Almost every State in the country now allows student athletes to participate in marketing and financial exploitation of their name, image and likeness (“NIL”). This has allowed athletes to monetize their college (and even high school) sports careers. In addition to allowing an athlete to profit from their NIL, most newly enacted State laws allow athletes to hire agents, brokers and attorneys to help arrange and negotiate these deals. And, the NIL lawyers here at Revision Legal endorse what the statutes allow. NIL deals may be somewhat new to college athletes, but NIL contracts and arrangements have been around for a long time with professional athletes. Thus, the contracts are long, involved, contain lots of “boilerplate” language and you need someone on “your side” to make sure you are not taken advantage of. Hire lawyers and agents. They will help maximize the money you can make and make payment legally binding on the licensee of your NIL rights. The “licensee” is the endorsement/marketing company that is buying your NIL rights.

Even though NIL agreements are each complicated and legally complex, there are some basic parts of every NIL agreement. The main parts are:

• Identification of the parties
• Payment obligations
• Obligations/rights with respect to NIL, talent appearances, etc.
• Default provisions
• Other considerations

It is important that an NIL contract carefully identify the parties involved. It is best to have one specifically identified company that is licensing the NIL rights. Sometimes, unscrupulous endorsement companies will try to include “affiliates” and “subsidiaries” in the definition of who is licensing the NIL rights which leads to several companies having claims against the talent’s time and rights. Also, it is important to avoid having agents and/or brokers defined as the licensee. Likewise, only the student athlete should be identified as a party; not friends, family, brokers, agents, etc.

In terms of payment, usually the payment terms are flat fee such as a $1 million endorsement deal for two years. From there, however, matters can be very open-ended and “what sounds great” can be lost in the details. Consider: is that $1 million paid out evenly over 24 months? Or is it one lump sum at the beginning, is it an “advance” or will payment be made in small monthly payments with a lump sum coming at the end of the two years? Is it guaranteed payment or contingent?

With respect to the obligations and rights of the student/athlete talent, these provisions, of course, deserve special attention. The main question is how demanding will the obligations be to make appearances, show up for photo and video shoots, etc. Special attention must also be paid to so-called morality provisions which cover criminal behavior, expression of political views, etc.

Default provisions are crucial too. “Default” is a legal term that indicates that one party to a contract believes the other has violated the contract. The contract will generally say what are the possible remedies such as refund of money, termination of contract, etc.

“Other considerations” can cover a lot of ground, but one key area to include well-crafted NIL contract provisions involves requirements and rules imposed by schools and conferences. Violate those types of rules and your NIL deal will be worthless.

Contact the NIL Rights and Esports Attorneys at Revision Legal

For more information, contact the experienced NIL and Esports Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.

How to Negotiate an NIL Contract: What Athletes Need to Know

Understanding the components of an NIL contract is one thing. Knowing how to negotiate those components — and what to push back on — is what actually protects the athlete’s interests. Most businesses seeking NIL rights have experienced legal and marketing teams on their side. Athletes who do not have comparable representation are at a structural disadvantage from the moment negotiations begin.

Payment Structure and Tax Implications

The headline number in an NIL deal is almost always the total payment — “$1 million endorsement deal” sounds straightforward, but the payment structure embedded in that number matters enormously. Is the $1 million paid as a single upfront payment, or is it spread over the contract term in monthly installments? Is any portion contingent on performance metrics, social media engagement thresholds, or the athlete’s continued eligibility? Are there bonuses for post-season performance or championship appearances?

Athletes must also understand the tax implications of NIL income. Unlike a scholarship, which may be excluded from gross income under Section 117 of the Internal Revenue Code, NIL payments are taxable as ordinary income. If the athlete is operating as a sole proprietor — which is the default for most college athletes without a formal business entity — NIL income is also subject to self-employment tax, currently 15.3% on the first $160,200 (2024 threshold) of net earnings. Working with a CPA alongside legal counsel before signing helps athletes understand their actual after-tax income from any proposed deal.

Scope of NIL Rights Granted

The NIL rights licensed to the business must be defined precisely. “Name, image, and likeness” is a broad concept — it can encompass the athlete’s name in advertising copy, photographs and video of the athlete, the athlete’s voice, social media handles, and even digital representations or avatars. A licensee that is paying for a regional print advertising campaign has no legitimate need for global digital and social media rights. Every right should be defined and every platform and medium should be specifically enumerated. Rights that are not expressly granted should be reserved to the athlete.

Duration is equally important. Perpetual licenses in NIL agreements are never appropriate — an athlete who signs a perpetual license for a regional endorsement deal at age 18 has, in effect, given away a portion of their brand forever. All NIL licenses should have a defined end date, with clear provisions about what happens to existing advertising materials at the expiration of the agreement. Specifically, the contract should require the licensee to cease all use of the athlete’s NIL within a defined period after the agreement ends and to certify destruction of any stored materials containing the athlete’s image.

Exclusivity Provisions

Many NIL agreements request exclusivity — the licensee wants to be the only company in a particular product or service category using the athlete’s NIL. Exclusivity has real value to the licensee and real cost to the athlete. If an athlete is locked into an exclusive endorsement deal with one shoe company, they cannot sign another shoe company deal, even if a better offer arises. Athletes should push for limited exclusivity — exclusive within the narrowest possible product category (e.g., “basketball footwear” rather than “athletic footwear” or “footwear generally”) and for additional compensation in exchange for any exclusivity granted.

Morality clauses, sometimes called “conduct provisions,” are standard in NIL contracts. They allow the licensee to terminate the agreement if the athlete engages in specified conduct — criminal behavior, public statements that damage the brand, academic ineligibility, etc. Athletes and their counsel should scrutinize morality clauses carefully. Overly broad morality clauses can be weaponized to terminate agreements on pretextual grounds. The conduct that triggers termination should be clearly and narrowly defined, the termination process should include notice and a reasonable cure period, and the financial consequences of termination (refund obligations, loss of future payments) should be explicitly stated.

Dispute Resolution and Governing Law

All NIL contracts should contain a dispute resolution provision. Most will specify arbitration rather than litigation — arbitration is typically faster and less expensive, but it also forecloses the athlete’s right to a jury trial and limits appellate review. If the agreement requires arbitration, the athlete should ensure that the arbitration rules are specified (AAA, JAMS, or another reputable provider), that the arbitration venue is neutral (not in the licensee’s home city), and that the cost allocation provisions do not place an unreasonable financial burden on the athlete.

The choice of governing law matters too. If the contract is governed by the law of a state with more athlete-friendly contract interpretation rules, that benefits the athlete. If the licensee’s home state law governs, understand what that means for how a court or arbitrator will interpret any ambiguous terms. These are negotiating points that experienced NIL counsel can leverage.

The NIL attorneys at Revision Legal have helped athletes at every level — from high school prospects to professional players — navigate NIL agreements. If you are reviewing an NIL contract or beginning negotiations, contact us before you sign.