What I'm Telling My Athlete Clients About Name, Image, and Likeness Deals

Navigating Name, Image, and Likeness (NIL) deals offers exciting financial opportunities for student-athletes. NIL now allows college athletes to accept money from businesses for endorsements and advertisements, a right previously restricted by the National Collegiate Athletics Association (NCAA).

A recent court ruling will also permit schools to pay athletes directly. Additionally, NIL collectives, funded by boosters, alumni, and fans, have emerged to provide paid opportunities for endorsements, public appearances, and social media content.

However, without thoughtful planning, these earnings can quickly disappear. Here’s how athletes can avoid traps and build a stable financial future with NIL earnings.

What I'm Telling My Clients

These are the words of caution I'm sharing with my clients who have or are student athletes:

Overspending

NIL deals can bring in cash quickly, often leading to impulsive spending. It's tempting to splurge on luxury items, entertainment, and other non-essential expenses. However, if left unchecked, this can lead to financial instability, leaving athletes without savings or investments when they graduate.

Furthermore, many student-athletes are not necessarily learning the importance of financial management in their college courses, which presents even more challenges in the age of NIL deals. Having a cash flow plan leads to financial stability and security. 

To make a cash flow plan, first your essential expenses, savings goals, and lifestyle spending.

Use the 50/20/30 rule to get started: 50% for essentials, 20% for savings, and 30% for luxuries & lifestyle. Open separate accounts for each category and set up automatic transfers. This will cover your basics, set a solid financial foundation, and allow you to enjoy your lifestyle guilt-free.

Ignoring Taxes

NIL income is subject to federal, state, and local taxes. Often, non-cash income, like free gear or a car for the season, is also taxable but not thought of as taxable compensation. 

Proper tax management avoids significant tax liabilities and penalties, offering peace of mind. It ensures accurate financial planning and budgeting, letting you focus on what matters. Spend a minute contacting a tax advisor through your university's NIL resources.

Set aside a portion of every NIL payment in a separate account specifically for taxes. Mark tax deadlines on your calendar and set reminders to keep up with filings and payments.

Lack of a Financial Game Plan 

Skipping professional advice and ignoring financial resources is like playing without a coach or a game plan. It’s a surefire way to miss out on financial growth. A solid financial game plan stacks the odds in your favor for long-term security and building wealth. It prepares you for life after athletics, ensuring you're ready for anything. Having trusted individuals in your corner who act in your best interest is crucial.

"The main issue I've seen with athletes signing representation is hidden future obligations in the fine print. College coaches can't advise on who to sign with, so it's crucial for athletes to have trusted people who can read and decipher contracts," says Mike Brown, wide receiver coach of Notre Dame’s Football Team.

If you want to make the most of your money, book a session with a fee-only financial advisor who is a fiduciary and CFP who works with athletes. These professionals are obligated to act in your best interest, helping you navigate the complexities of NIL deals to help you secure your financial future.

The Bottom Line

Harnessing the potential of NIL deals requires more than just signing a contract. By creating a cash flow plan, staying on top of taxes, and investing in financial education, college players can safeguard their earnings and set up a financial future that will last beyond their athletic careers.