A Field of Dreams: How NIL Changed the Game for Student Athletes

Journal of Financial Planning: May 2023

Dan Johnson is an independent consultant, assistant professor for the College for Financial Planning, and a part-time instructor for Kaplan Professional, Boston University, and the University of California, Los Angeles. He resides in Chicago, IL.

It is a beautiful autumn weekend in Pittsburgh, Pennsylvania, in November 2021. While many people are taking advantage of the weather, Emelie Curtis, a junior student athlete at Duquesne University, is busy running a lacrosse clinic for local middle and high school girls. The turnout may not be as impressive as nearby ACC football games, but for Emelie, it is a significant achievement. She can now afford to pay for her rent, utilities, gas, food, and entertainment like Netflix—all of which are necessary for a college student. Moreover, Emelie has accomplished something that her parents, who are both former Ohio State University student athletes, were not able to do—earn compensation based on her name, image, and likeness (NIL) as a student athlete. However, Emelie is not alone in this as thousands of student athletes across the country are also taking advantage of this opportunity and forming a rapidly growing niche.¹

Historical Perspective

Since its inception in 1906, the National Collegiate Athletic Association (NCAA), a nonprofit organization that regulates student athletics across the United States, Canada, and Puerto Rico, has held its core tenant as amateurism.² In other words, the NCAA has long prohibited student athletes from earning anything beyond what academic and athletic scholarships could provide. That meant that student athletes could not have a job or receive any monetary or nonmonetary compensation, including profiting from their “name, image, and likeness.”

The penalties for breaking these rules equated to lost playing eligibility and school sanctions. In 1986, repeated recruiting and “pay-for-play” violations caused the NCAA to hand Southern Methodist University’s football team the “death penalty,” including a cancellation of the team’s entire 1987 season, no home games in 1988, a ban from all bowl games and live television until 1990, and a loss of 55 scholarships and four coaching positions over a four-year period.³

In 2010, former University of Southern California (USC) running back, Reggie Bush, widely considered one of the greatest college football players of all time, was stripped of his 2005 Heisman Trophy award after an NCAA probe discovered lavish gifts and cash advancements were made to him and his family from various boosters. USC was also penalized, including vacating its 2005 regular season and Orange Bowl victories, a ban from all 2010 and 2011 bowl games, and a loss of 30 scholarships across three years.^2,4,5

Critics argued it was unfair that it could profit off a student athlete’s NIL while the latter received nothing beyond basic academic and athletic scholarships. In July 2009, Ed O’Bannon, a former University of California basketball player, filed a lawsuit against the NCAA and Collegiate Licensing Company over EA Sport’s video game, NCAA Basketball 2009. O’Bannon claimed both organizations violated antitrust laws by using his NIL without permission to profit and that he and other players should be compensated. From 2009 through 2014, over 20 former student athletes joined O’Bannon as plaintiffs in the class action lawsuit, and a California district court ruled in their favor in August 2014. The victory resulted in the NCAA paying over $45 million to the plaintiffs and marked the first time that a student athlete effectively profited from their NIL with permissive NCAA acknowledgement.⁵

Change of Tides

Despite O’Bannon’s historic victory, relatively little changed from 2014 through 2018. Yet widespread criticism was growing around the country among players, fans, families, the media, and even lawmakers. In 2019, California became the first state to pass legislation and directly challenge the NCAA⁶  on name, image, and likeness.

Known as “The Fair Pay to Play Act,” California’s legislation now allowed athletes of any age to profit off their name, image, and likeness, regardless of the league or sport.⁶ Much to the dismay of the NCAA, the move was widely heralded across the country and soon other state lawmakers began enacting similar legislation.

In June 2021, the U.S. Supreme Court inflicted its own death penalty on the NCAA by ruling against its NIL restrictions (NCAA vs. Alston), deeming them to be a direct violation of antitrust laws.⁷ Defeated, the NCAA adopted temporary rule changes, essentially allowing for NIL activity among student athletes and instructing schools to set their own policies regarding the matter.^8,9  The rule quickly became permanent in July 2021, allowing NCAA student athletes to profit off their NIL and engage in a wide variety of activities, including: ^8,9,10,11

• Appear in ad campaigns
• Advertise brands via their social media accounts
• Sign endorsement deals and form corporate and charitable partnerships
• Sell merchandise, signed memorabilia, apparel, and autographs
• Operate their own businesses and sporting camps
• Make paid appearances and speeches
• Hire professional NIL service providers

Despite the NCAA’s rule changes, numerous activities remain prohibited. For instance, schools are still not permitted to directly compensate players for their athletic accomplishments, and coaches are not allowed to offer money to entice high school and middle school prospects to attend their college. Additionally, boosters are not permitted to directly pay student athletes for “pay-to-play” schemes.^8,9 Despite these limitations, within just one year, the NIL market has already surpassed $900 million, and it could grow well beyond $1 billion by the end of year two.^10,11

The NIL market is not only beneficial to student athletes and brands; there are numerous other parties involved, making it a rapidly expanding niche with plentiful opportunities.

Student Athletes Cashing In

Unsurprisingly, primetime sports and universities generate the bulk of revenue in the NCAA. For example, football and men’s basketball have traditionally been the highest revenue generators, with men’s ice hockey, women’s basketball, and baseball following closely behind, with a few well-known names repeatedly emerging as top revenue-generating universities: University of Texas at Austin, Ohio State University, the University of Alabama, Florida State University, and the University of Georgia. Likewise, similar patterns are occurring in the NIL landscape, where football and men’s basketball are the top earners, accounting for 48.8 percent and 17.7 percent of all NIL compensation. Following closely are women’s basketball (13.5 percent), women’s volleyball (2.4 percent), and softball (1.9 percent). Among the conferences, the Big Ten, Big 12, Big East, Pac-12, and SEC are the top five in NIL earnings. Additionally, the Big Ten, Big 12, ACC, SEC, and Pac-12 are the most active conferences in terms of the number of NIL deals.

Despite the dominance of big-name athletes from top-tier universities, lesser-known athletes from smaller schools are also finding ways to cash in on NIL opportunities. Rayquan Smith, a football and track student athlete at Norfolk State University, is a prime example. Although he is unlikely to become a professional athlete, Rayquan has secured over 70 NIL deals with popular brands, and he has even created his own company and website to further enhance his NIL profile. Although Rayquan’s success is exceptional among Division II and III athletes aiming to monetize their NIL, most will have to follow a path similar to Emelie Curtis. Nonetheless, Rayquan’s accomplishments serve as an inspiration, as they show what is attainable for any student athlete in the NIL era.

Female athletes are also demonstrating the potential of the new NIL era. Despite traditionally earning less than male athletes across all levels and sports, NIL is providing new opportunities for female athletes to bridge the gap. In total, female student athletes in Division I, II, III, and the National Association of Intercollegiate Athletics earn 27.5 percent, 24 percent, 39 percent, and 53 percent of total NIL compensation, respectively. This results in a male-to-female NIL ratio of 60 percent and 40 percent, respectively. However, if we exclude Division I football and men’s basketball, the statistics would be significantly different, with female student athletes potentially surpassing males in terms of compensation and number of deals signed. This is due to factors such as female athletes’ success on social media platforms like Instagram, Snapchat, and TikTok, which are the top NIL revenue generators. Additionally, the largest social media brand spaces, such as health, beauty, wellness, and fashion, have predominantly female audiences.

Finally, the impact of NIL is not limited to college sports, as it is now also making waves among high school and middle school athletes. Some of the highest-earning student athletes in NIL are not even enrolled in college yet. For example, Arch Manning, a high school senior and nephew of legendary NFL quarterbacks Peyton and Eli Manning, is worth over $3.4 million in NIL compensation. Similarly, Bronny and Bryce James, sons of NBA legend LeBron James, each attend Sierra Canyon High School in Chatsworth, California, and are worth approximately $7.3 million and $977,000, respectively. In fact, even in middle school, some athletes in hotbed areas like Texas and Florida are receiving attention from booster affiliates and signing private NIL deals worth hundreds of thousands. The National High School Federation (NHSF), which functions like the NCAA for high school sports, has expressed concern that NIL poses a threat to amateur athletics and created its regulations in response. Despite this, various schools, states, and leagues are creating their own NIL rules, which are redefining what is and isn’t allowed and indicating that the trickle-down effect of NIL is inevitable in middle school and high school sports.

The Rainmakers and Opportunists

It should be noted that despite the NCAA’s regulations, universities and coaches are still not allowed to directly compensate players for their athletic performances or use compensation as a means of recruiting. However, the pursuit of top student athletes has always been a fundamental goal for college sports programs, leading universities and coaches to sometimes push the boundaries of NCAA policies.

Traditionally, boosters have been instrumental in achieving this objective. In essence, boosters are individuals who contribute their time and finances to support a team or athletic department, thereby benefiting student athletes both on and off the field. Boosters engage in various activities, including the following:

• Donations in exchange for season tickets at the university
• Promotion of the university’s athletic programs and departments
• Making financial contributions to an athletic department or booster organization
• Arranging or providing employment opportunities for student athletes
• Assisting in the recruitment process of a prospective student athlete and/or their families
• Assisting in providing benefits to enrolled student athletes and/or their families

If an individual commits any of these acts, the NCAA will forever define them as “a representative of athletic interest,” with strict limitations on activities concerning prospective recruits and current student athletes.^2,9 Impermissible recruiting tactics include:^2,9

• Contacting a prospect in person either on or off campus
• Contacting a prospect via telephone, email, internet/social media, or letter
• Providing gifts and/or free or discounted services or tickets to prospects or their families
• Employing relatives, guardians, or friends of a prospect as an enticement for enrollment
• Directly or indirectly providing compensation, financial aid, or transportation to a prospect or their family and friends
• Providing compensation or benefits to any coaches of the prospect, including middle school, high school, junior college, and AAU or summer team coaches

Meanwhile, student athletes, including their families and friends, are not permitted to engage in the following activities:^2,9

• Tickets to college or professional sporting events
• Special discounts, payment arrangements, and/or credit on purchases or services
• Cash, loans, signing, or cosigning loans
• Transportation, payment, or loan of any automobiles
• Cash, benefits, or gifts tied to athletic performance or speaking engagements
• Free or subsidized housing or rent
• Employment for work not performed or compensation more than the average going rate

The NCAA does not have a specific ban on boosters, but it has comprehensive restrictions that can easily lead to violations, as seen in the cases of SMU and USC football. Considering the significant stakes involved, including national titles, reputations, livelihoods, families, and substantial financial gain, any edge in competition is highly valued. Therefore, groups of individuals such as alumni and influential university supporters have resorted to innovative tactics like forming “collectives,” which have been further enabled by the recent changes to the NIL rules.

A collective is an independent business entity formed under state law to collect money from boosters and businesses through one-time payments or subscriptions. They can be structured as either a for-profit or 501(c)(3) nonprofit. The for-profit collectives are usually limited liability companies (LLCs) that combine the benefits of pass-through taxation of sole proprietorships or partnerships with the limited liability protection of corporations. Meanwhile, nonprofit collectives gain tax-exempt status under the Internal Revenue Code and allow boosters to receive income tax deductions for their contributions. In return, the student athletes can pick their charity to provide their NIL services in exchange for payment from the collective. ^2,9,12

Collectives have emerged as a unique and powerful player in the world of college sports. By operating independently and utilizing indirect compensation methodologies, they are able to avoid many of the restrictions faced by traditional boosters. This has allowed them to effectively facilitate NIL opportunities for student athletes and help them monetize their personal brand. In addition, collectives can communicate with student athletes year-round, without the limitations faced by schools and coaches.

Overall, collectives have seen tremendous growth since the implementation of the NCAA’s interim NIL policies, with over 120 currently in existence. As a result, collectives are increasingly becoming the preferred model for recruiting and retaining players because they can provide opportunities that universities and coaches cannot. Schools that fail to embrace or partner with collectives may find themselves at a disadvantage in the highly competitive world of college sports.

Equally important is the rise of third-party companies helping student athletes and collectives facilitate NIL opportunities. Though each company is slightly different, they commonly earn revenue through a combination of retainer fees and revenue-sharing, plus offer services like:^10,12,13

• Promoting student athletes to independent brands, businesses, and collectives
• Leveraging and posting social media content across platforms
• Staying NIL compliant with states, schools, and leagues
• Navigating visa requirements for international student athletes
• Collecting NIL payments on behalf of student athletes
• Providing tax compliance and reporting tools for universities, athletes, and collectives

It’s important to note that the platforms facilitating NIL opportunities aren’t exclusively catering to superstar athletes from big-name schools. In fact, the majority of their clients are average student athletes across all NCAA divisions and sports. What’s even more intriguing is that these platforms suggest that social media growth, popularity, and profitability are more closely tied to one’s personality than their actual performance or media coverage. Essentially, brands are valuing a student athlete’s popularity and promotional skills over their on-field achievements. This is encouraging news for any student athlete who has limited playing time, participates in a niche sport, or has a low probability of going pro.

Moreover, these platforms work with universities, collectives, and businesses. They help universities and collectives with recruiting, retention, marketing, and ensuring NIL compliance for their recruits and players. In the case of private businesses, third-party companies can assist with contract negotiations, facilitation, and even provide matchmaker services by connecting businesses with student athletes that align with their brand image. All in all, these platforms have rapidly become a multibillion-dollar industry and appear to offer a competitive edge for all parties involved.

The Transfers

As previously discussed, NIL has been beneficial for a range of student athletes. Nevertheless, transfer athletes deserve particular attention as the recent rule changes, combined with NIL, have given rise to a college free-agency market similar to that of professional sports.

In prior years if a student athlete wanted to transfer, they needed permission from their coach to contact other schools. The coaches, however, could deny their requests, thus forcing the athlete to appeal to the school’s athletic director, then to the school dean if unsuccessful. If this option also failed, the last resort was appealing to a committee containing on-campus professionals and students. If the appeal was denied, the student athlete was forced to either stay, or transfer while forfeiting potential athletic scholarships at the new school.¹⁴

This all changed in 2018 when the NCAA created the new transfer portal as a way for student athletes to transfer schools, sans permission, in a streamlined fashion without penalty or loss of scholarships. Specifically, the database contains all men’s and women’s sports and can be sorted based on name, school, conference, and division. If a student athlete wants to transfer, they must simply notify their school’s compliance department within a specific “portal transfer window date.” These dates vary based on the sport, gender, and status (i.e., undergraduate or graduate), but once a student has notified school officials, the school then has only 48 hours to enter the athlete’s name into a database. Once inputted, coaches from other schools can then see the recent entries, contact the athlete unless they are labeled “do not contact,” and create “transfer watch lists” for recruiting purposes.¹⁴

Complementing the transfer portal is another important NCAA change known as the “one-time transfer” rule. This rule change came before NIL in April 2021 and aligned all sports and divisions under the same transfer rules, both for graduates and undergraduates. Specifically, Division I student athletes competing in football, men’s ice hockey, baseball, and men’s and women’s basketball, are now allowed to transfer schools via the NCAA portal without sitting out the subsequent year after transfer.¹⁴ Before this change, only athletes from other Division I sports, plus all sports in Division II and III, could utilize this feature. That is significant because despite athletes only being allowed one transfer per college athletic career, these sports are traditionally the highest earners.

Notably, these important changes tie directly into NIL and collectives because the latter are now utilizing their resources to create powerful transfer incentives for college athletes. Case in point, Division I has experienced a 60 percent respective growth rate since the “one-time-transfer” rule change in April 2021 and makes up over three-quarters of all NCAA transfers.¹⁵ In addition, 51 percent of those entrants eventually transferred while the remaining 5 percent and 44 percent of athletes withdrew and remained active inside the portal, respectively.¹⁵ Of course, it is impossible to know just how much of this activity was due to collective influence, but plenty of anecdotal evidence exists to support such theories.

That said, athletic directors and coaches alike are bemoaning the changes. According to one recent survey, 90 percent of athletic directors noted they are concerned about NIL, believing an unregulated NIL market coupled with transfer rule changes will lead to more scandals and unfair recruiting tactics. Similarly, coaches across the country are chiming in and expressing their displeasure. For instance, Garry Patterson, Texas Christian University (TCU) head football coach, has mentioned that he risks losing 25 to 30 players per year due to NIL-related transfers. Moreover, Ryan Dan, Ohio State head football coach, has publicly stated that their program needs about $13 million per year in NIL money to maintain their roster, otherwise they will not have a national championship caliber team.^{10,12,13,16,17}

Ultimately, whether or not a student athlete transfers, two things are becoming clear. First, student athletes are now largely in control of where they play and for how long. Secondly, the interplay between NIL, transfer rules, and collectives is creating a new recruiting landscape and a college free-agency market akin to professional sports. It is no longer just about where a star high school or college athlete can win the most playing time or a national championship. Now it is also about where they can maximize their earnings potential before their college careers are over; which for many is becoming the most important factor since their probability of turning professional is unlikely or a short-lived experience.

The Regulators

With Pandora’s Box open, boosters are stepping out from the shadows and availing themselves in the form of collectives that work tirelessly to assemble the best teams money can buy. For many, it is a refreshing change of pace, as the scales of power have shifted away from the NCAA and into the hands of players. Still, opponents argue that despite revised NIL guidelines, there is a lack of uniform standards that is leading to confusion, poor oversight, and questionable practices among individual states and schools. They also worry that NIL will be pushed too far and ultimately compromise college sports, thus regulation is needed.

In response, the NCAA recently revised booster guidance in May 2022 in an attempt to limit the power and influence of NIL collectives. Specifically, the NCAA is focusing on the word “booster” and reiterates that a booster is not just an individual. Instead, it also includes corporate entities and organizations that promote universities, athletic programs, and student athletes. In other words, if an individual or entity’s primary purpose is to engage in NIL activities with student athletes, then they will be considered a booster and not allowed to engage in recruiting activities or conversations on behalf of a school. Additionally, the NCAA has stated that each student athlete NIL deal needs to be evaluated on a case-by-case basis to (1) determine the value the athlete brings to an agreement, and (2) that deals may not be based on achievements, incentives, or enrollment decisions.^9,13

With this new guidance in place, the NCAA is hoping to reset expectations and take back control of the NIL marketplace. In particular, the NCAA has directed its staff to pursue action against those violating its NIL policies, including recruiting and incentive pay violations, both now and in the future. The NCAA has also stated it will retroactively investigate violations since the initial NIL rule adoption in June 2021 and assess penalties accordingly.^9,13 Still, many across the country are disappointed with the NCAA’s recent actions, believing it will do little to stop collectives and only bring about new rounds of litigation.

One reason is because the Supreme Court’s Alston decision significantly hobbled the NCAA’s authoritative power and, as a result, the NCAA is now relying on Congress to take action. However, it appears that Congress has little to no appetite to take on NIL regulation, as evidenced by at least eight failed federal law proposals thus far. Therefore, for the time being, NIL regulation has defaulted to state laws and executive actions that can essentially overrule the NCAA’s NIL Collective Guidance policies, thereby handcuffing the NCAA into purgatory and self-admission that it has no real regulatory authority.^10,11,12,13

Secondly, collectives are ready to fight back—something the NCAA should worry about since the former are commonly backed by wealthy and powerful boosters. In particular, legal experts argue that collectives can make claims stating that any limits the NCAA places on their ability to engage in NIL would violate federal antitrust laws, which the NCAA has already committed according to the Supreme Court’s Alston case. Also, the NCAA states that NIL deals cannot be contingent on initial or continuing enrollment, nor based on athletic performance, but the problem the NCAA will have is proving intent. After all, each deal according to the NCAA must be evaluated on an “independent, case-by-case basis where the value that each athlete brings to a NIL deal is determined.” But who determines this without subjective bias? Similarly, the NCAA guidelines mention collectives cannot contact athletes for “recruiting purposes,” but what constitutes a “recruiting purpose” is open to interpretation.^{10,12,13,16,17}

As per the student athletes, they too are well protected from NCAA punishment. The most obvious layer of protection comes from the Supreme Court, but more than two dozen states have also passed legislation. Specifically, states are prohibiting schools and the NCAA from punishing athletes for accepting money from third parties like collectives. Lastly, should the NCAA investigate student athletes directly, compelling athletes to cooperate in investigations will be challenging. After all, student athletes share many tight bonds and commonalities, so why would they risk their abilities, or a teammate’s or peers’ abilities, to earn NIL compensation?

Resultantly, regulation at this point is primarily being left to schools and individual states. For universities, the NCAA is urging schools to create and enforce their NIL policies and to self-report any violations.^8,9 How many schools are following these recommendations, however, is unclear. What is clear is that due to the updated NCAA policies, universities can now be held responsible for the actions of NIL collectives. As such, universities are treading carefully, though most appear to be yielding to their local state laws for guidance or outsourcing NIL compliance to third-party vendors.

Since 2019, states have been passing legislation enabling student athletes to earn NIL compensation, though the number of states at that time was relatively small. Following the Supreme Court’s decision in 2021, many states that had not yet updated their NIL laws suddenly found themselves at a competitive disadvantage. In response, dozens of states scrambled (and continue to scramble) to revise or altogether repeal their legislation. For the most part, this has been a positive change for collectives and student athletes, but it has also resulted in a complex network of state legislation that varies from one jurisdiction to the next—both at the college level and high school levels.

For instance, at the college level, 30 states have so far enacted NIL legislation or amended previous versions. Of the remaining 20 states, 11 have proposed legislation, two have repealed legislation, and the remaining seven remain unknown. For high school, 25 and 16 states permit and prohibit NIL, respectively, while the remaining nine states are still considering legislation.^10,11 For average student athletes, this is a somewhat moot point, but for superstars at either the high school or college level, it could be significant.

Another important factor that is often overlooked is the impact of favorable tax laws on the competitive advantage of universities in certain states. For instance, while California was the first to allow its athletes to earn NIL compensation, it also imposes the highest state income tax rate in the country, which is 12.3 percent. Additionally, nonresidents who receive income from a California source are also required to pay state taxes. This applies to all 50 states and is commonly known as “duty taxes” or the “jock tax,” especially for professional athletes. In contrast, states like Florida and Texas, which are the top two states for NIL compensation, have no state income or duty taxes for nonresident athletes. Thus, student athletes must carefully consider not only where they can maximize earnings but also where they can minimize taxes.

Ultimately, state lawmakers are reshaping the sports landscape and giving a competitive edge to schools located in favorable geographic regions. This places large, powerhouse universities in major sports markets with favorable NIL compensation and minimal taxation at the forefront of recruiting, while forcing less fortunate schools to adjust. For student athletes, the decision of where to play and win is now influenced by the ability to maximize earnings and minimize taxes. All parties involved in recruiting must now carefully consider the multitude of factors at play.

Future Predictions

Undoubtedly, it is becoming increasingly evident that name, image, and likeness (NIL) is a permanent fixture and will persist into the future. Although the majority of NIL transactions will take place at the college level, it is probable that it will eventually trickle down to high school athletics. Regardless, this development is good news for many as it creates a level playing field for both male and female athletes. While NIL will likely only play a minor role in the college careers of most student athletes, it offers a significant opportunity for superstar athletes or athletes with an entrepreneurial spirit to earn considerable income before their brief athletic careers come to a close—a particularly crucial aspect since less than one percent of athletes become professionals.

Meanwhile, third-party vendors will continue entering the NIL space and capitalize by offering a variety of services to different clientele. For student athletes, this includes services like social media promotion, deal negotiation and facilitation, and payment collection. Next, third-party vendors can assist universities and collectives with recruitment and regulatory compliance with both the NCAA and state legislators. Lastly, they can help private businesses find student athletes that fit into their brand image and structure appropriate contracts between both parties.

As NIL becomes more prevalent, the recruiting landscape is expected to continue evolving and becoming more competitive. Collectives will likely become the preferred recruitment vehicles among boosters and universities, with institutions that do not embrace such practices falling behind their competitors. Moreover, with the new student transfer portal and the one-time-transfer rule, student athletes will have greater control over their choice of institution. Collectives and recruiters will be able to capitalize on this by offering substantial incentives to athletes, creating a somewhat free-agent market in college sports. Consequently, playing time and championship opportunities will no longer suffice to recruit and retain players; NIL compensation will also be a significant factor to consider.

Finally, it seems that regulations surrounding NIL will remain a confusing array of various laws and regulations. Although the NCAA now allows student athletes to participate in NIL, it has also acknowledged the difficulties it presents and has taken initial measures to limit the influence and power of collectives. Nonetheless, their ability to enforce these regulations will continue to be hampered by the Supreme Court, state lawmakers, and a lack of federal legislation. Furthermore, the NCAA faces strong opposition from collectives and vendors supported by wealthy and influential boosters. Consequently, NIL legislation is currently being left to individual states, with universities in major sports markets, states with favorable NIL regulations, and those with little to no income taxation having a significant advantage. All of these issues are expected to persist until Congress enacts federal laws to ensure fairness and consistency nationwide.

Adviser Takeaways

Financial advisers often consider professional athletes as some of the most affluent and intricate clients they may ever encounter. Nevertheless, this segment of clientele is also uncommon and selective. But with the recent rule changes regarding name, image, and likeness (NIL), advisers now have the chance to broaden their practices and venture into the sports and entertainment sector.

The best approach is working directly with the student athletes themselves. Here the best-case scenario is that a young athlete earns substantial income, grows their net worth, and perhaps turns professional—all with their financial adviser in tow. However, even if the athlete does not achieve superstardom, the adviser can still provide valuable wealth management services both during and after the athlete’s playing career.

Another approach is working with the student athlete’s parents. For example, advisers might already have clients with student athlete children in high school or college. Advisers can capitalize on this by providing value-added services for parents while simultaneously building client–planner relationships with the children. This is important because many student athletes will eventually inherit their parents’ wealth but may fire their parents’ advisers and move their assets elsewhere.

Alternatively, the planner could establish new relationships with parents of student athletes and stress the important of early planning. After all, many of these athletes are quite young and do not yet possess financial and life experience to be making serious decisions. In addition, they are likely to be pursued by many professionals, most of whom are probably unqualified or do not have their best interests in mind. Therefore, establishing a client–planner relationship early on, with close parental oversight, can help avoid costly mistakes and prepare the child for long-term success well beyond their playing careers.

Finally, there might also be opportunities to work with universities, collectives, third-party vendors, and private businesses. For example, universities and collectives want to win championships, while third-party vendors want to maximize their profits by utilizing an athlete’s profile for marketing and NIL purposes. However, they can only accomplish these goals if they recruit and retain the best possible athletes. This is where the adviser can come into play.

For instance, rather than work directly with athletes, advisers can partner with institutions and provide their athletes with quality financial advice. The advice will likely be pro bono for the athletes, but adviser payments will still be made from the institutions in the form of project or retainer fees. Then, should the athlete want additional services, they can always hire the adviser independently. Either way, every party benefits: institutions provide value-add to their athletes, the student athletes receive high-quality financial advice, and the adviser expands their revenue streams while simultaneously building a pipeline full of warm referrals.

Of course, entering this niche can be quite challenging, but there are a variety of ways it can be done. It is important to note that as an adviser, NCAA recruiting rules do not apply, so there is no need to worry about policy violations. That said, perhaps the easiest starting point would be contacting current clients with student athlete children that may be impacted by NIL. Next, consider attending tournaments, recruiting events, and other engagements that athletes and their families may be attending. Alternatively, recognize that younger generations tend to receive their news and financial advice online via social media. Thus, it might also be worth considering revamping marketing efforts on Instagram, Snapchat, and TikTok (the three most popular platforms for younger generations) and creating a digital/mobile practice that is user-friendly to younger adults.

Working with universities, collectives, and third-party vendors is not an easy feat, and financial planners must have a clear understanding of the role that boosters and collectives play in college athletics to successfully navigate this area. Advisers must take into account the relationship between the boosters and collectives and the university, their motivations for supporting student athletes, and potential legal and ethical issues that may arise from their involvement. Additionally, advisers must assess interest from these institutions to ensure that their efforts will be profitable. It is also important for advisers to be aware of potential conflicts of interest that may arise from working with boosters and collectives, such as prioritizing the interests of these organizations over the student athlete or engaging in unethical practices like offering improper benefits or inducements.

To work with boosters and collectives in an ethical and effective manner, financial planners could develop best practices based on their analysis of the role and potential risks and opportunities associated with these organizations. These best practices may include establishing clear guidelines for working with boosters, disclosing potential conflicts of interest, and prioritizing the interests of the student athlete above all else.

Ultimately, whether financial advisers opt for a direct or indirect approach with student athletes, one thing remains evident: advisers have the potential to offer support to these young individuals as they navigate their athletic careers. This in turn can allow student athletes to focus on what truly matters to them—the elusive pursuit of fleeting moments of athletic success. 

SIDEBAR:
Where Are Schools Spending the Most on Student Athletes?

In states that permit schools to facilitate NIL relationships, universities can closely work with affiliated collectives during the recruiting process and offer student athletes elite programs, world-class facilities, national TV exposure, and a chance to later turn professional. They also, of course, can indirectly provide lucrative NIL compensation via collectives; which as previously discussed, is becoming a key factor for student athletes looking to maximize their NIL earnings before their college careers are over.

To provide some background, Florida is currently in the lead for total NIL compensation, with Texas, California, Ohio, North Carolina, Kansas, New York, Pennsylvania, Virginia, and Indiana following behind. Additionally, the projected regional breakdown of NIL compensation is as follows:¹⁰  

Southeast (FL, GA, NC, SC): $234.5M

West South Central (AR, LA, OK, TX): $153.3M               

East North Central (IL, IN, MI, OH, WI): $137.1M

Atlantic (DC, DE, MD, NJ, PA, VA): $135.3M

Pacific (AK, CA, HI, OR, WA): $121.4M

Northeast (CT, MA, ME, NH, NY, RI, VT): $111.8M

East South Central (AL, KY, MS, TN, WV): $96.6M

West North Central (IA, KS, MN, MO, ND, NE, SD): $91.3M

Mountain (AZ, CO, ID, MT, NM, NV, UT, WY):$60.7M

Endnotes

1. Blinder, A. 2021, December 9. “The Smaller, Everyday Deals for College Athletes under New Rules.” The New York Times. www.nytimes.com/2021/12/09/sports/ncaafootball/college-athletes-nil-deals.html.
2. NCAA. n.d. “History.” www.ncaa.org/sports/2021/5/4/history.aspx.
3. Dodds, Eric. 2015, February 25. “The ‘Death Penalty’ and How the College Sports Conversation Has Changed.” Time. https://time.com/3720498/ncaa-smu-death-penalty/.
4. McNair vs. National Collegiate Athletics Association, B245475. 2015. https://caselaw.findlaw.com/ca-court-of-appeal/1691746.html.
5. O’Bannon vs. National Collegiate Athletic Association, 802 F.3d 1049 (9th Cir. 2015). https://cdn.ca9.uscourts.gov/datastore/opinions/2015/09/30/14–16601.pdf.
6. 16 S.B. 206, 2019 Biennium, 2019 Reg. Sess. (CA. 2019). https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB206.
7. National Collegiate Athletic Association v. Alston, 594 U.S. __. 2021. www.supremecourt.gov/opinions/20pdf/20-512_gfbh.pdf.
8. NCAA. 2021, May. “Interim Name, Image, and Likeness Policy—Guidance Regarding Third Party Involvement.” https://ncaaorg.s3.amazonaws.com/ncaa/NIL/May2022NIL_Guidance.pdf.
9. NCAA. 2021, May. “Question and Answer: Name, Image, and Likeness Policy.” https://ncaaorg.s3.amazonaws.com/ncaa/NIL/NIL_QandA.pdf.
10. Opendorse. n.d. “NIL Insights.” https://biz.opendorse.com/nil-insights/.
11. Opendorse. 2022, June 30. “N1L: One Year of Name, Image, and Likeness.” https://opendorse.com/wp-content/uploads/2022/07/N1L_Full_063022_3.pdf.
12. On3. 2022, August 25. “The On3 Guide to NIL Collectives around the Nation.” www.on3.com/nil/news/on3-guide-to-nil-collectives-around-the-nation/.
13. Dellenger, R. 2022, June 14. “NCAA Enforcement Begins Attempted NIL Crackdown with Miami Inquiry.” Sports Illustrated. www.si.com/college/2022/06/14/miami-nil-inquiry-ncaa-john-ruiz.
14. NCAA. n.d. “Want to Transfer?” www.ncaa.org/sports/2015/2/13/want-to-transfer.aspx.
15. NCAA. n.d. “Transfer Portal Data: Division I Student Athlete Transfer Trends.” www.ncaa.org/sports/2022/4/25/transfer-portal-data-division-i-student-athlete-transfer-trends.aspx.
16. ESPN Staff. 2023, January 20. “A $13-Million NIL Deal Gone Wrong, a Top QB Recruit and What Happens Next.” ESPN. www.espn.com/college-football/story/_/id/35482485/jaden-rashada-faq-top-recruit-nil-deal-florida-football.
17. On3. n.d. “NIL Deal Tracker.”  www.on3.com/nil/deals/.