The date June 21, 2021 will perhaps live in college athletics infamy.
After decades of college athletes pouring their blood, sweat and tears into their sports for nothing more than a college scholarship, on that date, a landmark decision allowed student athletes to begin profiting off their name, image and likeness, aka NIL.
That has meant substantial riches for some who’ve played the game of going to the highest bidder for their athletic riches, with a few deals exceeding $10 million for a college student. It’s been life-changing money for some.
NIL money has also been life-changing in ways 17, 18 and 19-year-olds never considered. Suddenly, they are now balancing life as college students while being the breadwinners for their families, having access to luxury cars, homes and other trappings of rich people. They also come under Uncle Sam’s purview in the form of taxes.
“There is a thing about living in these United States where we are all governed by a term called tax laws,” University of Houston men’s basketball coach Kelvin Sampson said to the Defender. “So if I said I’m going to give you $100 in NIL money to come here, you do understand that that’s going to be taxed? So don’t look at me six months later saying, `Nobody told me about that.’ Nobody told you we are in the United States and all money is subject to tax laws, whether it’s W-2s or 1099s?
“But we have to educate them on that. That wasn’t part of the deal five years ago. But it is now.”
Without question, student-athletes deserve to profit off name, image and likeness in the billion-dollar college athletics landscape that has flourished on their backs. But experts warn that student-athletes and their families must be aware of the responsibilities that come with making thousands, hundreds of thousands and in some cases millions of dollars.
The money sometimes sounds good until you have to deal with it.
“It can be hard to get young people to think about that, think like they are a business. Some of them embrace it, create an LLC and know about their taxes,” said Houston native and Texas Southern alumnus Tony Wyllie, who is the chief executive officer of marketing agency The Collective Engine. “Some of them are pretty impressive, that they are young and they understand the business side of it. But the majority of them don’t know, so you have to really manage expectations. The media really doesn’t report the accuracy of some of these things, and it’s not like there is a collective bargaining agreement where everyone knows what everyone is making. So it breeds a false sense of reality and expectations.
“I think if they do things where they can learn financial literacy and know what to do once they get the money, I think that would be good.”
“I had to teach one of our clients how to file their taxes because they never did it before. All of that is a learning experience. That’s a lot to put on a teenager.”
Tony Wyllie
Some schools and coaches, like Sampson, have tried to get ahead of the chaos by working with student athletes on financial literacy. In addition to talking to his players about how to handle their money, he also conducts a Zoom call with the parents every year about the money their sons are coming into. He has been surprised at how many don’t understand dollars and cents and how they apply to the American economy.
“I’ve had discussions … some of these kids are going to be making more money than they will at any job for the rest of their lives,” Sampson said. “The positive is when they do leave here and they go on to the next phase of their lives, they will have already been educated and able to make decisions, whether it’s federal tax or state tax or whatever it is, it’s things that kids would never have thought of. You have to think of those things for them.
“But every school does this. It’s part of being a coach now. Before, you coached this and you coached that like all coaches do, but now we’ve been doing that for three years.”
Wyllie, whose primary role is to find student-athletes’ NIL deals, says some schools do help their student-athletes with financial literacy, but because it’s still a relatively new frontier, many don’t provide any formal preparation on how to deal with the newfound riches.
“I haven’t seen it. I think some do, but I think it’s on a case-by-case basis,” Wyllie said. “Some schools are just trying to get a grasp of this whole NIL thing. This thing is only a couple of years old.
“I think eventually, it will evolve into that. But for right now, it’s a whole new lane for everyone. It’s a moving target. It’s changing all of the time now.”
What’s also changing is the awareness of student-athletes and their families that these universities and deep-pocket boosters are willing to pay top dollars. This has created a culture of athletes going to the highest bidder and not hesitating to jump into the transfer portal when they see opportunities for better NIL offers.
This past spring we saw University of Tennessee quarterback Nico Iamaleava reach out to the Vols’ NIL collective, Sprye Sports Group, to increase his NIL deal from $2 million a year to $4 million. While Iamaleava and his father negotiated his deal, the starting quarterback refused to participate in spring practices. In the world where the head coach still has the final say so, Iamaleava was kicked off the Volunteers’ team.
Iamaleava eventually landed at UCLA, but for less than the $2 million he was making at Tennessee.
“At one point, I was like this is going good, it’s going where it needs to go,” said marketing agent Ishmael Lawrence, who is the founder and CEO of In Real Life Talent Group. “But the athletes have taken it too far.
“I love that they are taking back their intellectual property. They know their worth. They are getting an education. They are getting compensated for these billion-dollar media rights deals. And I hate this because it’s always the dads or the uncles. If they just sniff the money, they take it to extremes. It’s hurting these kids.”
But despite the few troubling instances we’ve seen and heard about, Wylie says that, for the most part, student athletes are handling their money the right way.
“Some have and some are really smart,” he said. “That goes to you having the right kid that’s pretty grounded where the money won’t make them go crazy.
“The ones I’ve seen who are grounded are handling it pretty well.”
