For decades, amateur athletes’ ability to profit off themselves was strictly prohibited. Maintaining your “amateur” status meant just that – no professionalized compensation whatsoever. In 2021, however, the NCAA implemented a policy change allowing student-athletes to earn money from their “NIL” (Name, Image, and Likeness). Since the policy shift, more than half of U.S. states have passed laws allowing athletes and other public figures to profit from their individual fame and notoriety.
But here’s the rub…if individuals begin to make money off their NIL, how do they get paid? Furthermore, how do they get paid efficiently, compliantly, and transparently? They’re unlikely to have an LLC set up or an accounting team on retainer. Some may even be in high school. With new laws, come new opportunities. And this opportunity portends to be massive for the payment processing space.
A few thoughts on the landscape of shifting NIL normalization and where it goes from here:
1. A massive wave of new influencers.
The NCAA legalized NIL payments a little over two years ago and projections for next year are already over $1B. The booming industry not only benefits high profile D-1 athletes, but opens up revenue opportunities far and wide for local athletes. Imagine a small-town high school basketball star who can now help promote a local car dealership, or a tennis player who loves to eat at a mom and pop diner. Before NIL deals, these athletes couldn’t legally support businesses, let alone profit from their own brands at the risk of losing their amateur status to compete in high school, college, or amateur sports, including certain Olympic Games events. As more states adopt measures to empower young athletes, more and more will benefit from their individual reputations and influence.
2. How do amateur athletes earn NIL money?
There are no limits on how much NIL money amateurs can make on an annual basis but student-athletes generally earn from $1,000 to $10,000. Over 450,000 student-athletes across the United States have found ways to generate some income. The general NIL deals for student-athletes include the following:
• Accepting direct payments for promotional activities
• Receiving free or sponsored products in exchange for promotion
• Receiving free or sponsored services in exchange for promotion
• Earning affiliate money from social media promotion
• Becoming an ambassador for a brand or business
• Appearing in commercials, ads, and digital content
In the past year, a number of NIL platforms and marketing agencies have surged into the scene to help student and amateur athletes connect with potential sponsors and navigate the NIL landscape for regional and national opportunities.
3. New payments to process, new compliance to navigate.
Payment processing for NIL influencers can be a bit tricky as there are a few different ways that they can be paid. Some NIL influencers may be paid through a sponsorship deal, where they receive a flat fee or a percentage of the profits from the product or service they are promoting. Others may be paid through a licensing agreement, where they receive a one-time payment or a recurring payment for the use of their name, image, and likeness. Regardless of the payment structures, it’s clear that changes are in store, and efficient, well-designed compliance tools like Payment Labs are needed.
4. A new industry is born.
With the easing of NIL rules come considerable opportunities…and new regulatory complexities. Amateur athletes are receiving offers in the multi-million dollar range to attend specific colleges. And when big money is involved, violations are soon to follow. While it’s no shock that these rules have finally been lifted, within this burgeoning space, there’s a need for infrastructure, order, and expertise.
These changes are still quite fresh – and the norms, rules, and laws surrounding NIL for amateur athletes are constantly developing. One thing is for certain though – the growing demand for NIL marketing agencies, support tools, compliance, and payment mechanisms will continue to grow. Regardless of what the future holds for this space, Payment Labs is excited about the fresh new path for young athletes and doors this industry may open.