The NCAA’s March Madness basketball tournament is going to hit a little different this year—not because of any changes in the game itself but because of what’s happening off the court.
After decades of legal battles—the most recent landing in the Supreme Court last year—the NCAA changed its rules around athletes being compensated, most importantly allowing them to earn money on their name, image, and likeness (NIL).
Once a financial boon exclusively for professionals, collegiate athletes are now able to score brand endorsement deals and monetize their social media accounts. It’s a huge win for athletes who have long derided the NCAA’s shaky argument of “amateurism,” i.e. not allowing students to earn money tied to their status as athletes because that would make them professionals and not amateurs. The rule change went into effect last July, so the 2021 college football season served as a test run of sorts for the NCAA’s new policy.
Brands and athletes are quickly finding their groove going into college basketball’s March Madness. For example, the restaurant chain Outback Steakhouse launched a campaign with basketball players across both men’s and women’s teams where they’re promoting their favorite menu items, à la McDonald’s leveraging the massive reach of Travis Scott, BTS, Saweetie, and Popeyes doing the same with Megan Thee Stallion.
“In the history of college athletes and their rights and the future of how this is going to the work, it was the biggest legal moment in the history. There’s no question about it,” says sports litigator Jeffrey Kessler in the latest episode of Fast Company‘s podcast Creative Control. “This has created an explosion of free market activity and we now see thousands of athletes getting deals for their NIL rights.”
As exciting as it is for college athletes to finally have financial control over these rights, the rules are still highly fragmented. The NCAA has yet to institute a standard policy for NIL deals, which has left schools and states creating their own guidelines. Ask anyone currently dealing in this space, and the term “Wild West” comes up quite a bit.
So how did the NCAA get to this point? And how are student athletes navigating this new era of NIL deals?
“An economic cartel”
For the majority of the NCAA’s 115-year existence, the organization has fiercely maintained that collegiate athletes shouldn’t be compensated outside of scholarships to preserve the concept of amateurism.
“The NCAA was originally formed at the request of President Theodore Roosevelt to try to improve safety in football because people were actually dying on the football field,” Kessler says. “Somehow, in its checkered history, it ended up primarily as an economic cartel of competing schools to regulate the compensation to athletes in gigantic sports businesses.”
The NCAA earned just over $1.1 billion in 2021. College athletic programs in 2019 took in nearly $19 billion in total revenue. While some of the money is funneled toward university-wide improvements and underwriting non-revenue collegiate sports, a good chunk goes toward coaches’s salaries and lavish training facilities and stadiums.
It’s little wonder why collegiate athletes have been crying foul. And not because they’re expecting a salary, but because they had been barred from earning any money at all on their own identity.
Former University of Central Florida football player Donald De La Haye made headlines in 2017 when he posted a video about losing his Division 1 scholarship because he was earning revenue from his YouTube content.
“It’s really so crazy to me, man—like I really did nothing wrong,” De La Haye said in his video. “I was just motivating kids, helping them out. A lot people who’d watch my videos say I inspire them, say they loved what I do, say I brought smiles to them, brightened up their day. I was just having innocent fun. But, you know, the NCAA monsters, if it don’t benefit them, then they don’t want it.”
“What was the great injustice here is that the only people who couldn’t do this were athletes,” Kessler says. “If you were an actor or a musician or anything else besides an athlete on these teams, you could develop your outside businesses and reputation and earn money. But only the athletes were prohibited from doing so.”
For most college athletes, playing their sport is their full-time job. If they’re lucky enough to get a scholarship, sometimes that can only go so far. In a 2014 interview about college athletes trying to unionize, former University of Connecticut basketball player Shabazz Napier laid the stakes out pretty clearly: “There’s hungry nights when I’m not able to eat, but I still got to play up to my capabilities. I don’t see myself so much as an employee. But we you see your jersey getting [sold], it may not have a last name on it, but when you see a jersey getting sold, things like that, you want something in return.”
Napier touched on a point that was the basis of a fundamental lawsuit that set in motion the NCAA’s NIL rule change. Schools and the NCAA at large have benefitted from selling athlete-specific merchandise such as jerseys or, in the case of O’Bannon vs. NCAA, licensing their likeness for use in a video game.
In 2009, former University of California, Los Angeles basketball player Ed O’Bannon sued the NCAA claiming that his name, image, and likeness were being used in EA Sports’s NCAA Basketball 09 without his permission or compensation. O’Bannon eventually won the lawsuit with the judge basically ruling that the NCAA was subject to antitrust laws just like any other commercial business.
O’Bannon’s victory in the Ninth Circuit Court of Appeals set the stage for a series of subsequent lawsuits, leading to the 2021 Supreme Court case NCAA vs. Alston where Kessler led the plaintiff’s team.
In a unanimous 9-0 decision, the Supreme Court struck down the NCAA’s restrictions on schools giving cash to athletes for academic expenses like laptops or tutoring. But the even bigger impact of the ruling was that it effectively closed the NCAA’s loophole of amateurism altogether.
“Those legal principles immediately led the NCAA to conclude that they had to suspend all their restrictions on names, images, and likenesses, even though they had sustained them in part, in the O’Bannon case,” Kessler says. “[But] the risk after Alston of it all being struck down was so great that they couldn’t continue to just run up a huge damages bill. Under the antitrust law, the damages are triple.”
A new era
So what does this new era mean for college athletes?
For University of Michigan basketball player Adrien Nunez, it’s meant a way to leverage his massive social media following.
“I’ve never been someone who posts everything on social media prior to this. I had one of those smallest followings on the team itself,” Nunez says. “I didn’t really like posting a lot, but in the 2019-2020 season, the team had got word that the NIL thing might actually be happening. We didn’t know when. And I was like, I got to get my Instagram followers up, so I can at least make a little money.”
Like many other creators during the pandemic, Nunez actually blew up on TikTok where he currently has 3.1 million followers.
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“The school gym was closed. So I was basically left with running outside and doing a couple [of] weighted exercises in my house and making TikToks,” he says. “Once I saw a little bit of success, I was like, I’m just going to try and post as much as possible.”
Helping Nunez get the most out of his new career as a content creator is Barbara Jones, founder and CEO of talent agency Outshine Talent, who also represents Charli D’Amelio, the most followed person on TikTok.
“I just look at them as content creators and storytellers—they just happen to be coming from a different community,” Jones says of working with college athletes. “It’s really about looking at each of them as the potential for what kind of stories can they create and how does that relate to brands?”
Nunez has scored deals with such brands as Spotify, Coca-Cola, Pizza Hut, and streetwear brand Thread Beast. For him, he’s leaning into fewer deals with bigger payoffs.
“It’s not about quantity, because then you’ll get on the hamster wheel and you’ll be working, working, working,” he says. “You don’t want your whole page to be an ad, which is hard right now because you’re getting so many offers. It’s hard to turn down a certain amount of money, especially coming from where I’m coming from in terms of not making any money off of TikTok and Instagram.”
Even if Nunez is keeping his brand deals to a minimum, it’s still a process that he admits he couldn’t handle one his own. Prior to signing with Outshine Talent, Nunez would personally field brand deals from an email he put in his social media bios.
“There were sometimes I’d be negotiating the deal while I’m in class,” Nunez says. “In my head I’m like, ‘Did I just do that?’ But I was so excited for it. I’d never gotten these things before. I was so ready to respond to these guys right away.”
That lack of knowledge underscores one of the problems in this new space of NIL deals.
So far, the only overarching guidance from the NCAA, schools, and states is that NIL deals cannot pay a player directly to attend or play for a college or university. Other than that, NIL deals can look vastly different depending on where you go. Some schools have struck NIL deals for whole teams including the University of Georgia, Syracuse University, and the University of Nebraska. Some students are going at it solo like Nunez. Amid all this dealmaking is a lack of expertise, which could lead to exploitation. “There is a lot of mystery behind how this industry even works,” Jones says. “What do you even charge? Who do you even contact? My biggest concern is having people be taken advantage of, especially when [it’s the] Wild West and [there are] no rules. Most of these schools are going to really need to have some education themselves on how it works.”
NIL deals for all
That education shouldn’t exist in a bubble for brand-name schools and celebrity athletes.
It’s clear to see a path toward lucrative NIL deals for athletes in Division 1 schools, particularly in sports such as football and basketball. However, Adrienne Larmett, a senior manager with the higher education practice at CPA firm Baker Tilly, has to remind leaders at smaller schools that there’s a lane for them as well.
“They say, ‘Oh, NIL, that’s not us. We’re a D3 [Division III] school.’ And I want to say, Have you talked to [your] athletics [departments] and seen how many of your athletes are actually reporting deals?” Larmett says. “Even if it’s in-kind, like they’ve contracted with a local restaurant, or they’ve got a small dollar amount. We’re seeing these things start to add up.”
“What I think it says to the institutions is, you need to take this seriously,” she adds. “This is something that your athletes want to be involved in. It is potentially a way to help recruit. It’s a potential way to help retain.”
In addition to athletes at smaller schools, another group that could really benefit from NIL deals are female athletes.
According to Jones at Outshine Talent, a substantial portion of influencer deals are in industries that typically lean more toward a female audience, e.g. fashion, beauty, and lifestyle. Louisiana State University gymnast Olivia Dunne is reportedly one of the highest-earning student athletes, scoring deals with the activewear brand Vuori, TooFaced cosmetics, and American Eagle, among others.
“I think that this ends up where the female athletes have an opportunity to actually outpace the male athletes in this area,” Jones says. “It’s a nice sort of tipping of the scales.”
Any way you look at it, collegiate athletes are finally in a position to gain more financial equity. Not only can they earn much-needed income while in school, but there’s more runway to set up their careers after they graduate.
That’s what got Jeffrey Kessler so fired up in the first place to take on the NCAA in front of the Supreme Court. “These [NIL deals], for many of these athletes, they’re life changing,” he says. “If you come from a background of very limited economic means, and you can earn $10,000 by doing something like this each year, if you can have the ability to help out your family or use this money to further develop your brand and maybe have a business after college, for some athletes, this lets them stay in school.”