Pro athletes Steph Curry, LeBron James and Roger Federer boast some of the most lucrative endorsement deals in the world.
Now it’s college athletes’ turn to start profiting from their name, image and likeness (NIL) since the National Collegiate Athletic Association in June gave approval for student players to make endorsement and sponsorship deals as well.
The NCAA is allowing all student-athletes to “monetize their name, image and likeness. It gives everyone the opportunity to make money off their [NIL] while they’re in college,” Sandra L. Richards, head of Morgan Stanley’s Global Sports & Entertainment Division, tells ThinkAdvisor in an interview.
Indeed, the deals already are coming at a fast clip. These range from relatively simple social media influencer contracts to mega-sized endorsements such as the $2 million deal that Hercy Miller, who starts playing basketball for Tennessee State University this fall, has reportedly signed.
Previously, under NCAA rules, student-athletes were prevented from earning NIL money because of their amateur status.
Some states have now put NIL laws into effect, while several universities are creating their own NIL policies.
In June, the Supreme Court ruled that student-athletes are permitted to receive paid internships and the like, and profit from sponsorships.
The ruling stemmed from an antitrust lawsuit that found the NCAA’s compensation restrictions for student-athletes for their play in violation of the Sherman Antitrust Act.
Now that they’re allowed to make money off their NIL, a door has opened for financial advisors to serve this new market segment.
Morgan Stanley’s GS&E Division was founded in 2014.
Managing $100 billion in assets, it has about 191 FAs who have earned an internal MS designation making them “directors” that specialize in helping athletes, actors, media executives, social media influencers and other entertainment types to maximize their financial assets.
As for the student-athletes, GS&E is starting off by providing financial education “as they’re coming to this newfound opportunity of making money,” Richards says.
ThinkAdvisor recently held a phone interview with Westchester County, New York-based Richards, who joined the firm in 2007 and was named head of GS&E in 2018.
Earlier, she was director of corporate and foundation relations at the Jackie Robinson Foundation.
She says the financial plan for players is “a road map” that helps them “get where they want to be and hopefully [avoid] making headlines [revealing] they have no money after they’ve left their professional career.”
Here are excerpts of our interview:
THINKADVISOR: Please explain the change in the National Collegiate Athletic Association’s rules concerning pay for college athletes.
SANDRA RICHARDS: Now student-athletes can be compensated and take sponsorships in endorsement deals. They’re able to make money off their name, image and likeness [NIL].
And service providers [financial advisors] can engage with them when they need help determining how to manage the money they’re getting and to seek advice about what they should be doing with it.
What are examples of how the athletes could profit from their name, image and likeness (NIL)?
By signing autographs at a local sporting equipment store or if a pizzeria wants to hire them to be the face of their advertising in the local market.
Or if their name or likeness are used on a [certain brand] of sneaker or other apparel, they can get paid for it.
Who does the paying?
The sponsors, the people engaging them in a partnership or brand deal. Not the schools or the institutions.
Why wasn’t this permitted before?
The NCAA had rules and policies that prevented the student-athletes from earning money under their amateur status.
Is it just the star players to whom this is relevant?
It equals the playing field for all student-athletes to monetize their name, image and likeness. It’s all athletes, whether you’re on the football team, the lacrosse team, women’s basketball team, men’s basketball team.
It gives everyone the opportunity to make money off their [NIL] while they’re in college.
Some states have put NIL laws into effect. Elsewhere, it may be up to the universities to create their own version.
Therefore, it seems that many athletes would choose a college where an NIL law is in effect. Thoughts?