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Payment for NIL is Here to Stay: Educating Student-Athletes and Those Who Education Student-Athletes

Payment for NIL is Here to Stay: Things to Consider and Understand for Student-Athletes and those Educating Student-Athletes


We are all a week into the new revolution in intercollegiate athletics. For the first time, student-athletes are able to receive compensation for the use of their names, images, and likenesses. Kudos to the pioneers – Jeremy Bloom, Ed O’Bannon, and Donald De La Haye – who helped push this issue forward. It is also great to see that female student-athletes have had success in branding themselves and receiving endorsement and sponsorship opportunities including some of the bigger deals to be publicly announced. However, unlike their professional counterparts, many student-athletes do not have lawyers, accountants, agents, financial advisors, insurance agents, and a players associations to watch out for their better interests. I have worked for athletes, institutions, teams, leagues, and sponsors and drafted and negotiated numerous sponsorship and advertising agreements. Accordingly, the following provides a list of topics to consider for student-athletes and those who are charged with and/or are educating student-athletes.


1. Logos and other intellectual property: Take control of your intellectual property early. Most of the well-known logos for athletes like Michael Jordan, Tiger Woods, and Ken Griffey Jr. are owned by apparel companies. For any questions about this issue, see Kawhi Leonard v. Nike (D. Ore. 2020)(finding the logo copyrighted by Nike was transformative and different than the claw logo created by Leonard and provided to Nike). Athletes should trademark their logos and other graphics and, in some cases, also copyright logos and other graphics. Hire a lawyer who can do these things correctly. Please note, filing to register a trademark can often take several months while copyright approval comes much more quickly.


2. Taxes: When agreeing to use your name image and likeness to market or sponsor a product or service, athletes are considered independent contractors. As an independent contractor, taxes will not be deducted from compensation and athletes will receive a 1099 at the end of the year. Make sure to withhold certain portions of your compensation to pay Uncle Sam. Tax penalties are real and the IRS will get its money. Do not get in the crosshairs of the federal government. Hire an accountant who can be trusted to help and advise you on tax related issues and correctly file tax returns.


3. Advertisements: The FTC has released guidelines (https://www.ftc.gov/system/files/documents/plain-language/1001a-influencer-guide-508_1.pdf) for influencers and others promoting products and services. When advertising or promoting a product or service on social media, make sure to be familiar with FTC guidelines including indicating that the post is an advertisement or promotion by including #ad or #promo or #promotion.


4. Insurance: Almost everything is insurable including attributes or defining characteristics. Even J Lo’s butt is or was insured. Also, some companies will require that an endorser have an insurance policy to coverage general commercial issues. Hire an insurance agent who can advise you on the correct policy, if needed.


5. Entity Formation: For liability purposes, asset protection, and potential write-offs, if an athlete is engaging in advertisement and promotion, it is good idea to create an entity (usually an LLC) that owns the athlete’s name, image, and likeness. Hire a lawyer who can be trusted to provide advice.


6. Influencer Agreements: Many of the athletes who have publicly announced agreements have amassed substantial followings on Twitter, Tik Tok, Instagram, and others. As such, companies are attracted to these athletes and desire for them to promote their products. I have handled influencer agreements with some of the largest companies in the world for professional athletes. Often times, these agreements allow the company to dictate the time and location of promotion and the number promotions per month. The language in these agreements often times does not fit well within schedule of a competing athlete. To make sure there is not an unintended breach down the road, make sure to be upfront with certain time restrictions and draft language accordingly.


7. State Law: As of today, we do not have uniformity in the laws. Most of the current laws in effect are similar, but they have subtle nuances and differences. Athletes must be familiar with what is required in their state and what are prohibited areas of endorsement (often drugs and alcohol, gaming, adult entertainment, etc.). Also, most state laws require disclosure to universities of agreements reached by athletes on college campuses.


8. University Logos and Marks: Before wearing university gear or using university logos and marks in advertisements and promotions, athletes must receive permission from the university. Universities own their logos and marks and will likely send athletes cease and desist letters if such logos and marks are used without permission. Universities can even take the stance that their colors are protected. See LSU v. Smack Apparel (5th Circuit 2008)(concluding LSU possessed strong marks in its use of color schemes and other identifying indicia on college sports-themed merchandise).


9. Exclusivity and Term of Use: The key contract term in sponsorship and branding is the category identified in the agreement and whether the agreement constitutes an exclusive engagement. For example, the beverage category contains numerous different sub-categories including, but not limited, beer, spirits and wine, water, electrolyte water, electrolyte drinks, soft drinks, and many, many more. It is important to make sure athletes are aware of the category they are agreeing to sponsor or promote to make sure they are not crossing into or possibly infringing on other deals. Additionally, many sponsorship agreements will contain language that permits the use of the athlete’s name, image, and likeness in perpetuity. That must be addressed and changed.


10. International Student-Athletes: International student-athletes who are in the United States on a visa may potentially have restrictions on compensation they are permitted to receive. It is important that international student-athletes keep in close contact with the international services office and athletics compliance office before entering into an agreement. It is also advisable to consult with an immigration attorney.


11. Sports Governing Bodies: Some national governing bodies have rules that conflict with NCAA legislation. For years, the NCAA and USGA had rules that conflicted including whether providing skill instruction constituted professionalism. Recently, however, the USGA announced that it implemented a policy that allows student-athletes to have certain rights. Nonetheless, make sure to consult with the national governing body to make sure that being compensated for the use of name, image, and likeness does not make an athlete a professional in the eyes of the national governing body.


12: Lawyers and Other Service Providers: There are a lot of great lawyers in the United States, but a far fewer number who are truly sports and entertainment lawyers. There are many who claim to represent sports and entertainment clients, but when discussing cases and matters more deeply they acknowledge they have little experience in representing clients. Some even have sizeable followings on social media. I am not throwing stones at anyone. However, it is important to make sure an attorney selected by a student-athlete actually has experience doing the things they claim to be an expert in doing. A lot of good lawyers do not have time to post on social media all day long. Good lawyers are busy servicing clients. Make sure any lawyer selected has the skill set needed, has time to provide services and advice to student-athletes, and is someone who can be trusted to answer questions. Student-athlete have a lot of questions (as they should).


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