5 Things Companies Should Know About NIL
The complete guide to navigating NIL deals as a business.
By Bryan Finck on
NIL refers to the rights of college athletes to monetize and profit from their personal brand, which consists of their name, image, and likeness (NIL).
It means that businesses can offer money or in-kind compensation (merchandise, tickets, etc) for things like sponsorships and promotions, social media posts, and much more.
This wasn’t allowed until July 2021, but NIL now makes it possible. Here are 5 things you need to know to make NIL work for your business.
1. How NIL Changed the Game
The NCAA passed a rule allowing all college athletes to participate in NIL deals, regardless of whether your state allowed it by law.
There are essentially four key aspects of NIL:
- Businesses can offer NIL deals to athletes pursuant to the rules of the NCAA, the school, and the state.
- Schools can only act as a resource for legal and compliance questions, they cannot facilitate deals.
- Businesses in states that do not have specific NIL laws can still participate in these deals without causing athletes they work with to violate NCAA regulations.
- Schools and athletic conferences can impose reporting requirements on schools and athletes as they see fit.
2. How NIL Deals Work
Businesses can offer deals to any qualifying athlete. The safest and most common approach is to use a NIL deal-making platform like Dreamfield to offer, execute and report on the deal.
However, businesses can also contact athletes directly. Regardless of how you choose to pursue offering NIL deals, the following steps are generally part of every deal.
Once a business finds an athlete or group of athletes they want to offer, both sides will sign a contract that outlines terms, what is expected, and the obligations of each party.
Once the athlete completes their duties as per the contract, the business will make payment—be it in cash or in-kind payment such as merchandise or apparel.
Compliance is the final component, a crucially important step that must be constantly monitored in order to stay on the right side of the line.
The athletes are ultimately responsible for reporting their NIL deals to their schools and thus to the NCAA. But no business wants to be a party to a deal that gets an athlete in trouble.
To be good partners, companies should also pay attention to the compliance aspects of NIL and make sure all deals are compliant.
3. The Risks of NIL
This early period of deals is akin to the Wild West and things are still evolving. As a result, an entire industry has appeared to handle things like:
- Connecting businesses to the athletes they want to work with
- Payment processing and accounting
- Legal and compliance
- Branding and marketing
- Social media publishing and management
Every single item above has the potential to cause issues with NIL deals for both sides. For example:
- What happens if the athlete does not perform the service per the contract?
- What happens if the deliverables aren’t up to expectations?
- What recourse do you have if they damage their own reputation?
- What if social media posts don’t contain the required FCC disclosures?
You can go it alone, but you will open yourself up to potential legal and compliance issues, and most companies don’t have the ability to properly mitigate those risks.
4. The Benefits of NIL
College athletics are hyper-local but also have a national reach, so small and large businesses both stand to profit from NIL deals.
Not only are huge national brands cashing in for product launches and major promotional pushes they are also activating local markets with meet and greets and appearances.
Small businesses like family-owned restaurants are sponsoring the large players on football teams, and running stores are featuring endorsements from track athletes.
Influencer marketing has never been bigger or more important, and with the current generation of athletes so enmeshed in social media communities, the mixture is a potent one for business.
For ideas on how your business can leverage NIL, check out 12 Ideas for Leveraging College Athletes To Promote Your Business.
5. Where NIL is Going
While NIL deals are going to see exponential growth in the next decade, the best time to get in is now.
This is a new approach and the businesses that are early stand to gain from lower costs and a boost in awareness from doing something novel.
Beyond just marketing, businesses can also use NIL as a way to help social causes and movements like mental health awareness, social justice, and equal rights.
Interested in running a campaign?