Sports Law: The Basics of NIL Deals

regarding NIL deals, can I do a contract with an athlete that would terminate if the athlete leaves XYZ university? Example the regional car dealer signs an NIL deal with an athlete that enters the transfer portal and transfers to another institution out of the area

After reviewing the current NCAA guidelines and applicable regulations, I can confirm that NIL agreements must focus on the athlete’s name, image, and likeness rather than being tied directly to their enrollment at a specific university or college. NCAA policy prohibits compensation contingent on the athlete’s continued enrollment at a particular school, so structuring the deal around school affiliation would not be compliant and, depending on the state, could run afoul of state law as well. Instead, a brand (assuming this question relates to a company rather than a collective (or now a school paying the athlete for their NIL directly) can create an agreement based on the athlete’s performance/fulfillment of specific contractual milestones. For example, the contract could be structured around the athlete’s ongoing participation in promotional activities, social media content creation, or other agreed-upon deliverables. If these conditions are not met, the deal can be terminated without linking it to the athlete’s transfer to another institution. Additionally, depending on the nature of the relationship between the brand or party paying for the NIL rights and their specific needs, the agreement could be more flexible on a case-by-case basis. For example, a brand could enter into an ongoing NIL agreement where payment is made per event/personal appearance. This would allow the brand to effectively terminate the deal simply by ceasing to request the athlete’s participation in specific events or activities tied to the brand. While this option may not be ideal for the athlete, it does provide a pathway for brands to scale their commitments with athletes at specific schools while remaining in compliance with NCAA regulations, as it does not directly tie the athlete’s compensation to their school enrollment. While some have considered including geographic or regional clauses in NIL agreements, this approach has yet to be extensively litigated, and associated risks are plentiful. It’s generally not advisable to rely on geographic-based clauses unless there is a clear connection to the athlete’s personal brand rather than their school affiliation, and an extensive review and draft of the agreement does not run afoul of the NCAA or state regulations. Overall, I believe it is best to structure NIL agreements based on the athlete’s brand and performance, ensuring compliance with NCAA regulations.