What are the perils of athletes giving schools exclusive NIL rights?

Dive deep into the House v. NCAA long-form settlement and you’ll find a needle in the legalese haystack of the historic 100-plus page agreement.

A proposed settlement that has garnered big-font headlines for its multibillion-dollar damages award and landmark revenue-sharing model also includes this: Schools will have the ability to enter into exclusive agreements with athletes for use of their NIL.

If you’re an athlete, what does this mean?

“If I’m a college athlete and give my school exclusive rights to my NIL, it means the school has complete control over the use of my NIL,” Mit Winter, a sports attorney for Kennyhertz Perry, told On3. “They can prevent me from doing any other NIL deals – whether that’s with a collective or a business.”

In that scenario, the school, Winter said, likely would be the only person or entity that’s working to find you deals.

A marketing agent would be unlikely to want to take the time to work with you because deals they bring to you might not be allowed by the school, he added. 

And because schools obviously have a lot of athletes, it would be difficult for them – or people they hire – to focus on finding deals just for you like your marketing agent would.

Giving away NIL rights could create ‘major conflict’

Attorney Darren Heitner cast a spotlight on the issue on social media this week, writing in part: “It’s a horrible idea for an athlete to appoint his/her school as an exclusive marketing agent to find/negotiate NIL deals.

“It’s also a major conflict if schools are aligned with certain marketing agencies and filter athletes to be exclusively represented by those firms.”

Sam Ehrlich, a sports law professor at Boise State, said his biggest concern would be that schools would want to use these rights to combat what they see as “ambush marketing.”

Schools have already lobbied to get a fair amount of state laws to include so-called “conflict” language, he said, that prevents athletes from doing deals that conflict with university sponsorships. Giving schools exclusive rights over athlete NIL would allow even stronger control to that end.  

It would potentially cut off a good amount of NIL opportunities for athletes, Ehrlich said, as well as cutting off access for brands looking to get in on college sports sponsorship markets who are unwilling or unable to enter into partnership agreements directly with the athletic department itself.

Reviewing agreements with schools is paramount

Neither Winter, nor Ehrlich expects this to lead to more athletes opting out of the settlement. Just because schools are allowed to acquire exclusive NIL rights, Winter said, doesn’t mean athletes have to agree to a deal like that with their school.

“It just makes it important for athletes to have someone reviewing the agreements they enter into with their school or other entity they’ll be contracting with,” Winter said. “Just like it’s important for athletes to have someone review all NIL deals they enter into now. Because they could be giving away their exclusive NIL rights to someone.” 

The prospect of athletes giving schools exclusive rights to their NIL highlights the need for athletes to read their contracts carefully and potentially have someone outside the athletic department review that deal before it’s signed, Ehrlich said. It also highlights that while allowing athletic department personnel to assist athletes with NIL endeavors is generally good, it does often create conflicts of interest.

“I think that most athletic departments won’t take advantage of this due to recruiting concerns,” Ehrlich said. “But it’s hard to not foresee some conflict if athletic departments try to sneak a clause in a contract hoping that their athletes won’t see it.”