Collegiate sports 101: What’s the deal with NIL?

?On June 30, 2021, the landscape of collegiate sports completely shifted.??

If you’re a fan of college sports, know a college athlete, have a Twitter account or have seen the sports section of basically any news outlet in the country over the past year, you know where I’m going with this.?

Let me explain NIL deals have shaken up the collegiate sports world and changed the landscape of collegiate sports forever.

What is an NIL deal??

NIL stands for name, image and likeness and it refers to the ability of a person to earn money by selling their name, image or likeness for brands to use. This is common among celebrities and professional athletes. I know you’ve seen Shaquille O’Neal’s Gold Bond commercials or even Terry Crews’ Old Spice ads. Until last year, collegiate athletes were prohibited from entering into these types of deals.??

That all changed when UCLA basketball player Ed O’Bannon and 19 others sued the NCAA on the grounds that the organization violated U.S. antitrust laws by forbidding athletes to take a share of the profits generated from the use of their NILs in broadcasts and video games. A judge ruled in their favor, and then similar cases started popping up and legislation was drafted in many states across the country.??

In June 2020, this topic made its way to the Supreme Court in the case of NCAA vs. Alston, in which the court agreed that the NCAA was violating antitrust laws. The Supreme Court decision made it clear that change was on the horizon. In the final hour before state laws went into effect on July 1, 2021, the NCAA introduced a bylaw that opened up the opportunity for NIL.?

So, what has changed??

The decision to allow NIL has been controversial to say the least with a rising concern over it potentially morphing into a form of pay-for-play. While student athletes are thrilled that they can monetize their brand with custom merchandise, paid summer camp instructor gigs and more, some schools and coaches feel that the decision has been detrimental to enrollment and retention.??

Some say that recruiting and college decisions for student athletes have become less about what school is the right fit and more about who is the highest bidder. Others claim that money has always been a deciding factor for many college students based on the cost of tuition and scholarships that have long been an issue in higher education. Some say that if coaches can get involved in bidding wars and make millions from their jobs, as they have for years, then it should be OK for the athletes to do the same.?

Despite where you fall on this spectrum of beliefs, many people agree that there is currently a need for more transparency around NIL in college sports. The NCAA lifted the restriction but has left specific guidelines up to the states and schools within them. There is no federal law governing this either, though many pieces of legislation have been introduced, including a call for athletes to be allowed to unionize.??

What does this mean in terms of the licensing industry??

After a year of giving athletes the green light to enter into NIL deals, new challenges have cropped up that have forced the NCAA to take a close look at its regulations, pushed college coaches into something mirroring professional leagues, and allowed athletes to hire agents and attorneys, which has piqued the interest of many in the licensing world.?

The first year of NIL has had a heavy emphasis on licensing for individual student athletes. You may have seen players start posting to their own social media handles to promote a product, for example. An interesting trend we’re watching now is the rise of collegiate group licensing, where multiple student athletes pool their collective NIL rights to be sold as one license.?

The benefit of doing this is an increase in the value of each NIL license more than it may have been worth in terms of individual marketability. Sometimes colleges even allow the use of their name, logo or color schemes to be included in these group licenses. This could also open the door for NIL opportunities to more universities with smaller budgets or student athletes with less initial recognition, providing an additional stream of revenue for scholarship programs and college athletic departments.?

Where will the NCAA go from here??

More change is clearly coming as the NCAA along with local and federal governments evaluate how NIL has impacted the collegiate sports world in its first year. One thing is for certain - and that’s that NIL has benefitted the players, allowing students to take control of their personal brands and even making it possible for students to stay in prestigious schools that they may not have otherwise been able to afford. Personally, I look forward to seeing the ongoing opportunities NIL provides not only for the players, but also my colleagues in the sports licensing industry.?

What do you think is next for NIL? Let me know in the comments!?