NIL: Considerations for Student-Athletes

11/3/2021

Approximately six months into the Name, Image, and Likeness (“NIL”) era of the NCAA, we now have a snapshot of what NIL agreements between NCAA athletes and third-parties will look like and the legal concerns surrounding those deals.  We have seen agreements ranging from autograph signings at local businesses and apparel and merchandise sales to non-fungible token (“NFT”) artwork auctions and the launch of a cryptocurrency.  Regardless of the route taken, athletes who intend to profit from their NIL must carefully consider the personal and professional ramifications of these newfound opportunities, including the risk to their amateur status (and thus eligibility), the possibility of personal liability, and the protection of their brands.

Maintaining Amateur Status

Possibly the most important consideration for college athletes contemplating NIL agreements is to protect their amateur status and eligibility by complying with state laws and NCAA regulations. In May 2021, Tennessee passed NIL legislation with a web of requirements that untrained entrepreneurs may not be equipped to navigate given their hectic athletic and educational obligations.  Further, while the NCAA has stated it will not destroy the eligibility of athletes complying with state law, this is a temporary policy that could be altered at any moment. Athletes seeking NIL endorsements need to constantly monitor the rules and regulations in place to ensure compliance and maintain their amateur status.

Liabilities

Another important consideration for student-athletes seeking NIL endorsements is the possibility of personal liability for certain business ventures.  Athletes may want to consider forming an entity to manage their business ventures in order to shield themselves from liability.  For instance, an athlete hosting a training camp may be sued for any injury incurred at that camp, but having the camp run by the athlete’s company can protect the athlete from personal liability.

Intellectual Property

Finally, as athletes begin to build their brand and profit from their NIL, it is vital to protect that brand by shrewdly negotiating contracts to limit their liability and risk, as well as to retain as much control of the NIL rights as possible. Athletes can further protect their brand and increase their ability to profit therefrom by acquiring legal protection of their intellectual property. Many athletes have begun selling merchandise bearing their NIL and logos. As an athlete’s popularity increases, so too does the likelihood that a third-party will try to capitalize on that popularity by selling counterfeit goods bearing an athlete’s intellectual property.  Athletes who fail to put the proper protections in place before their intellectual property is stolen may drastically reduce the value of their brand and their ability to protect it.

Don't Be Afraid To Seek Guidance

Given the web of requirements surrounding NIL laws and the demanding schedule of student-athletes, seeking guidance from legal professionals concerning the nuances of the law, the implications of NIL agreements, and strategies to protect and grow a brand is a prudent decision.  Kennerly, Montgomery & Finley, P.C. is here to offer invaluable guidance to student-athletes navigating the uncharted realm of NIL.

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