Student Athlete NIL Deal Do’s and Don’ts

Student athletes’ ability to profit from their name, image and likeness (NIL) opens a world of new opportunities for both the athletes and businesses. If your company is considering an NIL deal, keep these do’s and don’ts in mind to stay in line with regulations and make the most of your partnerships.

What do the newly allowed NIL deals change?

We’re all entitled to control or prevent the commercial use of our name, image and likeness. With the increase in commercialization of college sports in TV and radio broadcasts and event attendance, many different parties profit off the NIL of student athletes. Now, thanks to 2021 Supreme Court decision, the athletes themselves have a seat at the table and a say in how their image is used commercially.

Who can participate in student athlete NIL deals?

Student athletes can now profit off of their name, image and likeness without losing NCAA eligibility. They can also engage lawyers, accountants and agents to help them navigate NIL deals and their legal and tax implications.

NIL Deal Do’s

1. Do look at a wide range of sports, athletes and ways to form partnerships.

When many hear the term “NIL deals,” they think of the star quarterback on a National Championship-winning NCAA football team. But while NIL has quickly become synonymous with college football, it applies to a wide range of athletes and commercial opportunities. And many of these may be more affordable than you think.

For instance, instead of simply donating to a charity golf tournament, your business could sponsor a hole and partner with a collegiate golfer to take photos with participants as they play through, which could generate brand recognition and maybe even press coverage. Or, you could hire student athletes to put on sports clinics for employees or out in the community. You can also work with athletes from all types of schools, including HBCUs, community colleges and liberal arts schools, which can help embed your brand even more in your local community than working with a bigger conference school.

2. Do follow all applicable rules.

Depending on your location and the school the student athlete attends, you’ll need to navigate several different types of regulations, including:

• • State regulations, which vary widely from state to state, with some moving away from NIL regulations altogether
  • Conference rules, which do not currently offer significant limits, but which could develop as an obstacle
  • School-specific guidance that regulates use of their trademarks, required disclosures and gives them veto power over deals
  • NCAA regulations, which govern pay-for-play prohibitions and fair market value requirements
  • Advertising rules from the FTC that regulate how and when athletes can promote products or services

While there isn’t currently any federal legislation on NIL deals, there may be bills on the horizon, so businesses should stay up to date on federal developments.

3. Do have a clear and transparent contract.

Student athletes own their NIL and must grant you permission to use it. Contracts protect all parties in the NIL deal and create a record of your obligations, the terms of your agreement, and the regulations and guidelines you’re complying with. Some things your contract should cover include:

• • Athlete’s employment type (independent contractor vs. employee)
  • What the student will do for the compensation (social media posts, promotional videos, event attendance, etc.)
  • How you will use the NIL
  • Compensation amount, frequency and method
  • University permission and reporting if needed
  • Time period of the agreement
  • Termination rights and conditions
  • Rights to NIL materials after the contract period ends

NIL Deal Don’ts

1. 1. Do not imply university or college endorsement of your product or service
   2. Each individual athlete has the right to license their own name, image, or likeness. Athletes do not have the right to endorse on behalf of their universities. Be careful not to imply university endorsement in any of your advertising. Do not engage in pay-for-play.

The NCAA strictly prohibits schools and businesses from paying students to join a certain athletic program. Make sure your partnership is clear that it is not inducing a student to attend a particular school. This is another reason contracts are essential– they outline what the athlete will be doing in exchange for the compensation, which protects your business from potential play-for-play allegations.

Please contact Robert Bass, Lindsay Calhoun, Andrew Coffman or any member of Phelps’ Intellectual Property team if you have questions or need advice or guidance.