Name, image, and likeness (NIL) deals are analogous to endorsement deals, where businesses contract with a person to promote a product or service, but "NIL deals" is typically used to refer to agreements with college student athletes. Since 2021, NIL deals have allowed student athletes to earn money and work with brands while in school, but they require brands to undertake additional steps above and beyond those required when working with a celebrity or influencer who is not a student athlete. This article highlights seven points that brands should consider before engaging with a student athlete in an NIL deal.
1. Be Aware of Governing State Law, College Requirements, and NCAA Requirements
Currently, the rules governing student athlete NIL deals are a patchwork of regulations varying by jurisdiction and even individual school organization. Accordingly, it is necessary to know where the student athlete resides and attends school, so that you understand the regulatory framework that may apply to an NIL deal with that specific athlete. For example, some states like Florida, New York, and California, among roughly 30 others, have passed laws pertaining to student athletes and NIL deals.
Some requirements, like the requirement for student athletes to disclose details about NIL agreements to their universities, are common in many states, and disclosure is now required by the NCAA where compensation for the NIL agreement is greater than $600 in value. Additionally, the majority of rules and regulations surrounding student athlete NIL deals prohibit "pay-to-play" clauses where deal compensation is tied to athletic performance.
In certain instances, where a student athlete is under 18 years old, or is an international student, additional rules and regulations may apply to the NIL deal. Each prospective NIL deal is unique to each student athlete, and thus businesses must weigh compliance with the regulations applicable to the benefits of working with the student athlete in each case.
2. Understand That Various Colleges Facilitate NIL "Exchange" Platforms
Businesses interested in NIL opportunities with student athletes may be required to register and contact students through "exchanges" facilitated in connection with their university. These "exchanges" list information about various student athletes, including the sport they participate in, their social media accounts, and NIL opportunities they are willing to engage in, among other potential information. Prior to contacting students, businesses must register for the exchange, which is then reviewed by university personnel, and if the business's registration is approved, the business can then begin to contact student athletes through the "exchange" portal. In some instances, payment in connection with the NIL deal may also be facilitated through the exchange portal.
At present, universities such as Ohio State, the University of Michigan, the University of Florida, and the University of Georgia, among others, currently have "exchanges" where businesses can connect with student athletes regarding NIL opportunities.
3. Confirm Permissions to Use Any Third-Party Trademarks and School Facilities
Universities typically own and control the rights to use school trademarks and logos that are present around campuses and on university sporting apparel. Student athletes are unlikely to have a right to use college trademarks or logos without obtaining prior permission from their university. Accordingly, if a business wants to use trademarks or logos owned by a university in connection with a student athlete NIL deal, prior permission from the school is likely required, and a separate trademark licensing agreement with the school may be necessary. Universities often post a list of their trademarks and other source identifiers on their website to provide notice to third parties and students regarding branding guidelines.
In addition to obtaining university approvals for trademark use, a business and a student athlete may need to obtain prior approval to use college facilities if desired in connection with an NIL deal. Facilities use requirements will vary by school, but may include rental fees or a waiver of liability agreements.
4. Confirm Permissions to Use Any Applicable Student Athlete Trademarks
While it may not be commonplace, some student athletes may have catch phrases or registered trademarks that they have become associated with during their athletic career or in connection with social media. If a business wants to use the student athlete's trademarks or catch phrases in connection with an NIL deal, it may also be required to get the athlete's permission to do so, particularly if the NIL deal involves repeat commercials or photographs and/or video taken at a live event that a business may want to use in the future.
5. Ensure the Student Athlete Is Aware of FTC Endorser and Influencer Guidelines
Influencer and endorsement agreements typically contain provisions related to compliance with FTC guidelines. FTC guidelines and requirements still apply even when the influencer or endorser in connection with an NIL deal is a student athlete. If an NIL deal pertains to student athletes providing social media influencer posts or content, or an endorsement of a brand, businesses should include provisions in the NIL deal that require student athletes to comply with all FTC guidelines, including but not limited to disclosure guidelines.
6. Understand That the Student Athlete NIL Landscape Is Constantly Evolving
Businesses interested in entering into NIL deals with student athletes should be aware that the legal landscape is currently still evolving in this "new" industry. Legislation has been introduced pertaining to student athlete NIL deals at the federal level, and various states are still in the process of introducing and enacting NIL-related legislation or modifying the legislation currently in place. Accordingly, businesses involved in NIL deals with student athletes should stay apprised of any regulatory changes in this space and should include provisions within NIL agreements that mandate student athletes comply with relevant laws.
7. Colleges May Not Permit NIL Deals Pertaining to Certain Industries
When it comes to NIL deals with student athletes, not all industries may be able to benefit. Some universities and states prohibit student athletes from engaging in NIL deals related to certain industries or categories of products. Each state and university's guidelines are unique, so businesses should consult each state's regulations and each school's guidelines to confirm that its students may engage in the desired NIL deal. Some industries where student athletes are prohibited from engaging in NIL deals are listed below:
- Tobacco
- Alcoholic beverages
- Dispensaries and/or marijuana
- Adult entertainment
- Gambling/sports betting
- Performance-enhancing drugs and/or banned substances
- Coffee
- Firearms or weapons
- Pharmaceuticals
