Much has been made of the rule changes in college athletics, with the NCAA allowing college athletes to profit off of their name, image, and likeness since July 1st, 2021. The NIL market—already a billion-dollar industry—is only set to grow, as more businesses will seek to capitalize on the opportunities provided through athlete sponsorship. The “NIL era” has been tremendously beneficial for college athletes, but is also a game changer for small businesses and national corporations that seek to operate in the high-ROI athlete and influencer marketing space.

Since July 1st, 2021 dozens of service providers have entered the NIL market. Many companies now provide college athletes and universities with NIL-related education and services. However, with so much educational material and services tailored towards college athletes, there has been little educational information developed for the sponsors seeking to partner with college athletes.

While the emphasis for college athletes has been on compliance with NCAA rules, state laws, and internal university policies for the purpose of ensuring their continued athletic eligibility, businesses seeking to work with college athletes should also be concerned with the legal implications of NIL deals. Of course, companies should seek to have well-drafted contracts in all aspects of their business dealings. However, in entering into NIL contracts with college athletes, businesses should take particular care to adhere to all relevant rules and laws. The downside of glossing over those rules and laws can extend far beyond the PR disaster of having a situation where a college athlete or university is in trouble with the NCAA. 

The benefit of partnering with a college athlete to promote a product or business is immense. College athletes often have huge platforms and many fans. With tremendous social media followings and loyal supporters, these athletes have excellent voices to help target audiences engage with your business. Consider the following steps to engage with college athletes and effectively use their NIL to grow your brand: 

Connect with College Athletes on Social Media or Through Marketplace Platforms 

The easiest way to connect with college athletes is through their social media accounts. It is also an easy way to see their following and engagement on other posts. A simple “DM” can be a great start to a partnership. Many college athletes are also listed on influencer marketing transaction platforms, such as Opendorse or MarketPryce. You can sign up for a business account and see athletes that are listed on the exchanges. These platforms do typically charge a transaction fee (sometimes as high as 30% of the deal), either to you or to the athlete you are connecting with. Additionally, some college athletes have hired marketing agents to put together NIL deals for them. Be prepared to negotiate terms with a college athlete’s representative. However you connect with athletes, offering them a deal is the place to start. 

Ensure the Deal is in Compliance With all Relevant Rules, Laws, and Policies 

The regulatory landscape surrounding NIL can be complex; you must adhere to NCAA rules, state laws, and institutional policies. The NCAA’s interim NIL policy directs college athletes to follow their state NIL laws, and in states where there is no NIL law, to follow their institutional or conference NIL policy. The NCAA’s NIL rules also allow college athletes to retain professional service providers to represent them. You may find yourself negotiating an NIL deal with an attorney or agent. Finally, the NCAA does still prohibit deals that constitute “pay-for-play” or serve as recruiting inducements. It is important to draft contract language that could not be construed as either. 

Although many states have similar laws regulating college athlete NIL, it is important to consider the nuanced differences between them. Typically, you should consider the restrictions of the NIL law in the state where the college athlete plays. That law will be critical—regardless of where your business is located or incorporated. Be sure that no portion of the contract you offer to a college athlete is in violation of their state’s NIL law. 

Finally, consider the NIL policy of the institution that the college athlete attends. These can differ quite substantially. Certain schools allow the athletic department to facilitate deals for their players. Other schools prohibit institutional involvement completely. The athletic department’s website is the first place to check for any restrictions that the college athlete may have in finalizing the deal. You should also check for any reporting requirements the institution may have. 

Check the Intellectual Property Provisions in Your Contract 

At its core, an NIL deal is a limited grant of intellectual property rights. While a college athlete has the authority to grant you the right to use their name, image, and likeness, they do not typically have the ability to use their university’s intellectual property. There are alternative avenues to securing such a license. Additionally, some universities permit their players to engage in NIL activity in team-issued apparel, but others do not. It is important to draft appropriate contract language, that correctly reflects the intellectual property provisions of the deal. 

Consider Other Relevant Laws 

In addition to NIL-specific state laws, there may be other laws that play a factor in your NIL deals with college athletes. They might include state right-of-publicity statutes or common laws, tax laws, employment laws, and even immigration laws for international student-athletes. The variety of laws that play a factor can impact much more than a college athlete’s eligibility. They can directly impact your business as well. 

Send the College Athlete a 1099 and Other Relevant Tax Documents 

After you have provided compensation to the college athlete and the athlete has provided the required deliverables, you must provide tax documentation for the deal. You must provide an IRS Form 1099 to any athlete who you have paid over $600. 

While there are many benefits to partnering with college athletes as a business—including the opportunity to help increase sales and develop brand affinity—there are also risks. It is important to be strategic and provide college athletes with NIL contracts that are compliant with all relevant rules and laws. Consider hiring an attorney with broad experience drafting NIL contracts to help meet your legal needs.