Where does the NIL money come from?

By Jason Bolton June 16, 2023 11:12

Photo by Shutterstock.com

College athletics have undergone a significant change in recent years, with new laws and regulations allowing athletes to profit from their name, image, and likeness (NIL) rights. This shift has sparked many questions, including where the NIL money comes from. In this article, we will explore the various sources of NIL money and how they are changing the landscape of college sports.

Firstly, it is important to understand that the NCAA regulations prohibit schools or employees from directly paying athletes for their NIL rights. However, this does not mean that athletes cannot make money off their NIL. Rather, the NIL rights provide a loophole for athletes to receive compensation while maintaining their amateur sports status. Under the new NIL laws, athletes can sell the rights to their names, images, and likenesses to third-party companies for use in advertising and promotions.

One source of NIL money for college athletes is through endorsements. Companies are now able to sponsor college athletes and use their images and names in advertisements. This opens up a new market for companies that want to reach the college demographic. College athletes are seen as role models and influencers, making them attractive endorsers for a variety of products and services. Endorsement deals can vary widely in value, with top-tier athletes commanding six or seven-figure deals.

Another source of NIL money comes from group licensing opportunities. In some states, companies are allowed to enter into group licensing agreements with colleges or athletic departments. This allows companies to use the collective NIL rights of a team or school in advertising and promotions. For example, a company could create a line of merchandise featuring the images and names of a college football team, with a portion of the profits going to the athletes.

Schools are also playing a more active role in arranging endorsement deals for their athletes. Many universities have created NIL support programs to help their athletes navigate the new landscape. These programs offer resources such as legal advice, financial planning, and marketing assistance to help athletes make the most of their NIL rights. Schools may also have relationships with local businesses and brands that can provide endorsement opportunities for their athletes.

The NCAA is also exploring ways to allow athletes to profit from their NIL rights while maintaining a level playing field. One proposal is to create a clearinghouse where athletes can disclose their endorsement deals and receive approval from the NCAA. This would help ensure that deals are above board and not used as a recruiting tool. The NCAA is also considering allowing schools to provide some education-related benefits to athletes, such as scholarships for graduate school or paid internships.

As the landscape of college sports continues to evolve, it is clear that NIL money will play a significant role. Athletes now have the ability to profit from their name, image, and likeness, opening up new opportunities for endorsement deals and group licensing agreements. Schools and companies are also adapting to the new rules by creating support programs and exploring new revenue streams. The future of college sports will undoubtedly be shaped by the ongoing discussions around NIL rights and how they are regulated.