At its core, every NIL agreement is a license of intellectual property. The primary legal question is not whether rights are granted but rather how broadly those rights are defined. An NIL agreement may include rights relating to an athlete’s name, image, likeness, voice, signature, social media handles, biographical information, catchphrases, or logos and their personal branding marks. Contracts that fail to clearly define these licensed assets create ambiguity.
Athletes should assess whether the license is exclusive or non-exclusive, limited in duration or perpetual, permits derivative works, and allows sublicensing. Overly broad language can restrict future monetization opportunities for athletes.
From a business perspective, the clause must ensure that the athlete has the authority to grant the licensed rights and that no conflicting sponsorships or institutional restrictions undermine the agreement. A nightmare scenario for a business is paying for rights that the athlete cannot legally grant.
2. Compensation Structure
Compensation provisions are equally significant because they define how financial risk is allocated. NIL agreements may include fixed fees, milestone payments or performance-based incentives tied to deliverables or engagement metrics. Athletes should ensure that there are clear payment timelines, defined performance standards, and objective benchmarks. Athletes should also evaluate whether compensation is contingent upon subjective standards or whether clawback provisions are narrowly tailored.
Businesses, on the other hand, must ensure that payment obligations are tied clearly to defined deliverables and that a mechanism exists to address nonperformance or breach.
Both parties must also ensure that deliverables are not based on the athlete’s athletic performance, as this is prohibited and can void the NIL agreement.
Many NIL deal conflicts arise not from bad faith but from ambiguity. NIL agreements should specify the requirements for each deliverable. For example, if a student-athlete is asked to post content on social media, a well-drafted agreement should specify the number of posts to be made, the platforms to be used (e.g., TikTok, Instagram, Twitter), deadlines, and content format. Open-ended language regarding expectations is a red flag for athletes. Additionally, businesses can benefit from defining clear deliverables, as this helps protect their investment and ensures brand consistency.
Termination and morals clauses introduce reputational considerations. Businesses typically seek broad rights to terminate if conduct harms their public image. Athletes should understand how broadly that language is written and whether they are entitled to payment for work already completed if the deal ends early. Both sides should also address what happens to content after termination.