The NCAA's Name, Image, and Likeness Policy (NIL) is an interim rule that allows college athletes to earn money by funding celebrities to endorse or promote their products, services, or brands. Since it took effect in 2021, NIL transactions have exploded, increasing 146% from 2022 to 2023, according to SponsorUnited, an online platform that tracks sponsorship data.
In addition to its impact on college athletics, this policy will increase access for small businesses that previously could not afford large-scale sponsorships from universities and allow them to work with school brands through small-scale NIL deals. do.
“Most schools have a lot of athletes who want to be part of this economy, but not all of them are looking for multimillion-dollar contracts,” said Robert Borland, a sports law professor at Seton Hall University and an attorney for Shoemaker. It's not,” he says. A law firm specializing in college and professional sports, including NIL sponsorships.
Here's what small business owners need to know before investing in this type of partnership.
NIL is similar to other types of marketing
Opendorse, an online athlete marketplace and NIL technology company, says the majority of NIL transactions involve social media posts. These types of trades work just like any other type of trade. influencer marketingIn , popular social media personalities work with businesses to promote their products.
NIL activities may also include print and television advertising, clinics, and in-person meet-and-greets and autograph sessions. Boland said compensation can be received in cash, but small business owners can also offer players free or discounted products or services in exchange for promotions.
NIL's prospects are broader than it appears
While big-name companies and star athletes receive media attention, Opendorse data shows that the average NIL contract value since the policy was implemented has ranged from $228 to just over $10,000, depending on the athlete and college sector. is within the range of However, keep in mind that these averages are inflated by the big contracts that only a handful of star athletes receive. As Borland explains, many of NIL's sponsorships are “micro-transactions.”
NCAA football is by far the top class sport, but Approval of NILsBoland said sports such as volleyball, track and field, baseball and softball account for nearly a quarter of NIL's activities, and athletes in lesser-known sports can also be great partners.
The main industries for NIL trading are apparel and footwear, followed by local restaurants and technology companies, but these are not the only companies that can benefit from NIL trading.
Brian Quigley, founder of Colorado-based mortgage company Beacon Lending, worked with three college athletes from Boulder and Fort Collins to promote the business. He found that these sponsorships increased brand awareness and trust, especially among young people, and also deepened ties with their respective communities. He believes this is especially important for those in his industry.
Collective helps facilitate NIL transactions
Small business owners who don't feel comfortable contacting athletes directly can do so through the NIL Collective. The NIL Collective is an independent, school-specific organization that serves as a marketplace for athletes to connect with companies of interest and vice versa. The Collective functions similarly to a marketing or talent agency, and aims to protect athletes and businesses by facilitating NIL transactions and handling the finances of the transactions.
Currently, there are over 250 collectives in existence or in preparation, with the majority of schools in the Atlantic Coast Conference (ACC), Big Ten Conference, Big 12 Conference, Pacific 12 Conference (Pac-12), etc. Participating in the Power 5 Conference. The Southeastern Conference (SEC) has at least one organization.
NIL activity is not uniformly regulated
NCAA policy does not allow athletes to be compensated for their athletic performance, and deals that are conditional on admission to a particular college are strictly prohibited. Currently, such transactions are regulated at the state and university level, meaning schools and students are responsible for monitoring and reporting activities and potential violations.
This has led to concerns that NIL transactions are too close to a “pay-for-play” model and could facilitate illegal recruitment activities. There are currently several bipartisan bills in Congress that could make regulations universal across the country.
This means the model for NIL sponsorship remains very “dynamic,” said Stephen, leader of California's Coachella Valley chapter of SCORE, a nonprofit that provides free resources to small business owners. Baker warns. Small business owners must be intentional about each aspect of their approach. marketing strategy Baker said they also plan for a return on investment. Above all, don't invest just because you're a fan.
Small business owners should research who they are working with. Quigley's recommendation is to prioritize reliability. “Choose athletes who resonate with your brand values,” he said in an email. “This is not just a transaction, this is a partnership.”
