NIL, or name, image, and likeness, is an acronym that has become omnipresent in the world of college sports. The ability for athletes to be compensated for their efforts has truly changed the landscape of collegiate athletics. Some find this change abrupt, as just a few years ago athletes were getting caught in scandals for receiving payment from schools. Regardless, the logic behind compensating college athletes is sound—most Division 1 athletes report dedicating upwards of 60 hours a week to their sport. That is more than the average full time employee works (40 hours a week). In addition to this, they generate significant revenue for their school. The Duke men’s basketball team, for example, generated 45 million dollars in revenue in 2022. With so much money and effort at stake, was the sudden introduction of NIL actually an inevitable change? 

The case that introduced the legal foundation for NIL was NCAA v Board of Regents of Oklahoma (1984). Prior to this case, the NCAA limited the number of games that college teams could play on national television, in an effort to protect live attendance. The Universities of Oklahoma and Georgia challenged this constraint, and the Supreme Court  ruled that the NCAA’s policy violated the Sherman Antitrust Act, as the NCAA’s control over televising the games affected output and prices by unreasonably restricting the competition. This case played a crucial role in the development of NIL. For the first time, schools and conferences were allowed to negotiate their own TV deals. In combination with the increase in televised games led to higher revenues for the universities. This allowed college sports to become the enterprise it is today, and turned the players into the economic agents of this enterprise. The next key case regarding NIL would not emerge until 2015. 

However, between these cases, there were many developments with both athletes and employees of the NCAA. For example, in 2014 the Northwestern University football team petitioned to be classified as employees and therefore benefit from commercial opportunities. While this was unsuccessful, it did pave the way for future cases.  One such example is Bannon vs NCAA. In 2015, Ed O’Bannon, a former basketball player at UCLA led a class action lawsuit that challenged the NCAA’s rule that athletes could not be compensated for their images being used in video games and commercials. O’Bannon pursued this case after his image was used in the EA Sports game NCAA Basketball 09 without his permission. The court ruled that athletes could receive up to the cost of attending college in compensation for their dedication as an athlete. Additionally, it allowed for deferred cash compensations of up to $5,000 being placed in trust for the athlete. This ruling was expanded in 2021 with the case of NCAA vs Alston. A group of former and current football and men and women’s basketball players argued that the NCAA restrictions on the compensation athletes could receive did not match a competitive market value. This, they argued, violated antitrust laws. The courts ruled in favor of the athletes, reasoning that compensatory changes could be made to education-related benefits (scholarships, study abroad programs, tutoring services, etc.) while still preserving the NCAA’s amateur status. The passage of NIL laws at the state level also  led to the NCAA becoming more accepting of NIL. For example, following the Alston case ruling, California passed the Fair Play Act. This allowed student athletes to hire agents and get money from NIL. The law influenced other states to permit   the same or similar benefits (a series of cases changing rules around the transfer portal and other aspects of NIL were also important). There have been some recent developments, though, as well. An intermediary clearinghouse, NIL Go, has been created to make sure that NIL deals include actual endorsements instead of players just being paid directly by boosters. Any NIL deal that is valued at over $600 has to be submitted to NIL Go, a portal created in a partnership between Deloitte and the College Sports Commission where athletes report their NIL deals which are then assessed by the College Sports Commission (a ruling body created by the Power 5 Conferences as a result of House vs NCAA) for compliance. 

So, in this complex legal landscape, how does NIL today actually function? There are three main ways that athletes can receive money from their name, image, and likeness: NIL collectives, brand partnerships, and personal services. NIL collectives are created when donors pool money and use these funds to find ways for athletes to monetize their identity. This is the strategy that most Duke boosters have used, especially for the basketball team. Athletes can also participate in brand partnerships where they promote a product for a company. One example of this is the infamous Cooper Flagg x New Balance partnership, a huge win for the company.  Lastly, athletes can collect money through personal services. This can include running a camp or creating their own merch. This year, though, there could be an additional way through which athletes can make money from NIL. A new court decision, House v NCAA, allows athletes to receive up to 22.5% of Power Five schools’ (part of the ACC, Big 12, Big Ten, Pac-12, and SEC conferences) athletic revenue. Institutions that exceed the 22.5% revenue cap will be penalized by the College Sports Commission. This decision has been controversial, since the schools that already generate high revenue from sports have a clear advantage in recruiting and retaining athletes. This decision will widen that gap as schools with smaller budgets and revenue won’t be able to offer the same financial incentives to their recruits. However, many consider it fair that the athletes receive a portion of the revenue, as they are the ones generating it. 

NIL is providing other de facto advantages to athletic powerhouses  also completely changed the recruiting process for athletes. There are more factors for them to consider aside from the usual draws, like coaching staff and team culture. Now, athletes can bear in mind the engagement of the program—both on social media and with their fan base, how the school sets them up to grow their personal brand, and how they will be supported in their entrepreneurial pursuits. Larger schools and established programs have an advantage in this area as they receive more media and fan coverage and have more extensive alumni networks. This has forced smaller schools to adapt and focus on local and community-based deals for their athletes  

NIL will likely remain controversial for the foreseeable future, even as a more coherent and permanent legal framework emerges . Many believe that NIL has escalated from a way to compensate athletes for the time and effort  they put into their sports to a wholesale professionalization of amateur sports . College sports teams in football and basketball increasingly resemble their professional equivalents in key ways, including the development of corporate front offices. One way this can be seen is by the increase of General Managers (GMs) in the college space. General managers oversee the business aspects of a team – contracts, marketing, publicity, etc. GM was once a position unique to professional teams. However, it is now the most sought-after position in college athletics and can even be seen as necessary for success at the highest level of college sports. In fact, 8 out of 12 teams that qualified for the College Football Playoffs had a general manager or equivalent. This makes sense: to recruit the top talent you need to be able to organize and facilitate NIL opportunities for players. GMs have been the best way to do this in the professional space, so their influx into the college-level is organic. Yet, this trend also highlights the increased commercialization of college sports. College teams have limited payroll positions available, but NIL is such a priority that one of these positions accommodates it exclusively. Another effect of NIL, alongside its shift of college athletes toward professionalism, has been the increased use of the transfer portal. The combination of NIL with the transfer portal has made a free-agent market for college athletes. They can use the transfer portal to gauge the value of the deals they could be offered, similar to how professional athletes operate. Many believe that this further blurs  the line between amateur and professional status as fewer athletes are remaining at a university for the duration of their college careers. Their role as a student athlete now includes significant financial decisions that many perceive as transactional. Some fans also find it difficult to truly connect with a team when the roster becomes a revolving door.

Duke has navigated the added financial aspect of college sports skillfully. In March of 2023, the “One Vision Futures Fund” was created by Duke alumni. Under the “nature of the business” section of its annual report, the nonprofit simply listed: NIL. These alumni aren’t limited to just buying new uniforms or practice facilities either, but they can indirectly and sometimes even directly pay the players. Does this give a school like Duke an advantage? Of course. But it  is also very legal. Despite their obvious impact on the team, these donors stay anonymous as they want the coach to pursue their vision and do not want the fundraising to distract from it. In addition to the One Vision Futures Fund, Duke basketball has also been endowed for years by the “Legacy Fund” established by Coach K. This fund has a minimum donation of $1 million. One of the main reasons, though, that Duke sports have been so successful in the age of NIL is not just due to innovative fundraising. It is instead attributable to how the athletic program adapted to the landscape of NIL. Every school that has rivaled Duke’s athletic success has alumni willing and able to shell out some cash for their alma mater. Duke, though, has managed to excel in the areas that are most crucial to attracting NIL-focused athletes. Duke athletics’ social media presence, for example, is one of the biggest assets in this new era of athletics. The Duke Men’s Basketball Instagram, for example, is the most followed account in all of college sports. It has more than double the followers of the second most followed college basketball account, the University of Kentucky. The Durham Devils Club is another innovative approach to creating NIL partnerships. This membership-based NIL collective allows Duke fans to interact with the athletes they fundraise for as well as build relationships with the coaching staff in exchange for a membership fee. This fee goes towards finding NIL opportunities for Duke athletes. It is important to note, though, that this collective is not affiliated with Duke—as specified by their website—but is instead a third-party entity. Regardless, Duke has been able to generate a significant head start in this new era of sports, and whether people like it or not, NIL seems to be here to stay. As other schools begin to adapt their approaches and new legislation develops, it will be exciting to see how the field of college sports continues to evolve. 

by Emily McDermott