The NIL Era Does Not Actually Disadvantage Small Sport Student-Athletes

A major argument against allowing student-athletes to profit off their name, image, and likeness (“NIL”) that was made pre-Alston and is still (somehow) being made post-Alston goes a little something like this: allowing student-athletes to profit off their NIL is unfair and will not actually result in many student-athletes profiting because all of the available deals will go to student-athletes in high revenue generating sports (i.e., football and men’s basketball).

Well, once again, that argument has been proven to be a losing one.

SmartyStreets announced on September 21st that it would extend an offer to enter into NIL agreements with each and every one of the female athletes at Brigham Young University (“BYU”). Each and every one. The female student-athletes at BYU will have the opportunity to be compensated up to $6,000 by using their NIL and social media accounts to promote SmartyStreets to their fans and followers. Additionally, BYU’s female student-athletes will be compensated for appearing at SmartyStreet company events and activities. Since international student-athletes are currently unable to take advantage of NIL opportunities, the company decided to instead donate to BYU’s international student scholarship fund. (It is unclear in these cases if the international female student-athletes will be responsible for social media posts and appearances or whether they would even be allowed to under current NCAA rules regarding NIL and international student-athletes). Clearly, SmartyStreet sees the value in marketing through student-athletes in non-high revenue generating sports. With over 300 female student-athletes at BYU, this NIL deal could ultimately be valued at over $2 million total.[1]

Another aspect of the broader NIL deal with BYU’s female student-athletes is that SmartyStreet committed to donating facility and equipment upgrades to BYU female student-athletes.[2] If I had to guess, more companies will start to structure NIL deals in the same manner where they partner with, for example, every female student-athlete at a university or maybe just a specific sports team at a university and also make donations to improve the quality of the facilities that those student-athletes use. On one hand, the investment in facilities is an investment in the student-athletes themselves – SmartStreets’ Founder and CEO Jonathan Oliver stated that part of their purpose was to “provide an additional spotlight on these athletes to create opportunities for them to build their personal and professional brands.”[3] On the other hand, the investment in facilities is an investment in any NIL sponsor’s own business – better facilities equals better performance which equals more visibility for the student-athlete(s) which thereby increases the value of the marketing and exposure an NIL sponsor receives through its NIL arrangement with a student-athlete. Motivations aside, these types of NIL deals where a company invests in the university and student-athletes themselves is a win-win.

An aspect of this NIL deal that is a bit unclear, however, is how the NIL deal with BYU’s female student-athletes is being, as an attorney may colloquially say, papered. In SmartyStreet’s press release, the company stated that it was “entering into [NIL] agreements with all female student-athletes at BYU” and also referred to “NIL agreements with student-athletes.” But then the press release goes on to say that this opportunity had only been presented to BYU’s female student-athletes, which seems to imply that maybe there are still contracts to be signed. [4]

Did SmartyStreets enter into a contract with BYU directly that will govern the obligations and compensation to BYU’s female student-athletes who agree to partake into compensable activities? If that is the case, the female student-athletes will have certain protections as third-party beneficiaries of the contract but would have less bargaining power to negotiate and restructure the initial contract offered by SmartyStreets based on their own individual concerns. Or did SmartyStreets make available to all of BYU’s female student-athletes an individual contract that the specific student-athlete could enter into with SmartyStreets directly? If that is the case, the female student-athletes have more protections as direct parties to such agreements, but the university may feel less protected or as if they have less control in managing the relationship between its female student-athletes and SmartyStreets. Or, behind door number three, there may have been two types of contracts sent out: one between SmartyStreets and BYU and another that SmartyStreets would enter into with BYU’s female student-athletes on a student-athlete by student-athlete basis.

None of these scenarios even take into account how SmartyStreets and BYU will handle the contracting, if any, for SmartyStreets’ donation of facility and equipment upgrades to BYU’s female student-athletes.

Contracting for NIL deals is only going to get more complex, placing more emphasis on the in-house counsel and compliance departments for universities to be involved early on and throughout NIL contract negotiations for its student-athletes, especially when a possible NIL sponsor wants to contract with large groups of student-athletes. This deal also leads us to what might be the next big NIL related question that universities will need to tackle – could some of these deals that are only made available to women, or only made available to men, impact Title IX based on the level of university involvement?

[1] SmartyStreets inks deal with all BYU female student-athletes - https://www.smartystreets.com/blog. [2] SmartyStreets inks deal with all BYU female student-athletes - https://www.smartystreets.com/blog. [3] SmartyStreets inks deal with all BYU female student-athletes - https://www.smartystreets.com/blog. [4] SmartyStreets inks deal with all BYU female student-athletes - https://www.smartystreets.com/blog.