NIL Money: How Lucrative are NIL Endorsements?

After a decades-long battle petitioning for changes to NCAA policies, athletes finally have a viable option for earning NIL money.

As a result, universities and major brands across the country have been scrambling to understand what the changes mean for them as sporting institutions.

Athletes have also been eager to know exactly what they can and cannot do as a result of the new NIL rules.

While there is plenty of information about athletes signing NIL endorsement deals, it’s difficult to know exactly how to acquire one, or how valuable these deals are.

This begs the question – how do you as an athlete get a piece of the lucrative NIL pie, and how much is that slice worth?

In this guide, we’ll examine the many different ways you can earn money from NIL deals, how much you can expect to make, the tax implications related to NIL, and everything in between.

What is NIL money?

Broadly speaking, NIL money refers to the money that you can now earn by signing NIL deals and marketing your name, image, and likeness.

The exact amount of NIL money that you can expect to receive is going to vary depending on your social media following, market value, and the sport you play.

Football and basketball players receive the largest compensation when it comes to NIL endorsements, but there are plenty of NIL opportunities for other sports as well.

How can athletes earn NIL money?

There are many different types of NIL deals available. These include:

• Accepting direct payments for promotional activities

• Receiving free or sponsored products in exchange for promotion

• Receiving free or sponsored services in exchange for promotion

• Earning affiliate money from social media promotion

• Becoming an ambassador for a brand or business

• Appearing in commercials, ads, and digital content

Over 450,000 student-athletes across the United States have already found ways to earn an income with their NIL by partnering with local businesses on promotions.

Some have found work with big brands running training clinics. Others are making appearances for autograph and photograph opportunities for fans or corporate events.

And a few college players are starring in commercials for local restaurants and businesses.

But perhaps the fastest and easiest way that athletes are making NIL money is by leveraging their social media influence.

Depending on the size of your following, it’s possible to earn hundreds or even thousands of dollars per month by posting sponsored content.

Even nano-influencers – athletes with about 10,000 followers – can profit off of their social media followings.

The Vitamin Shoppe, for example, recently worked with 14 college athlete influencers – all of whom had less than 10,000 followers – for a social media campaign and paid them with free products in exchange for social media engagement.

How much money can I expect to make from a NIL endorsement?

In terms of licensing, the annual NIL value for a student-athlete could generally range from about $1,000 to $10,000, although there are exceptions where athletes could earn substantially more.

This huge variance is due to a variety of factors, including what sport you play, your potential for success, and your social media following.

For example, sophomore Alabama quarterback, Bryce Young – who has almost 200,000 Instagram followers – has already earned over $1 million from NIL endorsement deals.

Unfortunately, not all NIL deals are this lucrative, but you can still expect to make a decent sum of money if you have a healthy following and navigate the NIL waters prudently.

According to NIL market platform Opendorse, the average compensation for NIL activities during the first six months of the new NCAA laws looked like this:

• $4,923 per agreement for a multi-activity endorsement

• $5,557 per year for licensing rights

• $522 per Instagram post

• $933 per YouTube video

• $1,736 per hour for an appearance

• $457 per interview

Maximizing your worth

While it’s clear that there are many ways of earning NIL money, there are a number of things you should consider to increase your earning potential.

Firstly, before you sign an NIL deal, it pays to speak to a qualified team of financial and legal experts to vet your contract and ensure that you’re getting the best possible deal.

Not only will a qualified team ensure that you have complete power over your brand going forward, but they will help you invest your NIL money effectively, and minimize your tax liability.

Secondly, it’s vital to stay NCAA compliant and be aware of NIL state laws and your own college’s policies and guidelines.

While the new NIL laws can be vague and confusing, breaking NCAA guidelines can result in a number of penalties and fines which could affect your earnings significantly.

If you’d like to know more about staying NCAA compliant and maintaining eligibility, check out our article explaining the NIL rules.

What is the best way of finding NIL endorsements?

The new NIL rules have opened the doors for innumerable novel endorsement opportunities, and many of them are digital.

NIL platforms

While traditional endorsement deals are still on the table, finding brand partnerships has become much easier thanks to the surge of NIL platforms that connect student-athletes with sponsors.

Matchpoint Connection, for example, is an app that lets you find and talk to brands that you’re interested in working with and explore an entire network of potential NIL opportunities.

Jonathan Pixley, the founder of Matchpoint Connection, discussed these opportunities in a recent episode of the Athlete Wealth Podcast. He also explained how the platform could benefit student-athletes looking for NIL endorsements:

“Most of the platforms are set up to where ultimately a brand pitches a talent and that's it. But athletes on our app can reach out to businesses, both locally and nationally, and submit offers to them. And once the offers are submitted, then it's up to the other side. They'll receive a push or an email notification letting them know that they got an offer waiting on them.”

Marketing agents

Another new method for finding endorsements is through the use of a marketing agent.

Under the previous NIL rules, student-athletes weren’t allowed professional representation, and they are still prohibited from working with a sports agent. But now you’re free to work with a marketing agent to help you find sponsorships and negotiate with companies that want to work with you.

Of course, you would have to pay them a small percentage of your earnings, but it might be more profitable than going at it alone if the agency can connect you with lucrative deals.

Doug Fillis, founder of Accelerate Sports Ventures, an NIL education and consulting firm, spoke at length about this topic in a recent Athlete CEO podcast episode.

Alternative NIL streams

There are many ways to earn NIL money outside of conventional methods. Student-athletes are already taking advantage of the near-limitless opportunities that the internet offers.

University of Miami Athletics football player Al Blades Jr, for example, has become a well-recognized streamer on the streaming-platform Twitch and receives consistent financial support from his viewers.

There’s also Ben Wiegman, a baseball player for the University of Louisville Athletics, who writes and produces music under his rapper alias, WIGZ.

Wiegman uses his social media presence to promote his music and drive up the number of monthly streams that his songs get. But it was NIL money that allowed him the freedom to focus on his music and promote it freely in the first place.

These are just two examples of student-athletes self-promoting their own work and being able to pursue more forms of income thanks to the NIL changes, but there are many more opportunities available.

Fangage, for example, is one of the more interesting promotional platforms and allows fans to submit a photograph and get it digitally signed by a rising star or celebrity.

While all of these novel ways of making money sound appealing, Jonathan Pixley cautions against getting carried away by NIL opportunities at the expense of your actual athletic career.

“Your performance on the field, on the court, in the pool, on the track, wherever it is, NIL needs to be a by-product of that. The minute you put NIL ahead of that, that's when what really matters suffers. It's the reason NIL exists is for college athletes.”

What taxes do I have to pay on NIL money?

Just as with any sort of income, there are a number of tax implications that you will have to deal with once you start earning money from your NIL.

Taxes on NIL income are seen as self-employment. So if you earn over $600 for a deal, then you’ll have to fill out a 1099 form from the company that paid you.

Here are a few more things to note regarding NIL taxes:

• Income over $12,550 is subject to Federal tax

• You will owe tax to the state where you earned the income, as well as potentially the state you are living in

• Self-employment tax is necessary to pay because NIL deals are considered a form of self-employment. This will end up around 12-15% for the first $140,000 you earn.

Maximize NIL potential with the right team of experts

This information might seem overwhelming, which is why it’s important to work with a team of financial experts who can take care of all the heavy lifting for you.

At AWM we have years of experience working with elite performers at every stage of their athletic careers. We are perfectly positioned to help you make decisions that will set you up to own your wealth as a professional athlete and beyond.

If you want to learn more about maximizing your NIL potential, get in touch with Will.

Article by Will McGuffey, CFP® - Private Wealth Advisor at AWM Capital, Licensed Attorney

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