What Student-Athletes Need to Know About Third-Party NIL Contracts
Student-athletes navigating today’s college sports landscape face unprecedented opportunities, as well as risks. Understanding third-party NIL contracts has never been more critical, especially in a climate where coaches are getting fired at record rates, likely driving record transfer portal activity.
Here’s what you need to know to protect your eligibility and earning potential.
The New Rules: No School Guarantees After July 1, 2025
On October 1, the NCAA approved emergency legislation that fundamentally changed NIL recruiting. Effective July 1, 2025, schools cannot guarantee third-party NIL payments, either verbally or in writing. This means if a collective or booster fails to pay, your school cannot promise to cover it. The exception is if your school guaranteed a third-party deal before July 1, 2025, that guarantee remains valid.
Why it matters: During recruiting or transfer discussions, coaches may reference NIL opportunities, but they cannot legally promise specific amounts from collectives. Get everything in writing directly from the paying party.
In NCAA Division I, all Deals Over $600 Must Be Reported
Every Division I athlete must report third-party NIL contracts worth $600 or more through NIL Go, the College Sports Commission’s clearinghouse platform. Deals are evaluated on three criteria:
Payor association (connection to your school)
Valid business purpose (legitimate promotion of goods/services)
Range of compensation (fair market value)
Contract Red Flags Every Athlete Must Avoid
Before signing any NIL contract, watch for these dangerous clauses:
Vague language around “marketability”: Payments may stop if you’re injured or benched, even if contracts can’t explicitly cite injury
Exclusivity clauses: Block you from signing with competing brands, limiting future opportunities
Perpetual usage rights: Brands control your image forever, not just during the contract term
One-sided termination clauses: They can walk away; you cannot
No written agreement: Verbal promises mean nothing legally
Transfer Portal Considerations
NIL and transfers are now inseparable. Schools use NIL as recruiting leverage, but remember:
Your current NIL deal may not transfer with you
New schools cannot guarantee third-party payments
State NIL laws vary, so what’s allowed in one state may violate rules in another
Transfers who signed before July 1, 2025, may have grandfathered guarantees; newer transfers do not
Protection Strategies
Get legal review. Schools, collectives, and brands protect their interests, and you need someone protecting yours. Many athletes lose eligibility or money due to contract mistakes they didn’t understand.
Read everything. Understand payment schedules, performance requirements, and termination rights. If terms aren’t explicit, don’t sign.
Report immediately. Submit deals to NIL Go within the required timeframes to avoid eligibility issues.
Know your worth. Research comparable athletes’ deals. Don’t accept lowball offers because you’re desperate or excited.
The Bottom Line
The NIL landscape offers real earning potential, but it’s also a legal minefield. With coaching changes creating uncertainty, don’t let desperation drive bad decisions. Every contract clause matters. Every verbal promise needs documentation. Your eligibility and financial future depend on understanding what you’re signing before you transfer, before you commit, and before you lose leverage.
If you have questions, reach out today for a confidential consultation to ensure that you protect your rights and earning opportunities.
