questions and lawsuits around athletes’ NIL rights.

In 2019, California enacted the Fair Pay to Play Act, allowing athletes to be compensated for promotional opportunities. Other states followed suit, forcing the NCAA to reconsider its stance on NIL.

Currently, NIL guidelines are relatively simplistic, leaving room for interpretation. According to the NCAA board of directors, college athletes can engage in NIL activities that comply with state law where the school is located. Colleges and universities are responsible for determining whether activities are consistent with state law. Student-athletes in states without NIL laws can engage in these activities without violating NCAA rules. College athletes can use professional services for NIL activities and should report them to their school.

These rules have created a "Wild West" situation, as everyone tries to understand the boundaries. Payments for athletic performance cannot come from universities but must come from businesses. Some state laws prohibit athletes from endorsing alcohol, tobacco, or gambling products, and some prohibit using school logos or copyrighted material in endorsements.

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Who Does NIL Apply To?

NIL laws might initially seem relevant only to the top athletes, such as football quarterbacks or potential lottery picks. However, the new rules allow athletes to profit from activities such as autograph signings, endorsements, social media posts, and teaching camps.

These opportunities are not limited to a select group of athletes. Both Heisman Trophy candidates and backup players have the chance to make a profit, depending on their chosen avenues. Small schools with dedicated local followings may offer a better market for athletes than large state schools.

Performance on the field has a relatively small impact on NIL potential. Athletes who play a more publicized sport and perform well can increase their market potential. However, athletes who carve out a niche through social media or a dedicated local following also have significant NIL potential.

Athletes can choose to promote products on social media, sign autographs, teach camps, or promote local businesses. The current NIL market rewards athletes who creatively use their name, image, and likeness to generate a profit.

How Are Athletes Cashing In On NIL?

While college football is the most lucrative college sport, the first athletes to capitalize on NIL potential were women’s basketball players. Hanna and Haley Cavinder, twin sisters who play for Fresno State and have millions of social media followers, partnered with Icon Source and Boost Mobile within hours of the new NIL rules being instated.

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Stephen Stokols, CEO of Boost Mobile, shared plans to partner with hundreds of student-athletes in the coming years, starting with the Cavinder twins as a national campaign and expanding to athletes at a local level.

Athletes have also announced partnerships with local companies, such as a fireworks warehouse in Iowa and a barbecue joint in Arkansas that sponsored the team's entire offensive line. Two Auburn football players struck noticeable deals as well. Dontaie Allen announced his own line of custom merchandise. Antwan Owens and four other Jackson State players signed a deal with 3 Kings Grooming, a black-owned hair product business, with the help of Icon Source.

These examples demonstrate the creative ways athletes are beginning to test the waters. The types of deals that make the most sense for players often depend on the state in which they live and play.

Which States Have NIL Laws?

Colleges and universities are responsible for determining whether NIL activities are consistent with state law. The list of states with NIL laws is extensive and constantly evolving.

The NCAA has instructed schools in states without NIL laws to create their own policies to resolve disputes. At the same time, efforts are being made at the national level.

Almost a dozen bills have been proposed by members of Congress to reform college sports and address the question of paying college athletes. Some focus on a national NIL standard, while others propose additional medical benefits, educational opportunities, and collective bargaining rights for athletes. However, disagreements have stalled legislative efforts in Washington, D.C., leaving decisions primarily in the hands of individual states.

If a college athlete lives in a state with NIL legislation, they can profit from their name, image, or likeness according to state law. In states without NIL laws, individual schools must create a policy for athletes to follow. The NCAA's guidelines prevent direct pay to athletes and state that NIL deals cannot influence recruiting, but everything else is up to the individual states and universities.

How Can I Execute on My NIL Potential?

As politicians, schools, and interested parties navigate this new marketplace, athletes can capitalize on their NIL potential. Given their busy schedules, athletes may benefit from partnering with a trustworthy guide to navigate this evolving space without adding an additional burden.

Since 2018, Icon Source has connected professional athletes and their agents with brands. This has enabled brands to find the right athlete, connect with them on demand, and execute contracts while protecting the athlete’s interests.

With Icon Source, student-athletes can manage their profiles on a mobile app, which sends all required reporting data directly to the school or its desired disclosure software. Athletes receive a single 1099 form for tax purposes, regardless of the number of deals completed on Icon Source. Most importantly, Icon Source uses a single, non-editable contract to protect student-athletes from unforeseen NIL issues. Creating a profile is a risk-free way for college athletes to explore their unique NIL potential.

As the NIL landscape unfolds and states and universities clarify their laws and rules, now is the time for student-athletes to get involved.

NIL: A Closer Look

College athletes weren't always allowed to profit from their athletic abilities. The NCAA changed rules in 2021 to allow students to profit from their name, image, and likeness -- otherwise known as NIL.

"NIL" stands for "name, image and likeness," which refers to a person's legal right to control how their image is used, including commercially. College athletes were previously prohibited from making deals to profit from their fame, forfeiting their NIL rights by signing on with college sports teams. NCAA rule changes and state laws restored NIL rights to college athletes, and they've been making sponsorship deals ever since.

A combination of school policies and state laws dictate what deals athletes can make. In states with no oversight, the NCAA has universities write policies for their own athletes. Some common school requirements are that athletes get business advice or training before making deals, or preventing them from promoting certain products. State laws primarily focus on preventing NIL deals from being used as recruitment tools. Schools can't pay students directly, but some states have murky laws surrounding just how involved a school's booster club can get.

Every athlete is allowed to hire professionals to help with marketing, legal issues, tax laws, and other business dealings. Many schools also offer training and resources to athletes directly, often in the form of early-season classes on NIL law and basic business practices.

Most colleges have policies that require athletes to report the details of any potential deals with their schools, and some must get school approval before signing. Several schools reserve the right to keep their athletes from advertising certain products, like drugs and alcohol.

While several states now have NIL laws or have proposed bills to implement them, the content is far from uniform. Like any state-by-state legislation, local lawmakers have taken different approaches to prioritizing local businesses and incentivizing top athletes to choose universities within their borders.

The NCAA has expressed concern that, without a federal law, enforcing its own NIL rules could violate antitrust rules -- so while the organization has hoped that Congress will pass a federal standard, there's no national set of rules.

Examples of NIL Deals

From free sneakers and workout gear to high-end clothing items and dorm essentials, perks for college athletes signing NIL deals have skyrocketed since student-athletes won the right to cash in on the publicity they bring to their schools.

The biggest stars, guided by business mentors and school-provided financial advice, have cashed in. On3 ranked Colorado quarterback Shedeur Sanders as the star of the current NIL market with a $4.7 million valuation, including a sequel to his father's Nike deal. The site estimates that each of the 20 players at the top of its list are worth a minimum of $1 million, and even the 100th-ranked athlete was worth $583,000.

Top athletes have signed deals with Nike, Adidas, and Under Armour, while non-athletic brands such as T-Mobile, Sam's Club, and Amazon tap students across the country.

Many companies, from local mom & pop shops to international brands, are partnering with up-and-coming students in every sport and a variety of schools.

Dienurst Collins, an offensive lineman at Lake Erie College, scored both a deal and a second round of internet fame when he signed a deal with Popeyes -- where he went viral at 9 years old for side-eyeing a stranger who recorded him at the restaurant then posted the video.

Decoldest Crawford capitalized on his name to earn some extra money while injured. The Louisiana Tech wide receiver partnered with a family-owned air conditioning business to make a commercial based around the pun.

Running back Bijan Robinson took a similar approach to name-based leverage while playing for Texas. He began selling Dijon mustard, marketing it as Bijan Mustardson and selling it in Texas. When Robinson joined the Atlanta Falcons he brought the branding with him, now touting it as the official Dijon mustard of the team.

Ga'Quincy "Kool-Aid" McKinstry snapped up a deal with his nickname's brand soon after the ruling that allowed NIL deals.

Reese's Peanut Butter Cups partnered with a dozen students from Texas to Delaware who share just two traits: playing football and having the last name "Reese." Angel Reese didn't appear in their original list but has since become an ambassador for the brand in her own right.

Tommy Brown, a Colorado lineman, modeled Shinesty underwear in a series of tongue-in-cheek poses that emphasized his farmer's tan. Arkansas wide receiver Trey Knox brought his dog, Blue, into a deal with him. PetSmart sponsored both of them, in a move that brought both a wave of online engagement.

Gymnast Sam Phillips has partnered with businesses that celebrate Black and LGBTQIA+ customers, modeling everything from underwear to athletic tape for Our Colour, which makes tape to match darker skin tones than many brands offer.

Student-athletes have the opportunity to receive compensation from third parties using their personal brand. The NCAA introduced NCAA NIL Assist, a NIL platform in collaboration with Teamworks, to serve as a centralized source for student-athletes to understand and make informed decisions about NIL. NIL Assist will include educational resources, a directory of providers interested in working with student-athletes, and an aggregated and de-identified database of NIL information reported by Division I programs.

Athletes can benefit from NIL by endorsing products, signing sponsorship deals, engaging in commercial opportunities and monetizing their social media presence, among other avenues. NCAA rules allow athletes to receive compensation for use of their NIL; however, NIL activities may not be used to compensate an athlete for athletics participation or achievement (i.e., pay-for-play). Regulations surrounding NIL also vary by jurisdiction and organization.

Tax Implications of NIL Deals

All income earned through name, image and likeness (NIL) activities is considered taxable. That means student-athletes must keep accurate records of earnings, track expenses, and file taxes appropriately. It’s important to understand that everyone’s tax situation is different. Filing as an individual, setting up an LLC or S corporation, and identifying eligible deductions can all impact your financial outcome. Since tax season often overlaps with sports seasons, planning ahead is key to avoiding stress or mistakes.

NIL rights empower college athletes to earn income from business ventures and personal brand while still in school. Student-athletes should talk with their school to see what its NIL policies are. A campus also can help explain state law and provide additional education, resources and information .

NIL for High School Athletes

Whether high school students can participate in NIL activities depends on the rules set by your state’s high school sports association. Regulation of NIL deals is expected to increase under the new changes. Seek guidance from current college student-athletes for advice on name, image and likeness. Begin building your online presence on social media. Stay informed about NIL rules and regulations, which are constantly changing.

In states with active NIL laws, college athletes can earn money following both state and school rules. It is highly recommended that you reach out to your high school athletic director or contact your high school association before engaging with NIL deals as a high school student. Each individual school has oversight of NIL deals and the right to object to a deal if it conflicts with existing agreements. The first national governing body to address the new NIL policy was USGA (United States Golf Association). Student-athletes interested in monetizing their NIL will need to ask questions about NIL rules when talking with coaches. Before speaking with a coach, prospective student-athletes should create a list of questions about the NIL rules that would impact them.

The Role of NIL Collectives

NIL collectives are support networks for college athletes where donors pool together money to compensate athletes for their name, image and likeness. The NCAA intends to work with federal congressional legislators to replace the interim policy with a single nationwide policy, but there is no timeline on when that might happen. For now, athletes should continue to adhere to NIL rules set in their specific state.

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