How does NIL work in College Football?
When talking about College Football, you will continuously run in to a 3-letter acronym – NIL. It pops up all over college athletics after its introduction in 2021. It is not something we come across in UK sports so this week I ask “What is NIL and how does it work in college football?
Amateurism vs Professionalism
Before we get into it, let me set the scene by outlining the normal development path in American Football.
Young athletes typically start out in high school and those with promise might move on to a strong college football program to combine studies with football development. The best college players then enter the NFL Draft, hoping to be selected and signed by a professional team. If they make it through training camp without being cut, they earn a spot on the roster as a fully fledged American football player.
High school is obviously an amateur endeavour and college football has traditionally been the same. The earliest you can enter the NFL draft is 3 years after high school graduation, with those 3 years spent in college football. This means that most college football athletes could not turn professional until around 20.
NCAA and the Amateur Student Athlete
The NCAA as the governing organisation over college sports have always been strongly focussed on the “student” element of student-athlete. Their core belief is that athletes are students first, underpinning their desire to maintain college sports as an amateur undertaking.
The NCAA kept strict rules that outside of scholarships and stipends, the student athlete could not be paid.
The issue with this is that college sports, football in particular, generates a great deal of revenue for universities. Student athletes put their health on the line to support the success of university athletic programmes. Should they not share in some of the financial gain?
There is the additional issue that if student athletes are not being paid, they are not employees. Therefore they would not get rights that workers tend to get in the US (ability to unionise/collectively bargain etc). Could it not be argued that they work for the Colleges? They follow the rules of the athletics department.
Employees?
The Emergence of NIL
Matters eventually came to a head following political and legal pressure, and the NCAA found itself in court fighting different cases surrounding this topic. This is not a legal briefing but for those interested, the key cases to look at are O’Bannon vs NCAA and Alston vs NCAA. These cases set the stage for an agreed interim position in 2021 which allowed student athletes to profit from their name, image and likeness (“NIL”) as follows:
- Student athletes could engage in NIL activity across the country, despite any state NIL-laws to the contrary.
- Student athletes could use professional service providers for NIL deals (agents).
- Student athletes needed to disclose their NIL activity in line with any local laws.
- Restrictions remained in place against pay-for-play and improper recruiting inducements.
The above remains an interim policy until federal legislation or permanent NCAA rules are established. The starting point for this will be the settlement of House v NCAA. As at the time of writing this is in the final stages of a decision by the Courts (more on that later).
Pay for Play vs NIL
The above draws and important distinction between NIL and pay-for-play. NIL payments relate to compensation for promotional activities whereas pay-for-play would be compensation for being part of a roster or actual athletic performance.
NIL requires the student athlete to make public appearances or make certain endorsements (some sort of active engagement) whereas pay-for-play would be a form of salary, and we would firmly be looking at a professional setup at that point. It also would be an important differentiator in recruiting (if say one school could offer a bigger salary than another).
The 2021 settlement agreed an interim position of allowing players to be compensated for their marketing activity. It ruled out reward for playing or remuneration for signing on to a team (recruitment inducements).
How does NIL work?
If colleges cannot pay student athletes then where does the money come from for NIL? Most colleges will have NIL collectives. NIL collectives are supported by fans/alumni/external benefactors who contribute to funds that are used for NIL purposes. An NIL collective will normally be linked to a certain college.
NIL collectives can also facilitate marketing opportunities for student athletes.
Student athletes must declare to their college any NIL deals signed into and there are some areas which they must avoid (i.e. promoting gambling). The college will report back to the NCAA all deals on an aggregated basis. As such the full details for any player are not in the public domain.
Normally a student athlete will subscribe to a platform and register for NIL opportunities. These opportunities will include things like personal appearances, endorsements, teaching/coaching camps and signing apparel. Clearly depending on their profile, they will see different levels of interest.
Why does NIL matter?
The NIL arrangement should be seen as a bridge solution. It bridges between no pay for student athletes as amateurs and a fully professionalised model where student athletes are paid, which is where this all seems to be heading.
At its heart NIL seeks to reward student athletes for their marketability. If they are playing well for a high-profile team which makes lots of TV revenue, Should they not be rewarded for that?
The issue comes if it is used indirectly as a marketing tool by colleges to either sign new high school recruits or win recruits in the transfer portal. Sure, a team cannot lead with it in negotiations but if a player knows that a certain team has a larger, more lucrative NIL market, they will be influenced.
Also the current position gives those who fund NIL collectives a lot of influence and we are starting to see this flexed in various ways.
From Georgia to Miami
A interesting example of a student athlete making a success of NIL is Carson Beck. Beck has been QB of the Georgia Bulldogs for the past two seasons and was last seen winning his team the SEC Championship game in December. Unfortunately injury ended his season shortly after.
Partly due to the injury, the QB deferred his entry into the NFL draft and elected to stay in school. He didn’t stay in Georgia however preferring to move to Miami. It is reported that he benefited from a $3-$4m NIL deal following the move (projected earnings are expected to be higher).
Decoldest Example
Nebraska’s Decoldest Crawford signed the most apt NIL deal with heating, ventilation and cooling company SOS Heating and Cooling. A great example of creative marketing and I imagine his agent got well rewarded for this one!
EA Sports College Football Game
I mentioned previously that EA sports setup a deal for student athletes to benefit from the use of their likeness in their college football game. The game was a success and the 2026 version is underway, with an improved NIL offering.
A Move toward professionalism
We seem to be moving towards an era where student athletes will be paid for their play. It is the next logical extension from NIL and something being considered in the current House v NCAA case and its expected settlement. At this stage we are a long way from the amateurism that characterised college football for so many years.
Is that a bad thing? It depends on your point of view. For FBS schools, in particular those in the Power 4 conferences, it makes sense for them to benefit from the sums of money being generated from TV, ticket sales and merchandising. Especially given that the future ranks of the NFL rosters will be filled from these teams.
I am not sure how workable this is however in the FCS divisions. There is a danger that it will accelerate a drain of talent in these divisions towards the FBS where better opportunities can arise. But equally it would not be fair for one group to be rewarded and one to not.
It could be argued that a pay for play model is helpful in that NIL requires a drain on a student athletes time in which they should be studying (assuming that remains a thing of course…). This is not to say that NIL will disappear, as the suggestion is that the two will co-exist.
Development vs wealth generation
In this new era, will we start to see student athletes making financial decisions rather than football ones? It was cited that Carson Beck’s $3-4m deal is more than some higher-level NFL contracts are worth. There were other reasons for Beck to remain in the college game this year, but he will accumulate a lot of additional wealth in doing so.
It won’t be long before the lines between financial and football decisions become even blurrier. That being said the college football career will always be capped so the ultimate goal must remain to get to the NFL. But what will be the impact on their draft stock from this?
Bringing Clarity
As a write this post there is a live example of a student athlete appearing to make a decision about his football future due to financial factors. Nico Iamaleava seems to want to renegotiate his NIL deal with the Tennessee NIL collective. He seems to be holding out from Spring training on the back of it.
I don’t know the details of his specific situation or motivations. But it does feel like a framework is required to avoid situations like this from happening. The team are impacted by losing their QB from Spring Training (possibly the season). This also can’t be good for the player’s long term prospects either.
A framework where players are formal employees with fixed codes of conduct and penalties agreed in their remuneration contract would help everyone. It is not a magic bullet however as we still see similar flashpoints in the NFL.
What next?
The judge in the current House vs NCAA case has deferred a decision on the proposed NCAA settlement for a further week. The settlement is still expected to be agreed. One of the many points in this package will be the sharing of team revenue with student athletes. This should start the dawn of full professionalism, and I will write more about this once agreed.
