Rise in NIL deals spurs call for financial education
NCAA rules and state law now allow student athletes to earn money from sponsorship deals, and a few are cashing in big time. But how will players make sense of the contracts companies are offering them?
Shortly after starting college last fall, Fresno State equestrian Yasmin Roman found out from her school’s athletic department that she could get endorsement deals on a platform called Opendorse, which connects companies to athletes. Roman signed up early in the spring, excited to offset some of the costs associated with being an out-of-state student in an expensive sport. Since then she’s earned $30 on a paid Instagram story for a food delivery service on the app.
On the other side of the spectrum are players like UCLA quarterback Chase Griffin, who has leveraged a fanbase of 30,000 followers on Instagram to sign deals with major brands such as Discord, Duffl, Degree Deodorant, Clearcover Car Insurance and Shell.
Student athletes in California have only been able to profit off their name, image, and likeness — known as NIL — since new NCAA rules and a state law took effect last year, but such agreements are already evolving into an estimated $500 million dollar market nationally. Some California colleges are offering financial education designed to prepare athletes to navigate the new landscape. Advocates for the training say it can facilitate further deals, get more athletes to participate, and help athletes avoid agreements that can cost them money in the long run.
Roman, for example, still has questions that her college’s staff haven’t answered: How can she garner interest from companies while playing a sport that doesn’t attract as big an audience as football or basketball? And how should she know if a deal is worth her time, or how to negotiate a contract?
“It’s definitely still a learning curve, and I’m still working through it to see what kind of opportunities there are for me to make some money throughout my sport,” she said.
Specialized training can help answer those questions for the roughly 500,000 student athletes who participate in the NCAA, said Rashad Campbell, a partner at Team Altemus, a consulting firm that provides education on NIL and financial literacy to Division I programs including San Diego State and Ohio State.
“The sooner we can educate, the sooner we can make this a real thing, the better off everybody will be,” Campbell said.
Colleges try to fill the gap
While the most lucrative NIL deals earn headlines, most are more humble, according to Opendorse and INFLCR, another company that connects athletes to brands. From July 1 to the end of 2021, INFLCR said its median transaction value was $51. Football players brought in the most endorsement dollars on Opendorse from July to the end of February, accounting for about half of total NIL earnings, followed by women’s basketball at 19% and men’s basketball at 15%.
California colleges vary in the financial education they offer to student athletes. Unlike Florida, which passed a law requiring schools to offer financial literacy training to players, California was the first to legalize NIL deals, but doesn’t require such workshops.
San Diego State University moved quickly to develop a curriculum in NIL after 60 players on the university’s football team signed a deal with the College H.U.N.K.S. Hauling Junk moving company.
In November, the school hired a name, image, and likeness coordinator, Michelle Meyer, a former beach volleyball coach and founder of NIL Network, a website where athletes, administrators and coaches can learn more about the topic. Meyer said she plans to meet with each team on the university’s roster. Before athletes look to sign deals, Meyer asks them first what they want to get out of it.
“Do you want to make a quick buck or some cash? Is it about building your network, building your resume, picking up some of those life skills like entrepreneurship?”
Team Altemus will also offer financial education at San Diego State on topics such as decision making, due-diligence, money and contracts. Campbell said he wants athletes to understand both how to handle their money and the risks associated with entering a contract, so they can protect themselves.
Athletes might have experience with choosing a college or a major, but little background in weighing the many factors involved in a business deal, Campbell said.
“We educate them to really assess risk and make informed decisions that they’re comfortable with,” he said.
These kinds of programs would be helpful for Roman, the Fresno State athlete, who also secured a deal for free drinks from Liquid IV in exchange for social media posts. Even small dollar amounts can help defray the costs of competing as an equestrian, she said.
“Our busy schedules don’t really leave us with much time to make meals at home,” she said. “So it’s a lot more eating out. And because we are so physically demanding in our sport, we do need to be conscious of what we’re eating. That tends to come with more of a cost.”
Roman said she mostly analyzes offers on her own. Sometimes she will ask her brother, who is pursuing a master’s degree in business administration, for a second opinion. Typically she asks, “What would you do in this situation? What do you think is better? Do you think it’s worth it?”
At many schools, athletics compliance officers have become the de facto staff to field those kinds of questions, even though some don’t have all the answers. At Sacramento State, for example, compliance director Matt Vincent said he advises students on whether they’re getting fair market value based on the standard rates for professional athletes who sign autographs or do promotional appearances.
Santa Clara University compliance director Ryan Merz helps athletes analyze offers and has given team presentations, pulling online examples of deals gone wrong.
Compliance offices are limited in the guidance they can offer. “I’m not a lawyer. I’m not a tax professional. So I can’t give any kind of legal advice, tax advice or anything like that,” Merz said.
Still, Merz believes it’s important that student athletes get education about NIL directly from universities because there’s “not an agenda there,” Merz said. “A company that you’re paying to educate your athletes has an agenda because they want to keep getting paid, but our professors are here already.”
The university’s athletic department, Merz said, is now working with the law and business school to create a minor that focuses on brand management, marketing, financial responsibility and taxes.
Tips for athletes
Experts interviewed by the College Journalism Network offered some tips for student athletes: First, they should avoid giving a company rights to their name, image and likeness forever, said Matthew Mitten, a sports law professor at Marquette University. He said a company may offer you an exorbitant-sounding sum of money, like $20,000, “but whatever you gave up might be worth well in excess of that.”
Athletes should also approach agreements as a trial, Campbell said, avoiding opting into longer term arrangements until they gain more experience. And they need to consider the reputation of a company before signing, he said.
Although many community college athletes are not receiving NIL deals, John Beam, the athletic director and head football coach at Oakland’s Laney College, sees this as a moment to push for more financial literacy. He brings in speakers to talk to Laney’s football team weekly, including NFL players and AthLife, a company that helps professional athletes meet athletic and career goals, to talk about the basics of NIL.
“So our kids are getting the same training, basically, as NFL or NBA players,” Beam said.
It’s especially important, Beam said, because many of the students he works with do not have easy access to financial planning support.
“If you’re from a marginalized group that has been shut out of the educational system or the finance system, how do you ever learn how to create wealth, generate wealth, and to preserve wealth and to grow?”
Gianni Galaviz, who plays football at Laney, counts himself a member of those marginalized groups. Growing up in Rodeo, Galaviz transferred high schools because his mother wanted him to get a better education, and was surrounded by students wealthier than his family. But he didn’t learn much about how to make and keep money, he said.
“It’s always been a hustle to make money and pay bills, so it’s like you really have to figure it out on your own,” Galaviz said. “Or if not, it’s pretty much failure.”
Athletes themselves are among those pushing for colleges to develop curricula around the new NCAA rules. Tray Maddox Jr., a senior men’s basketball player at Cal State Fullerton, said he contemplated switching his major from sociology to finance and believes that athletes should be able to take classes in NIL.
Because Maddox Jr. had more than 40,000 followers on TikTok and 15,000-plus on Instagram, he knew he had the potential to make money off his likeness. And even before NCAA rules allowed him to, several companies messaged inquiring about deals.
When he was allowed to answer those messages, one of his coaches scanned contracts for any hidden details. “All my coaches have been around pro athletes and have seen the type of deals that people sign with,” Maddox Jr. said. But he’d like to learn those skills himself, he said.
Griffin, the UCLA quarterback, has leveraged his social media following and personality to secure opportunities despite being a third-string player. His previous experience with brands and his father’s advertising expertise helped him vet the deals, he said.
As a young person new to the space, “it’s easy to see a deal…that pays you less than what your time is worth and think that that’s enough money,” Griffin said. ”Or see an opportunity that you like, but not really think about how that brand will impact your reputation.”
Griffin said he now evaluates opportunities in three ways: Does the brand or deal align with his personal values, does it create economic value for himself, and how can he use the deal to help his community?
He has set aside part of his earnings to benefit the Los Angeles Regional Food Bank, and listened when his father advised him to invest his NIL money instead of spending it.
“I know that I have a lot more money than I would have had without NIL,” he said. “And while I’m saving all of that now, in the days that come where I have to spend that, that can be life changing.”
UCLA, the birthplace of the NIL movement, last summer launched an NIL program called “Westwood Ascent,” bringing together UCLA’s graduate business school and the Center for Media, Entertainment and Sports for four workshops on topics relevant to NIL such as personal finance, social media and building a personal brand.
The university will also offer an NIL class during the upcoming summer session that will allow athletes to ask specific questions and develop relationships with experts who can offer individual advice, said Jay Tucker, the executive director of UCLA’s Center for Media, Entertainment and Sports. Created by UCLA’s athletic department, business and law schools, it will be open to any student athlete, Tucker said.
A growing interest in financial literacy
Even though many student athletes won’t make much money from NIL, the rise of this new market has increased their interest in financial topics, some experts said.
Kara Jo Wietrzykowski, a financial advisor at Morgan Stanley and former Ohio State tennis player, has visited colleges and spoken to student athletes about the basics of personal finance. She said when she graduated in 2013, finances were not a common topic of conversation, but now when she visits colleges, student athletes pay attention “because they see the opportunity to make money today.”
Wietrzykowski tells athletes to audit their spending and pull their credit card statements for the past two months to tally how much they’re spending. Once they’ve done that, she said it’s important to set short-, mid- and long-term financial goals, which can include getting out of credit card debt, saving for retirement or purchasing a home.
Galaviz, the Laney College football player, said he became more interested in financial literacy when NIL deals became an option. Galaviz is after endorsements for the networking more than the money, hoping he’ll be noticed by scouts who can take him to a Division I program or the NFL.
Now that he has some of the financial training he needs, Galaviz’s big question is: How does he get the deals?
“What does it take … and what as a student athlete do I have to do to make that possible for me?”
Shaikh is a fellow with the CalMatters College Journalism Network, a collaboration between CalMatters and student journalists from across California. This story and other higher education coverage are supported by the College Futures Foundation.