Silly NILLY: Why Due Diligence is Key in the NIL Landscape

As NIL continues to reshape college athletics, more players are entering the market with innovative—sometimes risky—models for athletes. At HYPHENATED ATHLETICS , we’re dedicated to supporting athletes and their families in understanding the nuances of these deals and making decisions that align with their goals. Recently, a new company, NILLY, co-founded by former NBA champion Kendrick Perkins and Wall Street veteran Chris Ricciardi, has attracted attention. Nilly offers athletes upfront cash in exchange for a cut of their future NIL earnings, exclusive rights to their name, image, and likeness for up to seven years. While this model may appeal to some, it’s crucial for athletes to approach these agreements with a discerning eye.

Breaking Down Nilly’s Model:

Nilly’s approach provides financial security by advancing cash in amounts from $25,000 into the hundreds of thousands. In exchange, Nilly takes a percentage (from 10% to 50%) of the athlete’s NIL revenue over a contracted period of up to seven years. Unlike other companies that focus on future professional earnings, Nilly’s contracts revolve around collegiate NIL dollars. This setup may seem straightforward, but it raises several considerations.

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Key Concerns for Athletes

As we advise athletes and their families, here are some critical factors to weigh when evaluating deals like those offered by Nilly:

1. Ownership and Long-Term Control: Nilly’s contracts require athletes to relinquish control over their NIL rights for several years, potentially impacting future earnings if their NIL value grows. For young athletes, these multi-year commitments might limit options later.
2. High Potential Cost: While the upfront money may feel like a relief, the long-term costs can be high. For instance, if an athlete’s NIL revenue grows significantly, they may end up paying Nilly much more than they initially received, which could hinder their financial growth down the line.
3. Regulatory and Legal Risks: Experts have noted that these contracts bear resemblance to high-interest loans, which could be subject to reclassification under federal law. If reclassified, athletes might face loan-related obligations they didn’t anticipate.

Balancing Benefits and Risks

We recognize that each athlete’s financial situation is unique. For some, deals like Nilly’s can provide immediate support, helping ease financial burdens without waiting for future earnings. However, Perkins and Ricciardi’s approach, while innovative, also requires a significant leap of faith that could impact an athlete’s financial future.

How Hyphenated Athletics Can Help:

We guide athletes and families in making sound, informed decisions by focusing on a few key principles:

1. Understand the Long-Term Impact: It’s crucial to assess deals beyond the upfront benefit. Signing away NIL rights can mean giving up control over future endorsements and limiting long-term income potential.
2. Seek Expert Advice: Consulting a trusted advisor or NIL specialist can help break down complex terms and ensure that agreements align with the athlete’s goals.
3. Consider Flexibility: We encourage athletes to evaluate shorter contracts or non-exclusive agreements, which may offer financial support without significant long-term limitations.

As the NIL industry expands, athletes will face more choices with varying degrees of risk. Our mission at HYPHENATED ATHLETICS is to ensure athletes and their families are equipped with the knowledge and support they need to navigate these opportunities confidently. By doing their due diligence and seeking sound advice, athletes can protect their futures while maximizing the benefits of their NIL potential.