Name, Image, and Likeness Compensation: How Financial Advisors Can Assist College Athletes
College sports are immensely popular in the United States, and these sporting events are lucrative for universities. But unlike professional athletes, college athletes are considered amateurs and do not receive a salary for the significant amount of time and effort they dedicate to practicing and playing their sport. Historically, exceptional student-athletes have been incentivized to continue playing at the collegiate level only with scholarships, the goal of playing professionally, and their love of the game. However, compensation for college athletes has been debated and has undergone several changes in the past five years. Because of these changes and the new opportunities they have created, many college athletes would benefit from the help and guidance of an experienced financial professional.
A Crash Course in College Athlete Compensation
Numerous states have passed new laws governing how student–athletes can and cannot be compensated. As of June 2021, the National Collegiate Athletic Association (NCAA) passed an interim policy outlining its college athlete compensation rules, specifically for using an athlete’s name, image, and likeness (NIL) in product design and advertising. The NCAA’s new policy opens more opportunities for college athletes to earn income while pursuing their passion for their sport, but it also upholds the NCAA’s stance against “pay-for-play” compensation to preserve college athletes’ amateur status. Instead of a university paying college athletes directly, which could encourage unscrupulous recruiting pitches, athletes can make money by leveraging their personal brand and the fame they can build playing college sports to use their NIL to make sponsorship and branding deals with outside companies, sell merchandise, and monetize their social media presence.
The Role of a Financial Advisor
Financial advisors can be compared to a “money coach” because they provide guidance and think strategically to help people achieve their financial goals. They do this by getting to know each client’s financial situation, priorities, and needs and creating a personalized financial plan. Advisors can also provide several other financial services, including investment management, retirement planning, insurance planning, and tax planning. Moreover, they can work with your accountant to help you understand the tax implications of your income and manage income reporting for multiple streams of passive income. In exchange for their services and professional experience, financial advisors charge a fee or are paid in commissions. It is vital to understand how your advisor will be paid and note any potential conflicts of interest so that you can weigh how they might affect your overall investment returns.
Building a Strong Financial Foundation
Because the regulations of college athlete compensation are still evolving, ethical and legal issues can crop up regarding how and for what players are compensated, putting players and their universities at risk of damaged reputations and even lawsuits. Moreover, the latest NCAA guidelines conflict with some state-specific laws, which can confuse the permissibility of certain NIL activities. You and your advisor can combat these concerns by staying informed and tracking and properly reporting all income, ensuring that all compensation is above board and in compliance with the most recent laws, NCAA policies, and any specific NIL policies your university may have. A financial advisor can help you better organize and understand your financial documents to avoid legal concerns and remain in good standing with the NCAA.
Additionally, some of the most talented college athletes hope to play sports professionally after graduation; however, this is an inherently risky and time-bound career choice. The strain on the body, especially as a person ages, often forces professional athletes to retire or shift their career trajectory differently than they would otherwise plan to, and the prospect of a career-ending injury looms large in the minds of athletes and their loved ones. These risks can have substantial financial consequences if ignored, exacerbating the need for financial planning and passive income streams that can supplement other forms of income and provide financial security in the long term, regardless of your future career. A trusted financial advisor can help you objectively assess these financial risks and implement strategies to mitigate them so you can focus more on the sport you love. They can also help you find appropriate disability and life insurance policies to protect yourself and your loved ones from the financial fallout of a serious injury.
NIL compensation laws are still in flux, but new college athletes can access a world of financial opportunities their predecessors did not. If you are ready to make the most of your income and level up your finances by working with a top-notch financial advisor, you’re in the right place. Business & Financial Strategies (BFS) has a team of financial professionals ready to have a twenty- to thirty-minute in-person or virtual conversation about your NIL income and financial goals and needs. BFS has offices in the Iowa City/Coralville area and Fairfield, Iowa, serving clients from throughout the United States. To learn more about how a BFS financial advisor can help you reach your financial objectives, call 319-358-7700, or visit www.BFSFinancialPlanning.com to schedule a complimentary initial conversation.