Up until July 1, 2021, you may have been forgiven if you thought the term “nil” meant just a zero score in soccer or rugby. Prior to that day, US college athletes couldn’t earn money in connection with their athletic ability. But now, some two years later, NIL, which stands for name, image and likeness, has completely transformed and redefined the world of college athletics.
Simply put, NIL involves an athlete or a business using an athlete’s name, image and likeness in marketing and promotional campaigns. However, navigating the expansion and intricacies of this sector, valued at approximately $1 billion annually according to NIL company Opendorse, is far from straightforward. Student-athletes have become an integral part of global marketing strategies using their athletic performance and notoriety to attract previously unimaginable levels of fame and fortune.
Yet, for student athletes chasing NIL deals, numerous obstacles dot their path.
Wealth Management and Financial Literacy
How should a recent high-school graduate invest, spend and manage half a million dollars — or even more? According to The Athletic, a five-star recruit in the class of 2023 signed an agreement with a school’s NIL collective that could pay him more than $8 million by the end of his junior year. On the women’s side, Shaquille O’Neal, in his new role as president of basketball operations at Reebok, signed LSU basketball player Angel Reese to a multi-year name, image and likeness deal which she adds to her existing estimated $1.7 million in endorsement deals.
What kinds of businesses, properties or other assets should they be considering? How much should be invested in stocks, bonds, mutual funds or commodities? Should they buy a house for a family member? If so, in which market? The list of financial concerns gets very long, very quickly.
Business Management
When a student athlete starts pursuing NIL deals, they transition from a regular student to a blended entity: part business, part commodity and part individual. Of course, while one’s value as an individual never changes, we know that commodities and businesses are susceptible to the ebb and flow of market fluctuations and economic forces.
While the NCAA continues to press for Congressional legislation concerning some standardization of college athletes’ activities making money from their NIL, the road ahead is fraught with uncertainty. Until that time, the college-sports NIL environment remains governed by a patchwork of state laws.
Border Control
International student-athletes generally cannot participate in off-campus employment unless it is part of their academic program of study due to F-1 visa limitations. Many, however, have taken advantage of a loophole that allows them to license their NIL in return for compensation when competing internationally. International student-athletes can also promote themselves via merchandise to legally skirt around their visa restrictions. Ultimately, while often challenging, the most straightforward route for this frequently overlooked group to achieve NIL financial benefits is to seek an O-1 extraordinary ability visa, a path often taken by international athletes in their post-college professional journeys.
Canada has taken a different approach to the limits it places on its international student population and their ability to work. In October of 2022, the Canadian Minister of Immigration, Refugees, and Citizenship, Sean Fraser, announced a temporary lifting of the 20-hour-per-week cap on the number of hours that eligible post-secondary students are allowed to work off-campus while class is in session. In doing so, international students in Canada will see greater opportunity to gain valuable work experience and financially support themselves while maintaining their student status.
What you can do
For those stepping into the NIL game, the key to maximizing opportunities and positioning yourself for a big payday is planning. From a strategic perspective, consider working with a professional business manager who can provide day-to-day support with payroll and bookkeeping, tax prep and budgeting, as well as big picture structuring and opportunity analysis. With financial logistics under control, you can focus on your game with the peace of mind that comes from knowing the business-side is looked after.
Disclaimer: This information is made available for educational purposes. It provides general information and is not intended as a substitute for personalized advice related to your situation.
