College sports made history this year when the NCAA lifted a host of restrictions on athletes related to benefits and brand endorsements.
Athlete influencer marketing has traditionally been a mutually beneficial relationship excluded to professional athletes and their brand partners. But as of July 1, everything has changed.
Thanks to intervention by the Supreme Court and a remarkable reverse decision by the NCAA, the creator economy now includes thousands of division I, II, and III athletes. These individuals may now leverage their name, image, and likeness (NIL) to promote their favorite products and monetize their online presence.
A brief history of student athlete compensation struggles
Millions of teenagers and young adults dream of “making it big” in professional sports or winning an Olympic medal. For many of those individuals, obtaining a college scholarship through a reputable sports program is their chance to turn those dreams into reality.
NCAA institutions have been able to offer qualified athletes full-ride scholarships to complete their degree, and for a select few, help them go on to play for high-paying professional leagues.
The problem with this arrangement is that NCAA sports – particularly division I football and basketball – are industry cash cows. College athlete advocates note major discrepancies between what schools make off the talent of their players while those same players have barely a dollar to their name and many obstacles to overcome all for the chance to get rich in the NBA, NFL, MLS, MLB, and so on.
Despite the economic setbacks of COVID-19, colleges with competitive sports teams generate massive profits from their athletics. But until recently, NCAA leadership has severely restricted any kind of benefits to college athletes. On the surface, their reasoning was sound – not every sports program is equally competitive or funded.
Despite the NCAA’s best intentions, the reality was that many schools got richer, while athletes merely survived, unable to leverage their talent and personal brand to earn income.
These oppressive regulations turned into lawsuits and ongoing litigation, until the United States Supreme Court issued a warning to the NCAA.
“In a 9–0 unanimous decision, the Supreme Court upheld the lower court’s decision that NCAA restrictions on ‘education-related benefits’ for college athletes violated antitrust law.”
– SI.com, 2021
In addition to the direct attack on the NCAA’s restrictions and caps on college athlete benefits, many indirect implications became apparent. One of these consequences was that it became illegal for the NCAA to not allow athletes to benefit financially from their own name, image, and likeness, otherwise known as NIL.
The NCAA ruling on student athletes
“Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. The NCAA is not above the law.”
College sports operates as a business, to include large payrolls, marketing, sales, and multiple revenue streams. The recent Supreme Court ruling demanded that college athletes be allowed to receive reasonable compensation by way of college benefits.
In response to this federal ruling, NCAA leadership took immediate action to lift all relevant restrictions, including those related to NIL.
Benefits for athletes
Because some college sports programs have greater resources than others, the NCAA intended to level the playing field by placing heavy restrictions on various benefits for its athletes. But as of July 1, those restrictions have been deemed unlawful.
It is now up to state governments and school policy to decide what is and is not permissible when it comes to compensating their athletes, both monetarily or otherwise.
Name, Image, Likeness (NIL)
Similarly, all NCAA restrictions pertaining to NIL and athlete endorsements are lifted. College athletes may now invest in their personal brand and monetize their fan base through partnerships and/or their own entrepreneurial enterprise.
State adoption for new NIL regulations
In the wake of rulings from the Supreme Court and NCAA, both entities left the final decision up to each individual state on what (if any) restrictions on college benefits and NIL would be.
Because of the economic benefits related to attracting and retaining top college athletes, many states sprang into action and issued their own set of laws to guide universities (states in green above have already enacted NIL laws for college athletes).
Of those states that have yet to finalize legislation, most are well on their way and plan to put new laws in place within the next year or two.
What this ruling means for influencer marketing
“Influencer marketing was growing remarkably fast without the help of collegiate sports. But now that college athletes may partner with their favorite brands, influencer marketing is long past the ‘fad’ or trend’ stage – it is the future of digital and word-of-mouth marketing.”
– Business 2 Community, What Does the NCAA’s NIL Ruling Mean for Marketers?
Influencers, celebrity endorsements, and brand ambassadors all function within the creator economy. The NCAA’s NIL ruling creates enormous opportunities for brands, particularly for those that manage influencer programs through social media.
1. There are significantly more individuals joining the creator economy.
The first and most obvious benefit of NIL privileges for college athletes is that brands have more people to choose from to represent them to niche audiences.
But it isn’t just sports brands that can benefit from partnerships with college athletes. The majority of NCAA athletes maintain skills and aspirations outside of the sport that brought them their sports scholarship. Brands that build meaningful relationships with those individuals can unlock new opportunities to expand their reach and engage untapped audiences on that individual’s favorite social channels.
2. Athlete influencer marketing is more diverse.
Prior to July, brands seeking athlete endorsements could really only recruit from professional athletes. But all that has changed.
Brands can target more nuanced audiences with the help of younger, more diverse groups of creators. This benefit is particularly relevant when reaching Gen Z consumers, the next generation of conscientious and digitally-connected customers.
3. Brands are reaching different audiences online through division I, II, and III college athletes.
While the most well-known college athletes compete in division I football and basketball, brands are paying close attention to smaller programs that have extremely loyal, albeit regionally-specific fans.
There are countless influencer marketing opportunities for athletes within every NCAA sport across every division. Famous college athletes can make a “big splash” at a higher price point, but talented athletes with a small, local, and engaged following can interact with fans on a more personal level.
4. Legal compliance is a much bigger issue.
Kristi A. Dosh, an attorney and sports analyst, notes that many college campuses are scrambling to take advantage of NIL opportunities while also trying to understand what the new laws require. For this reason, college athlete endorsement deals are happening faster than universities can keep up with.
As time goes on, the confusion will subside, but not before sports programs recognize the need for NIL compliance personnel. Despite the Supreme Court’s ruling, states will have their own laws, and institutions must also form policies to protect the organization, staff members, and their athletes.
For those schools that are more proactive, leaders have established educators to advise student athletes on how to leverage their social media effectively and know which brand deals are legal and in a student’s best interest.
5. Influencer costs and payments are changing.
New NIL privileges don’t just allow brands to work directly with college athletes – brands and colleges can (and many already have) work with entire sports teams and programs. This impacts how brands negotiate deals and disburse payments.
As state laws stabilize, brands, schools, and athletes must learn to transact legally while also maintaining collaborative brand-creator relationships.
6. There are more opportunities for college athletes to generate income and build a professional future.
Perhaps the most exciting consequence of the NCAA’s NIL ruling is the fact that college athletes may invest in their own brand and think beyond the sports scholarships or trying to make it pro.
Those with more entrepreneurial aspirations will be able to leverage their personal brand to become full-time creators or launch a unique product or service. Brand partnerships will help these new creators develop a business and financial sense that can help them long after their prime sports days are over.
How brands are taking advantage of the NIL ruling
“One-off” endorsement deals
Traditional celebrity endorsements through “one-off” campaigns still have their place, even as long-term micro and nano influencer relationships assume a more dominant role in modern digital word-of-mouth.
Some brands have begun working through agencies to find willing partners among college athletes. That said, agency-managed athlete endorsements consistently underperform in today’s modern creator landscape where authenticity remains the key to connecting with consumers.
“Believable creator endorsements come from having an authentic relationship with the brand. And you can’t have an authentic relationship without direct, open communication.”
– GRIN, Say No to the Middleman
Long-term ambassador and affiliate partnerships
The most popular kinds of brand-athlete partnerships are ambassador and affiliate programs. College athletes “onboard” with a brand, embrace its mission/vision, and learn how to showcase the products that they will be promoting.
After vetting a college athlete thoroughly, brands can identify a great match and invest in that relationship over the course of several months and years.
Brand deals for an entire team or sports department
Brands are also reaching out to university sports departments and teams with offers to back as many athletes as are interested in a partnership. While the school would retain earnings/benefits generated from its own NIL (such as the team branding, logo, facilities, etc.), the athletes may also receive compensation for their participation.
Notable examples of this approach include Georgia Tech’s partnership with TiVo and Ole Miss’s deal with Blue Delta Jeans.
The recent NCAA ruling has opened new opportunities for brands and young athletes to work together. Many questions remain unanswered, such as how brand endorsements will impact the quality of collegiate sports and how state authorities will enforce new NIL regulations.
But the reality is that college athletes have now entered the creator economy, whether or not schools, fans, and players are ready for what is about to happen in the world of social commerce.
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