With the U.S. Supreme Court Decision in National Collegiate Athletic Association v. Alston, 141 S. Ct. 2141 (2021), the landscape for recruiting college athletes has undergone a paradigm shift. Athletes are now entitled to receive compensation for the use of their “name, image, and likeness.” The mechanics of NIL have evolved rapidly since the Alston decision. In short, NIL Collectives are the means by which college athletes are compensated.
NIL Collectives are independent entities that enter contracts with college athletes for the use of their name, image, and likeness. The amount of compensation depends on a number of factors including the services provided by the athlete, the sport they play, the size of the school they attend, and the value of their name in the market. Athletes are compensated for a number of things such as posting products on social media, making live appearances, appearing in traditional advertising and commercials, and any number of other things to leverage the sponsors with their NIL. Collectives act as the intermediary between the sponsors and the athletes. Collectives solicit opportunities with a variety of products and businesses for the athlete and compensate them in exchange.
NIL Collectives are typically associated with a particular educational institution. While they must adhere to certain rules to maintain independence, it is patently obvious that they exist as a recruiting tool for the school.
If you are the parent of a high school athlete who is presented with a NIL Collective contract, there are numerous considerations:
1. What is the compensation? Compensation runs all the way from seven-figure payments for top division one athletes in football and basketball to small payments and even product discounts for athletes in less popular sports and smaller institutions.
2. What is required of the athlete? NIL collective contracts by their nature must require something of the athlete in exchange for the compensation. With all the demands on student-athletes, the time commitment involved in complying with the NIL Collective contract is an important consideration. Having a thorough understanding of what the contract requires is essential to the decision to sign.
3. What is the duration of the contract and how will it affect the transfer status? With the transfer portal activity being at an all-time high, athletes who sign contracts need to know their options for getting out of the contract if they decide to transfer.
4. Who is behind the NIL Collective? The high school athlete should know that college coaches are completely removed from the process. While coaches are typically confidants and sounding boards for athletes, they should not lend any advice regarding collective contracts and must remain completely independent. Knowing the history of the collective entity and the experience athletes who are a part of the collective is important.
5. Is the Collective complying with all the rules to maintain independence? The NCAA instituted an interim rule placing parameters on NIL Collectives, particularly with regard to independence from the institutions. Athletes need to have an understanding of the Collectives efforts to comply with the rules.
6. What other resources to Collectives offer? One benefit for the athlete is the pooling of resources, particularly ones with more lucrative contracts. Financial, accounting, and legal resources are frequently a benefit to signing with a Collective. Depending on the trajectory of the athlete’s career, sound advice in a variety of areas is helpful. However, the accountants, financial advisors, lawyers, etc. are typically alumni or supporters of the schools with which the collective associates. It is wise to vet their services and reputation.
If your high school recruit is presented with an NIL Collective contract, review it with an independent trusted legal counsel. These contracts should not be entered into blindly or without guidance.
Partner Jim Pattillo has been practicing and litigating matters for more than 20 years in both state and federal courts in Alabama with more than 70 trials to verdict. His practice focuses on matters involving insurance coverage and bad faith liability, business and commercial litigation, and professional and product liability.
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