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Student-athletes who land a name, image, likeness (NIL) deal have an opportunity to monetize their personal brand like never before. But the earnings they receive can also be an important on-ramp to financial success — if they deploy those dollars with purpose.
“NIL incentives should absolutely be treated as a springboard,” said Michael Dennis, a former NCAA athlete and vice president of Fifth Avenue Financial in New York City. “Done correctly, a student-athlete can put themselves in the position to graduate with a strong credit score, an emergency fund, and a down payment for their first home. And that’s just the tip of the iceberg with many of the blockbuster NIL deals that are being signed on a regular basis.”
Indeed, whether the contract involves a multimillion-dollar endorsement deal or a more modest paycheck with fewer zeros, athletes with vision can potentially use their proceeds to:
- Pay down debt.
- Establish a discipline of saving, which can yield lifelong dividends.
- Fund a tax-favored retirement account.
- Begin building wealth (potentially) through home ownership.
What is an NIL deal?
An NIL deal is a legal “right of publicity” agreement between a student-athlete and a brand, company, or individual that enables the student to financially profit from the use of their name, image, or likeness. In some cases, high school athletes can also benefit from NIL contracts, but that depends on the laws in their state.
The National Collegiate Athletic Association (NCAA) interim policy that established the NIL rule was implemented in June 2021, a move that altered college sports profoundly.
New rules in 2025 will now permit colleges to pay students directly for their NIL rights rather than simply facilitating NIL deals with third parties. That opens the door to formalized pay-for-play contracts for the first time.
Initially, NIL agreements were targeted at top athletes. Now, though, a larger percentage of student-athletes at every level are turning their talent into paychecks.
How much do they make?
NIL deals can take many forms, including sponsorships, endorsement contracts, and business partnerships. In some cases, student-athletes get paid to promote products on social media, make appearances at live events, model clothes, drink a certain beverage on game day, or sign autographs. Other NIL contracts feature clauses that may offer student-athletes access to private jets or the use of luxury cars.
While standout NCAA athletes sometimes ink deals worth $5 million or more, most who sign over NIL rights receive far less.
According to the NCAA NIL Assist tool, the average athlete received $23,496 in reported NIL compensation in 2024, but more than half of all NIL deals were valued at $100 or less. In those cases, young athletes may agree to nonmonetary sponsorships, viewing it as an opportunity to seek endorsements elsewhere and elevate their brand.
Male-dominated sports, including football (42 percent), basketball (11 percent), and baseball (9 percent) claim the lion’s share of all NIL deals, with women’s basketball coming in fourth (nearly 8 percent), according to the NCAA.
Managing risk
Student-athletes who are considering an NIL deal should take steps to protect their interests and their assets, especially those with significant pending offers.
Many schools require athletes to seek financial advice or retain outside counsel before signing an NIL contract. They also require athletes to report the details of any potential NIL deal and most prohibit endorsements of certain products, including drugs and alcohol.
“Parental involvement can be beneficial, especially since NCAA athletes are still navigating their early adult years,” said James Carlos McFall, Partner at Foley & Lardner LLP. “Parents can provide support, help their children understand the implications of contracts, and ensure they make informed decisions that align with their long-term goals and values. Other family members, coaches, and mentors can also play a valuable role as trusted advisors.”
McFall said that athletes with an NIL offer should consider retaining an attorney who is well-versed in contract law to ensure it is fair, protect their college eligibility, and potentially negotiate for more favorable terms. An attorney will also help to ensure that any agreement made protects the athlete from potential litigation down the road, and vet the proposed sponsor for financial strength and reputation to ensure that it does not tarnish the athlete’s future prospects for going pro.
“Signing an NIL contract without fully understanding the terms can lead to unfavorable obligations, financial losses, or even jeopardize an athlete's collegiate eligibility,” said McFall. “It is essential for student-athletes to fully grasp their commitments to avoid binding agreements that may hinder their future opportunities or result in legal disputes.”
During contract negotiations, student-athletes should also consult an experienced tax professional for guidance on how much of their NIL earnings should be set aside for future taxes. It’s not all profit, after all. Uncle Sam wants his share. Planning ahead helps to avoid future penalties.
Lastly, athletes should surround themselves with financial professionals who can offer guidance on strategies that may help them protect and grow their wealth. Obviously, turning a four-year endorsement deal into a platform for financial security takes careful planning.
“It’s difficult for anyone to navigate receiving unexpected money, such as an inheritance or a lottery winning,” said Dennis. “Now imagine receiving those funds when, in many cases, the hardest financial decision you’ve made up to that point was deciding what plans you are making for senior prom. If the athlete does not have a strong support system to lean on or wants to try to manage their money on their own, that can lead to irresponsible spending or a mismanagement of funds, which is what we’ve often seen in the sports world.”
With that said, here are some suggested financial moves for putting NIL earnings to work:
Stop and think
Financial professionals often caution clients who come into sudden wealth to resist the urge to make big-ticket purchases right away.
Instead, take the time to visualize your future and your financial goals. Will the purchase of a sports car (that loses value when you drive it off the lot) get you there?
Another pearl of wisdom? Don’t take on new loans that you can’t afford after your NIL deal comes to an end. It’s commendable to want to purchase your parents a new home, but keep in mind that that is typically a 30-year commitment. Will you be able to cover the monthly payments even after your endorsement deal expires, especially if your plans for going pro don’t pan out.
The temptation to use NIL funds early can be overwhelming for young athletes, noted Dan Drabinski, founder and chief executive of Integrated Strategies in Dallas, Texas.
“But that money will likely be needed later to help launch a career or start a new business or potentially go toward a graduate or higher education degree at a later date,” he said. “We recommend the money be spent on paying down student debts or invested in a long-term savings plan to be used at a later date.”
Pay down debt
Indeed, a potentially good first choice for NIL proceeds is to use it to pay off debt, especially high-interest credit card balances and student loans.
Debt eats away at disposable income and limits the borrower’s ability to tackle other financial goals, such as buying a house or saving for retirement. It also forces those who carry a monthly balance to overpay for consumer goods — including furniture, clothes, and flat-screen TVs — due to the interest charges that accrue. (Related: How to manage debt in setting your financial goals)
By paying off a credit card balance with an 18 percent interest fee, you are effectively saving 18 percent every month. That’s better than you can likely do by investing in the stock market, which historically has yielded an inflation-adjusted 6.3 percent average annual return since 1957. But remember that past performance is not always indicative of future results.
Set up a savings account
Your next order of business is to set up a savings account and begin building your safety net.
For working adults, financial professionals generally recommend having an emergency fund with at least three to six months’ worth of living expenses set aside in a liquid (accessible) interest-bearing account, such as a money market or savings account. Those savings help ensure that unexpected expenses down the road (a costly car repair or medical bill) do not derail your financial plan or force you to rely on high-interest credit cards. (Learn more: Four simple ways to become a super saver)
As a college student, however, your living expenses may be limited, especially if you received a scholarship or live at home. You might instead park a portion of your NIL earnings — money that you may need in the near term for graduate school or the purchase of a car after college — into a savings or money market account that offers a higher interest rate.
At this age, it’s not about how much you save. The goal is to establish a discipline of saving, creating financial habits that will pay lifelong dividends.
Fund an IRA
Retirement feels like a long way off when you’re entering college, and it is, but the sooner you start saving, the better off you will be. Even a small amount invested in a tax-friendly Roth IRA can become significant over time thanks to the magic of compounded growth. (Calculator: How much should I save for retirement?)
For example, a $300 investment in a Roth IRA at age 18, without any additional contributions, would grow to $7,200 by age 65, assuming a 7 percent average annual return, according to the Roth IRA calculator on Calculator.net. A $1,000 investment at age 18 would be worth roughly $24,000 at age 65, and a $5,000 investment in a Roth IRA would potentially grow to $120,000, assuming the same time frame and investment return. (Learn more: Why is it important to start saving for retirement early?)
Those who secure bigger NIL contracts and choose to invest, say, $25,000 into a Roth IRA would have more than $600,000 by the time they turned 65. With the annual IRA contribution limit capped at $7,000, however, they would need to contribute that $25,000 in increments over four years.
Consider buying a house
Depending on how much you earn from NIL contracts, you might also consider using part of the proceeds to purchase a home after you graduate, a potentially appreciating asset that can be an important bridge to building wealth.
According to the National Association of REALTORS®, middle-income homeowners gained an average of more than $120,000 in wealth from home appreciation in the 10 years from 2012 to 2022.1
Other data reveals that the average annual appreciation rate for residential real estate from 1987 to 2023 was 5.17 percent.2 Of course, real estate doesn’t always appreciate in value, and past performance is never a guarantee of future returns.
Here again, it is important to only take on a mortgage if you are certain that you can afford your future monthly payments even after your NIL earnings come to a halt. A financial professional can help you determine how much house you can comfortably afford. (Related: What to consider when buying your first home)
Conclusion
For student athletes, most of whom are unlikely to go pro, the NIL earnings they receive from endorsements, sponsorships, and business ventures are a one-time opportunity to change the course of their financial future.
By working closely with trusted advisors, they can help protect their interests, insulate themselves from risk, and begin building wealth by putting their proceeds to best use.
Discover more from MassMutual…
Saving for retirement in your 20s: Doing the math
Repaying student loans early: How to do it right
Need a financial professional? Find one here
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1 National Association of Realtors, “Middle-Income Homeowners Gains More than $120,000 In Wealth Over the Past Decade From Home Appreciation, According to NAR,” April 18, 2023.
2 Case-Shiller, “Composite 20 Home Price Index YoY (I:CCSC20SM),” January 2024
