Written by One of the biggest revolutions of the last 14 months is the removal of barriers that prevented college athletes from receiving financial benefits from the use of their names, images, and likenesses (called “NIL”). As the opportunity to earn income from NIL has now moved to the high school level, at least in a growing number of states, it is important to take a deeper dive into this topic.
So much has been written about NIL, a lot of it is exaggerated or just plain misinformation. NIL has been blamed for so many things. It is not why USC and UCLA are moving to the Big Ten Conference. No one in their right minds would or should think that NIL values will be enhanced because USC or UCLA will be playing some games in West Lafayette, Indiana, home of Purdue, rather than in Los Angeles, one of the entertainment and media capitals of the world. NIL has not undermined the integrity of college athletics, destroyed team chemistry, or really shifted the balance of competitive power in any sport. But it has attracted a lot of attention.
Some of this has come from the misunderstandings of fans and boosters, where somebody, somewhere is always cheating or gaining advantage. Some of it has come from the competitiveness of coaches who never want to lose any recruit, ever, and have incorrectly blamed NIL for surprising matriculation decisions that have always taken place.
In fact, NIL has been far more benign than its critics contend. The deals are almost invariable smaller than discussed or reported in the media. Some athletes have done a good job in using NIL to earn a bit of needed extra money to help them continue their academic careers, avoid a poorly made decision to turn pro, and perhaps have a bit of dignity over and above the value of their scholarship. What’s been under reported is the work athletes have done in the NIL space to enhance their own skills in marketing, promotions, or contractual understanding that ultimately will be longer lasting than their playing days.
In almost no case has NIL provided more compensation than even the lowest level professional contract or anything approaching generational wealth. In working on a book and developing a university course on NIL, I have also not seen a single deal that even comes close to equaling the value of a college degree over a lifetime, although the media keeps reporting on ones that supposedly might. Take those reports with a grain of salt.
With NIL now permitted by the high school federations in as many as 17 states this year, understanding the value, or rather the absence of value attached to one’s NIL is probably the best first step in navigating it for the parent and young athlete alike. First, it is important to know if your home state is among those states permitting high school athletes to engage in NIL activity or prohibiting it. Some states have also capped the value of potential deals. So before printing up the marketing materials and quitting your day job to manage Junior’s prep NIL career, or up and moving to a state that permits NIL, it is good to have some grounding in the reality and what is permitted by your state’s high school federation. Even if NIL is permitted in your state, it is probably not going to be transformational for you, your family, or your child. Certainly it will not in the way playing their sport and succeeding in school will.
That doesn’t mean you should run from or be discouraged from pursuing NIL opportunities now or down the road for your child. There are several things to be mindful of in doing so.
Just because NIL is so widely discussed and reported on, it doesn’t mean that everything is now permitted. NIL in the college ranks came about through a combination of state laws that prohibited college athletes who pursue marketing opportunities from being declared ineligible and the NCAA pulling back some of its historical amateurism rules in response. This doesn’t mean the NCAA has relaxed all its rules and situations where NIL is being used as a recruiting inducement there still may be consequences for that that include ineligibility for the athlete. If your child is a top 100 recruit in any sport, congratulations that is an enviable position, but there is also good chance the NCAA knows about him or her and will be looking at his or her recruitment and eligibility with some detail. Defending an eligibility case can be very costly and difficult. While some say NIL stands for “Now It’s Legal,” it doesn’t ,and while the NCAA may be chastened in its approach to declaring players ineligible for earnings before college, it is still active in this space.
Similarly, income received by young athletes will be taxable income and this includes even the value goods or services received in exchange for promotion. Many knowledgeable observers think the government agency that will ultimately most regulate NIL will be the Internal Revenue Service (IRS) rather than Congress. For most athletes their earnings won’t approach even the $12,550 federal minimum to file taxes. But most NIL activity will be 1099 income, meaning that no taxes will be withheld, so if a young athlete earned even just $13,000 in goods or income, they or their family might have a tax liability of several thousand dollars because nothing has been withheld unlike in a job situation. Also, since most college athletic scholarships, outside of football, men’s and women’s basketball, women’s volleyball, and women’s tennis, aren’t full cost of attendance grants but rather scholarship equivalents’ where a full scholarship value can be split among multiple athletes, leaving an athlete or their family to fill the gap, even modest amounts of NIL earning might harm rather than help a student-athlete’s eligibility for some forms of need-based financial aid.
The one thing the collegiate NIL revolution has permitted is the ability for athletes and their families to seek professional advice regarding their potential NIL involvement. This is true for high school NIL as well. This space brings up some complicated issues and contracts and seeking reputable and trustworthy advice is important. It is well-considered advice not to do something harmful in the long term at a young age. Perhaps this is an ideal time to note that electronic is forever, meaning things posted on social media can follow a young athlete for many years. The same is true in NIL and most states that have an NIL law have prohibitions in so called “vice,” categories, so NIL work along the fringes may have greater ability to harm rather than help young athletes. Also NIL communication is considered commercial speech and subject to the Federal Trade Commission and state laws on disclosure and accuracy and not protected in the same way other communication is under the First Amendment.
There is a reason why the law treats 14–17-year-old high schoolers differently than 18-year-olds and college students in terms of things as basic as the hours they can work. This may be as good a rule of thumb as any for viewing or managing NIL opportunities. NIL should not be more than a part-time job or after-school pursuit for most high schoolers. There are some cases where more may be possible. But it is critical not to lose sight of and make decisions that might undermine larger goals, like picking the right college, earning a college degree, or maintaining academic eligibility, for what will likely be only small amounts of money.