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The New World of Collegiate Sports: Student Athletes Cashing in on NIL Rights in Ingenious New Ways

August 03 2022

On June 21, 2021, the Supreme Court’s ruling in National Collegiate Athletic Association v. Alston opened the door for student athletes to be compensated for their off field personas in a variety of ways that had been, up until then, off limits. In a bit of a rare occurrence these days, the Court came together in a unanimous ruling, finding that the NCAA’s restrictions on students receiving compensation or benefits outside of those related to their education unlawful.  In fact, Justice Kavanaugh, who wrote a concurring opinion, went as far as to state that these restrictions “would be flatly illegal in almost any other” industry.

Moving quickly, the NCAA issued an interim policy on July 1, 2021 which permitted student athletes to benefit from their name, image and likeness (NIL) rights.  The interim policy had limited restrictions, leaving much of the remaining control over these NIL rights to regulations at the state, local and educational institution level. Finally, on January 20, 2022, NCAA members approved a new constitution, which left most of the rule making over NIL rights to the three individual NCAA Divisions.  This new constitution went into effect as of August 1, 2022. The primary limitations in the new constitution relate to prohibitions on pay-to-play and using NIL rights as recruiting tools, but otherwise leaves the proverbial playing field wide open.

And the amount of money flowing into the market is astounding.  According to at least one source, over $900 million was spent in the first year of student athletes being able to capitalize on their NIL rights, with estimates for the 2022-2023 season being well over $1 billion. Not surprisingly, top athletes are likely to reap the largest rewards.  Like Alabama QB Bryce Young, who, according to his head coach, Nick Saban, has earned, “[A]lmost seven figures.”

However, not every athlete is going to hit those levels.  According to information provided by three NIL platforms, Opendorse, INFLCR and Athliance, average NIL transaction values are around $1,500-$1800, while the median transaction value was $53.  Breaking it down by activity type, Opendorse states the following breakdown: $4,923 per agreement for a multi-activity endorsement; $5,557 per year for licensing rights; $522 per Instagram post; $933 per YouTube video; $1,736 per hour for an appearance; $457 per interview. Clearly the numbers are all over the place, but the data seems to indicate that there are some at the top reaping most of the larger benefits.

When it comes to individual schools, Ohio State has come out on top, according to Opendorse, with a total value of $2,985,559 from July 1, 2021 through February 10, 2022.  Ohio’s football program claims nearly all of that, with 173 total deals representing $2,678,893 during the same period.

Finally, it is not just endorsement deals and social media posts that have the dollars coming in for these athletes.    In one of the most novel and ambitious new paths for compensating these up and coming athletes, non-profits are being formed and funded by wealthy alumni, with the donations going to pay players to make charity appearances and other positive impact performances.  For instance, through Horns with Heart, a non-profit founded by six alumni from the University of Texas, UT offensive lineman could receive $50,000 each for using their NIL rights “[T]o make charitable appearances and bring awareness to worthy causes that impact their local communities.”  In this manner, non-profits can be setup to act as recruiting tools, which would otherwise be impermissible if a university or college tried to do it directly.

It is clear that the future for student athletes is bright with these new opportunities to leverage their NIL rights for direct financial benefits in the future.  One last thing that the NCAA’s new rules have made clear, and something that particularly top tier talent should be taking advantage of, is that hiring of professionals, such as agents, accountants and attorneys, is permissible with respect to commoditizing these NIL rights.  With the amount of money involved and substantial nature of these relationships being built with these student athletes by top tier brands and organizations, student athletes would be wise to seek appropriate representation as early as possible.