Last July, the NCAA allowed college athletes to leverage their own personal brand, known as name, image and likeness, or NIL. The decision sparked an immediate conversation about whether high school athletes should have the same right. A year later, a growing number of states landed on the side of the high school entrepreneurial athlete.
NIL is a broad term which in this case means that students can leverage their status as accomplished athletes to earn money. Compensation can come from product sales, endorsements with other brands, public appearances, training camps and more.
Opportunities are likely to be scarcer for high school athletes than for college athletes, primarily due to commercialization. They will likely earn less, on average, too. The INFLCR’s Student-Athlete Content Platform’s NIL Year 1 Report puts the average value of all deals for college athletes at $1,815 and the median value of all deals at $53.
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Yet it’s a fast-moving industry that can turn a teenage phenom with an interested and engaged following into an entrepreneur overnight.
Take the experience of Elliot Cadeau, a top Swedish American basketball player. When New Jersey began allowing high school athletes to monetize their NIL in January 2022, it had suitors, both inside and outside the United States, ready to partner.
While the success of Cadeau won’t translate to most student-athletes, NIL may be the lightning rod that draws kids into business and finance early on. For attentive young athletes and entrepreneurs, the following fundamental lessons may apply.
Read the fine print
Rules, regulations and stipulations are a reality of any entrepreneurial industry. High school athletes looking for NIL offerings should be clear on what is copacetic. Parents should also be familiar with these rules.
“It’s important that they understand what is permitted by the high school their son or daughter is attending and that they understand the policies that apply there,” says Luke Fedlam, partner and president of sports law at Porter Wright. Morris & Arthur, LLP in Columbus, Ohio. .
A policy that is clear in all states that allow NIL: paid activities cannot be affiliated with the student-athlete’s high school.
For less clear rules, Fedlam, which is also co-manager of consulting and education company NIL Advance, suggests finding a qualified, independent third-party resource to interpret rule manuals, contracts and related documents. A lawyer is a good starting point.
Be honest and genuine
The quid pro quo between the student-athlete and the company they work for is a fundamental tenet of these arrangements, says Fedlam.
This means that the student must respect the service for which he agreed to be paid. If the contract says they’ll post five social media posts a month to promote a company’s sneaker line, they need to keep up. Otherwise, it’s money for nothing, and it’s neither cool nor legal.
What Elliot approves must be a good choice, stresses his mother, Michelle Cadeau. A partner, the Swedish company Barebells, manufactures nutritional bars. Rest assured he loves and eats bars, she says, noting how important authenticity is in the brand’s business.
Formalize the business
For the Cadeau family, they are in Elliot’s business. He is the mark.
And when it became legally negotiable, Michelle Cadeau says they formed a limited liability company, or LLC, opened a bank account and hired the services of an accountant. It was a smart move since taxes are not withheld in advance for most independent contractors.
Ask for trusted advice
High school athletes earning a salary for NIL are new and untested. “It’s extremely important to have someone to guide you,” says Michelle Cadeau. As a parent, she guides her son where she can so he can focus on what matters.
“I take care of all his financial stuff, so nothing comes to Elliot until he needs to make a decision,” she says.
They also hired an agent to help them navigate the gray area of NIL deals and negotiate with potential partners.
Budget income (and learning) for later
While the majority of paid student-athletes won’t work with a substantial windfall, a little spending discipline will benefit all young entrepreneurs.
Of course, teenagers with a wad of cash will want to have fun with it. But those who learn to budget, exercise restraint, and save some of their income will make the transition to adulthood easier, especially if turning pro doesn’t go well.
Fedlam sees NIL as a boon to youth financial literacy. “What excites me is that the name, image and likeness is a way to provide practical, hands-on education to student-athletes at a younger age,” he says.
“When you talk about their money-making opportunity, they want to listen and engage.”