NIL contracts for college athletes: what the deal actually sells, and who has to clear it

Most NIL guidance is written about whether an athlete may be paid. That question is settled. The useful question is narrower and much less discussed: when a contract arrives, what in it is worth arguing about, and what happens to it after it is signed.

Two pots of money, and only one of them is the school

Judge Claudia Wilken granted final approval to the House v. NCAA settlement on 6 June 2025, ending the NCAA's prohibition on institutions paying athletes directly. Direct payments began on 1 July 2025. Each participating school may distribute up to roughly 22% of the average Power Five revenue from media rights, ticket sales and sponsorship — about $20.5m in the first year and about $21.3m in 2026-27, rising across a ten-year term. The settlement also replaced scholarship limits with sport-by-sport roster limits, and its $2.8bn back-damages component remains under appeal in the Ninth Circuit.

That money is not an endorsement deal. It arrives under an institutional agreement, drafted by the school, and it is capped. A brand deal, a collective deal or a local dealership deal is a third-party contract, uncapped, and reviewed by a body that is not the school. Reading one as though it were the other is the first mistake, because the protections in each are entirely different.

A third-party deal is not final when you sign it

The College Sports Commission, created to administer the settlement, operates a clearinghouse called NIL Go, built with Deloitte. Any third-party NIL agreement worth $600 or more must be reported there within five days of execution. The review asks three things in sequence: whether the payor is an entity associated with the school, whether the deal has a valid business purpose — the promotion of goods or services actually sold to the public for profit — and whether the compensation sits in a defensible range for what is being delivered.

What the document is actually made of

Below the fee, an NIL agreement is a short stack of separate promises. They are usually drafted as one continuous block of prose, which is why athletes read the number and sign. Taken apart, the parts that decide the value of the deal are these:

The two clauses that outlive the fee

Term: it should end when your eligibility does

A two-year deal signed by a junior runs past the point at which the athlete is no longer a college athlete. Whether that matters depends on the state. Texas is explicit: under Education Code § 51.9246(g)(2)(C), as amended by HB 126 in 2025, a student athlete may not enter an NIL contract if "the duration of the contract extends beyond the student athlete's participation in the intercollegiate athletic program". Elsewhere it is a drafting question rather than a statutory one, and the answer is the same — a college athlete has no business granting rights that outlive their college career at college prices.

The related trap is the tail on the grant of rights. A term of one year with a licence that survives "in perpetuity for archival and portfolio use" is not a one-year deal. Ask for a defined run-out — thirty to ninety days for material already in market — and for organic posts to be taken down or left up by agreement rather than by silence. The same distinction between a campaign and the licence behind it is the one that catches creators generally, and it is worth reading on usage rights before signing anything with a media schedule attached.

Exclusivity: it can block a sponsor you have never met

"Athlete shall not endorse any competing product" reads harmlessly until the category is read against the brand's own product range: an energy-drink deal that captures all beverages, a footwear deal that captures all apparel. Name what is inside the category and what is outside it, and make it expire with the term.

The athlete-specific layer is above that. Schools and conferences carry their own sponsors, and an individual deal that conflicts with one is not merely awkward — it can be prohibited. Texas bars an athlete from entering an NIL contract where any provision conflicts with the team contract, an institutional contract, athletic department policy or the honour code. The athlete rarely knows what those contracts say. The compliance office does, which is why the disclosure step exists and why it belongs before signature rather than after.

You cannot license the school's logo, because it is not yours

This is the failure that catches nearly everyone. An athlete owns their name, image and likeness. They do not own the school's marks, its colours as applied to a uniform, its stadium or its mascot. A brand that wants a photograph of the athlete in kit, in the stadium, holding the product, is asking for two licences and usually paying for one. Texas puts the rule in the statute: an athlete "may not use an institution's facility, uniform, registered trademark, copyright-protected product, or official logo, mark, or other indicia" in connection with an NIL contract without the institution's express permission.

The fix is administrative rather than legal. Either shoot in unbranded kit, or get the institution's licensing office to grant a written trademark licence for the campaign. What is not a fix is a warranty in the brand's template in which the athlete promises they hold all rights necessary — that clause moves the whole problem onto the person who cannot solve it.

Who is representing you, and are they registered

Anyone negotiating endorsement contracts on an athlete's behalf is usually an athlete agent under state law, whatever they call themselves. Most states have adopted a version of the Uniform Athlete Agents Act, which requires registration and prescribes what an agency contract must contain; a contract that does not comply is generally voidable by the athlete. Federally, the Sports Agent Responsibility and Trust Act, 15 U.S.C. § 7802, prohibits false or misleading inducements and providing anything of value before a contract is signed, and requires a signed disclosure warning about eligibility before the agency contract is executed.

That statute was largely dormant. Executive Order 14400, signed on 3 April 2026, directs the Federal Trade Commission to enforce 15 U.S.C. §§ 7801-7807 against student-athlete agents; sections 3 to 6 of the order took effect on 1 August 2026. Check registration in the state before signing anything with a commission percentage in it, and treat a flat "advisor" title with no registration behind it as the warning it is.

Two situations where the ordinary advice is wrong

International athletes on an F-1 visa face a problem no clause solves. F-1 status permits almost no off-campus work, and unauthorised employment risks status, removal and future visas. The distinction that matters is whether the payment requires the athlete to do something, and where they do it: unauthorised employment under the immigration rules reaches work performed inside the United States. No published DHS or USCIS guidance blesses the royalty characterisation schools have adopted for revenue share, so this is a question for a designated school official and an immigration lawyer, before signature.

High-school athletes are the other case. Most states now permit some form of high-school NIL, on state-association rules that differ sharply, and a contract signed by a minor alone is voidable by the minor — which is why brands insist on a parent signature. Some states go further and restrict the deal outright: Texas prohibits an NIL arrangement with a prospective athlete under 17, or with their relatives, unless the athlete is already enrolled at an institution of higher education.

Nobody is withholding tax on any of this

The IRS treats NIL income as taxable and, where it is paid for services rather than as wages, as self-employment income: Schedule C, with Social Security and Medicare tax on Schedule SE. There is typically no withholding, so it is paid in quarterly estimates during the year rather than in one bill the following April. Expenses incurred to earn it — travel, equipment, professional fees — are generally deductible, which is the argument for keeping receipts from the first deal rather than the first audit.

Two points catch people. Non-cash compensation is income: the IRS names merchandise, gift cards and services as taxable at fair market value, so a season of free product is a tax liability with no cash attached to pay it. And a form arriving is not the test of whether income is taxable. For payments made in 2026 the Form 1099-NEC reporting threshold rose from $600 to $2,000, so a run of small deals can now generate no paperwork at all and remain fully taxable.

The ground is still moving

None of this is settled. The back-damages portion of the settlement is on appeal, the SCORE Act stalled in the House, and the Protect College Sports Act introduced in the Senate in May 2026 is still a draft. Executive Order 14400 directs the Attorney General to challenge state NIL statutes that conflict with governing-body rules — which, if it succeeds, removes exactly the state-law protections some athletes are relying on. So a contract signed now should assume the rules around it will move during its term and say what happens when they do. A clause letting either side renegotiate or exit if a rule change makes performance non-compliant is worth more than confidence about the current position.