Until recently, college student-athletes were considered amateurs and prohibited from receiving monetary compensation. However, the NCAA has introduced Name, Image, and Likeness (NIL) rules that now allow student-athletes to be monetarily compensated for their brand.
If you are a student-athlete or family member of one that could possibly earn money for their talent, the first thing you want to do is research the rules in your state, as each one is different and has specific criteria. Familiarizing yourself with what is allowed and what is not can help determine your eligibility for pursuing NIL opportunities. Several examples of how rules differentiate per state are as follows:
California
- Only applicable to athletes enrolled at 4-year institutions.
- Forbids deals that undermine an institution’s existing endorsements.
- California has no state law-mandated restriction on what kind of endorsements student athletes can accept, unlike states like Illinois or Texas who have provisions in their NIL bills that prohibit athletes from working with companies such as tobacco brands, sports gambling, and alcohol.
Illinois
- Student athletes may not enter into NIL deals relating to gambling, sports betting, controlled substances, cannabis, tobacco or alcohol companies, brands, or products, alternative electronic nicotine products or delivery systems, performance-enhancing supplements, adult entertainment, or any other product or service that is reasonably considered to be inconsistent with the values or mission of a postsecondary educational institution or that negatively impacts or reflects adversely on a postsecondary educational institution or its athletic programs.
- Schools may help arrange compensation and opportunities for student athletes.
- Contracts may be for the term that the student athlete is at any institution.
- Schools are encouraged to provide workshops and life skills education.
The NCAA NIL Rule and the Right of Publicity
Name, image, and likeness are three components of a legal concept known as the “right of publicity.” Suppose an athlete is, for example, wearing a specific brand and a photograph is taken and used to promote that product without the athlete’s consent. In that case, the athlete may argue the right of publicity was violated. The NIL rule was passed in 2021 and consists of three segments:
- Student-athletes can engage in NIL activities so long as they follow the laws and rules of their state where the school is located. Schools must ensure these activities comply with state law.
- Student-athletes in states without NIL laws and regulations can still participate in NIL activities without violating NCAA rules.
- Student-athletes are allowed to seek professional service providers for their NIL interests.
How Can Student-Athletes Profit?
Several examples of ways student-athletes can profit from NIL include:
- They can sign an NIL contract to be sponsored to advertise a brand or product. Deals generally range from $1,000 to $10,000. Sports Illustrated college football reporter Ross Dellenger, reported that the average Power 5 football player makes an estimated $10,000 to $50,000 through NIL collectives.
- Merchandise
- Memorabilia and autographs
- Personal appearances
- Podcasts and more
Can High School Athletes Also Earn Money With NIL?
According to the Business of College Sports, 30 states, including Washington D.C., permit high school athletes to enter NIL deals.
Who is Eligible for NIL Money?
As mentioned, depending on the rules of your state, high school and college athletes are eligible to receive NIL money. Students and families can pursue opportunities on their own, creating their own marketing strategies. However, many enlist help from firms with experience representing student-athletes to get the most beneficial deals. For families interested in pursuing help from a professional firm, NIL network has about 12 suggestions for hopeful student-athletes.
A great place to start looking is in the community where you live. Players can be proactive. They can hit the street and network, contact local businesses, and inquire about NIL and sponsorship opportunities. Consider the following list as a reference as you or your student-athlete pursues an NIL opportunity:
- Be a talented athlete.
- Build up a following in your local area and over social media.
- Reach out to businesses that interest you.
- Sign sponsorship deals.
- Get help from professionals, for example, an agent, marketing professional, financial professional, or lawyer.
- Keep your brand and image clean and respectable.
How to be Smart With Newfound Wealth as a Young Adult
Younger people who come into money, especially those who aren’t used to having money, might see it as an opportunity to spend. This is a good time for them to learn the importance of saving, budgeting, and investing for their future. Here are some personal finance techniques for young adults to consider:
Save as much money as you can while you are young.
When you are young, you may think you will live forever. You also might imagine that as you progress through life, you will magically build wealth and earn higher incomes. Building and preserving wealth happens through taking action and carefully managing your spending. Often, people spend more money as they progress in their careers and earn more money. That is why learning good saving habits at a young age is critical.
Create a budget.
Creating a manageable budget requires you to be honest with yourself about your spending habits when it comes to wants versus needs. Consider these budgeting tips to help you get started:
- Calculate your income.
- Determine your expenses.
- Track your overall spending.
- Set manageable goals.
- Design a strategy to work toward those goals.
- Modify your budget based on changes in costs.
- Review your budget often.
- Consult a financial professional.
Learn about low-risk investing and the power of compounding.
Investing, whether in the stock market, bonds, CDs, real estate or some other investment vehicle, may not guarantee you a return; however, if you consider adopting a low-risk investment strategy, the chances of you preserving and managing your wealth is possible.
Learning how to invest is generally not at the top of a young person’s list of activities to study and engage in, though with the proper guidance, they may soon learn the value of this endeavor. What makes careful investing potentially powerful is not just the fact that you are saving money instead of spending it. With patience, you may benefit from the power of compounding, where interest grows on the interest. This is a concept that even adults struggle with because it is such a slow growth process.
Don’t worry about impressing your peers.
For a young person, it doesn’t get any harder than this. It is normal for kids to want to buy flashy clothes and accessories, maybe a sleek car or, if you earn enough, a new home, but the reality is that it doesn’t impress people as much as you may think. People are only concerned about themselves. Learn to save first and spend moderately.
Consulting With a Financial Professional Can Be a Game Changer
Historically, most athletes have struggled financially despite experiencing sudden wealth. Being an athlete is exciting, glamorous, and can be significantly rewarding in many ways. However, the reality is that, according to a Sports Illustrated article, 78% of NFL players and 60% of NBA players experience severe financial hardships after they retire and those are adults in professional sports earning millions of dollars.
You can imagine how much harder it would be for a young high school or college athlete to reel in the impulses of spending money they didn’t have a few weeks or years earlier. Having young prospective NIL student-athletes meet with a financial professional can only help them in the long term with understanding the value of a dollar, the importance of saving and creating spending habits, and staying grounded in a world that promotes them to outshine the competition.
Sources:
DI Council approves NIL reforms, permits school assistance with NIL activity - NCAA.org
What is NIL? How much money do college athletes make off NIL deals? (tallahassee.com)
Meet 12 Businesses Helping Athletes Secure NIL Opportunities - NIL Network
Tracker: High School NIL (businessofcollegesports.com)
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by LPL Marketing Solutions.
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