NCAA now allows profitability

Name, Image and Likeness — a Popularity Contest? Not Quite!

Known legally as a “right of publicity,” name, image and likeness (NIL) is arguably one of the largest changes made to college athletics in years. Under NIL, an athlete may make money off merchandise, commercials and advertisements that use their name and recognizability.

The NCAA, which previously would pull eligibility if student-athletes made any income off social media or brand deals, changed its policy in July 2021 to allow student-athletes to benefit off their NIL, so long as “… NIL activities are consistent with the law of the state where the school is located.”

As soon as these changes were made, certain people, including Mat Ishbia, jumped at the chance to help the way student-athletes were compensated.

Ishbia, a Michigan State University basketball alum and CEO of United Wholesale Mortgage, donated $32 million to the Spartans’ athletic facilities previously and announced a group NIL deal with MSU’s football and basketball teams. The deal states that UWM will pay each MSU player on both teams a monthly $500 for the duration of the year, payments totaling $798k by year-end. In exchange, players have agreed to promote UWM on their social medias throughout the year.

While Ishbia’s is the largest group deal thus far, professional sports teams are also utilizing NIL individual sponsorship. In early August, D’Eriq King, a quarterback at the University of Miami, became the first college athlete to sign with a pro team, the Florida Panthers, agreeing to attend games and promote the team on social media in exchange for payment. Shortly thereafter, the Atlanta Braves created the “Braves Athlete program” and made a similar deal with University of Georgia gymnast Rachel Baumann, who has a large social media following.

Each of these deals include free team merchandise to wear to the games, “base pay” as well as commission, depending on the deal, of ticket sales, merchandise collaborations and concession stand sales. Teams creating these programs believe that their respective student-athlete “ambassadors” will help build the team’s fan base with college students as well as continue to build their ambassadors’ social media recognition.

A handful of other teams have made deals with individual student-athletes including several Auburn University football players who have gotten deals with restaurants like Guthrie’s Chicken, Baumhower’s Grill and Big Mike’s Steakhouse located in their college town.

While these deals are overwhelmingly positive, there are caveats. To start, each athlete must opt-in to each deal. Second, those with large followings may benefit more than team members who have fewer followers and less social media distinction.

Recognizing this issue, Nick Bunn and Andrew Mavis, Harvard University and George Washington University alums respectively, created an organization to directly connect potential sponsors with student-athletes. 98Strong, named for the 98% of NCAA athletes who don’t go pro, is based upon the belief that student-athletes on all levels deserve to benefit from NIL if possible. As of September, the organization has more than 1,000 students registered.

From a tax standpoint, student-athletes who make more than $600 in a year will have to report as self-employed for deals and sponsorships they hold. If they reach the federal standard deduction — $12,550 in 2021 — they’ll be subject to federal taxes as well. Residency and state income tax are other issues student-athletes will have to think about, which may ultimately sway their decision of what school to attend depending on how severe income tax is in each state. Schools in states without income tax, Florida, Tennessee and Texas for example, may even begin to use that as an incentive to get a particular athlete, touting residency as a way to avoid income tax as well.

Allowing student-athletes to profit from NIL was a necessary change that has, so far, been majorly successful. While it allows profit from social media deals and team sponsorships, it also allows student-athletes to explore other ventures and passions which can now provide a real source of income while still focusing on athletics. Teams will benefit from more younger people getting involved in their fanbases, and fans can see their favorite collegiate athlete crossover with their favorite professional team.

advisor

Become A Trusted Advisor

Become a Member and get unlimited access

MEMBERSHIP UNLOCKS:

  • feature-icon

    All Trusted Advisor features and articles

    Gain full access to all of our articles — ever published.

  • feature-icon

    Access to all white-paper reports

    Our analysts conduct deep dives into technology platforms used by business managers, cyber-security, client trends, operational methods and more. Sign-up to become a Trusted Advisor to gain access to reports as they’re published.

  • feature-icon

    Get featured in the Trusted Advisor Database

    Expand your reach by being featured in the Trusted Advisor Database. The Database is a robust "who's who" of Entertainment advisors - and also includes in depth reports about royalties, technology, crypto, investing and more.

  • feature-icon

    Access to in-person events

    Once we’re able to, we’re bringing back events where you can meet other Trusted Advisors. This includes regular cocktail mixers in Los Angeles, Nashville, and New York.

  • feature-icon

    And much more.

    We’re going to be launching new features continuously. Look out soon for a Trusted Advisor Slack channel, to meet and share insights with other Trusted Advisors.