NIL Craze Gains Traction Among High School Athletes
Not long after college athletes began monetizing their NIL, high school students quickly followed suit, securing substantial business deals with companies eager to sponsor athletes.
But what does the term 'NIL' stand for? Simply put, NIL is a way for student-athletes to receive financial compensation for their accomplishments both on and off the field.
This includes profiting from signing autographs, endorsements, selling apparel, forming corporate partnerships, making charitable appearances, and even starting their own businesses, among other avenues.
The NIL Status
For the first time since the founding of the National Collegiate Athletic Association (NCAA) in 1906, it was in June 2021 that student-athletes could finally profit from their name, image, and likeness (NIL) for endorsements and brand partnerships.
This came after the landmark decision in NCAA vs. Alston, where the Supreme Court ruled that student-athletes not being uncompensated for playing college sports is unconstitutional.
The very next day, several states pushed through their own individual laws, seeking to provide athletes with the opportunity to profit off of their success. And since then, we've seen famous athletes become millionaires, along with those athletes who don't really have a platform or have small-scale influence on social media.
Right now, NIL rules are governed by state law, and if a state does not have an NIL law, then it is governed by individual school or conference NIL policy.
"The state you live in and the states where a prospective student-athlete may wish to enroll may have NIL laws with which you will want to be familiar," reads the document released by the NCAA. "A prospective student-athlete may consult a professional services provider, contact the athletics compliance office of NCAA schools they may choose to attend, or research state law compliance requirements where they may wish to enroll."
Following the leave-it-up-to-the-states ruling of the Supreme Court, each state has begun to navigate its own path regarding high school NIL partnerships. California, among them, claims the title of having the first NIL deal signed by a high school football player. Riding this momentum, New York shortly after permitted their high school athletes to enjoy all the same benefits of a NIL partnership as their collegiate athletes.
As of now, it is clear in Alaska, California, Colorado, Connecticut, the District of Columbia (DC), Idaho, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Virginia, and Washington, that high school student-athletes can monetize their NIL.
Benefits of NIL for High School Athletes
Financial support for athletes is the major benefit of NIL, especially for those student-athletes who may not come from wealthy backgrounds. According to a 2019 National College Players Association study, a vast majority (86%) of student-athletes living off campus live below the federal poverty line. And it goes without saying that without opportunities like NIL and scholarships, these athletes would struggle to afford basic necessities.
When it first took place, critics of NIL predicted that only the top 1% of athletes would make any money and that differing compensation levels would lead to fights and dissension in the locker room. However, this hasn't been true, with different players from different sports having found the NIL space to be quite lucrative.
While there are questions about "fairness," there was never any to begin with. In Division I athletics, less than 60% of athletes get scholarship money, and most sports have strict scholarship restrictions that do not allow the number of scholarships to approach roster limits.
Besides, women have also been thriving in the NIL space, enhancing their sports and bringing more attention to its best athletes. Additionally, it has empowered female athletes to earn money to pay for graduate school and start businesses.
NIL is also allowing athletes to stay in school, removing the all-or-nothing decision to either stay in school and earn no money or leave school to earn money.
It gives athletes the incentive to finish out their school, and now, players have the option to continue their education and earn money. It further helps student-athletes prepare for their future by building their personal brand while still in high school.
After all, right from the start, athletes can establish themselves as valued members of their school community, develop important business skills, and create valuable connections that can benefit them in their future careers.
Moreover, competitive balance has not been compromised as feared. In fact, talent was more concentrated when athletes' decisions were limited to the best coach and facilities. NIL actually helps level the uneven playing field, given that school sports never really had parity or competitive balance in a real way.
It also brings forth opportunities for more student-athletes, covering those having a lower profile and those coming from non-revenue-generating sports. This is because many brands want to work with micro-influencers, and although their followings may be small compared to professional athletes, they can provide high engagement and ROI.
Yet another positive of NIL is the financial literacy for athletes as they can now engage in commercial activity, pay taxes, and, most importantly, make financial decisions regarding saving and investing. Additionally, student-athletes learn crucial lessons about how the business world works. It is simply a great opportunity for athletes to learn.
Prominent Examples of Student Athletes Monetizing NIL
Most high school athletic associations prohibit their student-athletes from profiting off their NIL. However, there's been a noticeable shift, with many students cashing in on their name, image, and likeness over the last few years.
Case in point, in Dec. 2021, New York welcomed its first high school athletes, Ian Jackson and Boogie Fland, to enter into an NIL partnership. They signed a deal with Spreadshop, a social media platform that allows content creators and athletes to sell their own merchandise.
It's not just New York making waves. Arizona State quarterback Jaden Rashada has been actively promoting the Athletes in Recruitment (AIR) app on his social media. Earlier this year, his potential with NIL was showcased when he almost sealed an unprecedented $13.85 million deal with the Gator Collective, Florida's third-party NIL arm, though it ultimately didn't materialize.
Meanwhile, renowned footwear and apparel brand Nike ventured into high school NIL deals last year by partnering with Harvard-Westlake soccer players Alyssa and Gisele Thompson. Additionally, five-star basketball prospect Mikey Williams was quick to leverage the NIL landscape, aligning himself with another leading footwear brand, PUMA.
Texas legislation mandates that athletes must wait until they enroll in higher education to receive NIL compensation. Reacting to this, high school athlete Quinn Ewers made a bold move. He skipped his senior year at Texas powerhouse Carroll Senior High School and started playing for Ohio State immediately after his junior year. This decision allowed him to secure a deal with GT Sports Marketing worth $1.4 million, showing that some high school athletes are willing to leave school early for such opportunities.
Hansel Emmanuel, the one-armed basketball star, is another example, who signed on with Gatorade and released an ad.
New Orleans wrestler Richie Clementi was also added to this list of student-athletes who have been benefiting from NIL when he inked a reported four-figure partnership with Friendly Powersports Slidell, marking the first high school student-athlete NIL deal in Louisiana's history.
However, NIL benefits are not limited to traditional partnerships. Highlighting the diversification in NIL opportunities, USC legend Matt Leinart and current Trojans quarterback Caleb Williams founded the NFT platform Hall of GOATs. They announced a partnership with the nation's top quarterback camp to initiate an NFT deal for last year's roster of Elite 11 finalists. This arrangement provided each finalist with an NFT avatar and co-branded merchandise. Additionally, finalists had the option to sell their merchandise once eligible.
The rise of NIL has also paved the way for those with strong online followings, as social media star and senior point guard at La Jolla Country Day School, Jada Williams, has been making a mark. She's pulling in six figures a year from six major endorsement deals and has committed to play at the University of Arizona.
This shows that the range of NIL collaborations continues to broaden from gymnasts to football players. NC State gymnast Nicole Webb exemplifies this, having partnered with Shuckin' Shack Oyster Bar, leveraging her modest social media reach as a micro-influencer. Echoing this approach, Nebraska football player Cade Mueller and Nebraska volleyball player Nicklin Hames have collaborated with Muchachos in Lincoln, Nebraska, promoting the eatery on their social media in exchange for NIL endorsements.
Concerns around Student Athletes Profiting off NIL
No doubt, NIL has provided numerous benefits for student-athletes, whether they're in high school or college. The landscape shifted dramatically over two years ago with the Supreme Court's decision in favor of athletes. In its wake, platforms like Burrst emerged, focusing not just on monetizing NIL but also on ensuring deal security. Specifically, Burrst, as the first blockchain-powered NIL marketplace, has already become instrumental for over 200 athletes, facilitating valuable brand partnerships.
While NIL's use for college athletes had bipartisan support nationwide, allowing it at the high school level has been seen as more controversial.
Many high school athletic associations have amateurism-related exceptions in place for Olympians, but most of these associations prohibit high school student-athletes from monetizing their NIL.
Less than a year after the state of Tennessee passed a law allowing NIL monetization at the college level, the state's high school sports association is now considering addressing the issue as early as December. As former TSSAA executive director Bernard Childress said, the NIL craze in high school sports is "here, and it's here much faster than we thought."
While the sample size is small for NIL deals in high school athletics, an evaluation by On3 estimates that the most prominent high school athletes could be worth millions. For instance, Basketball superstar Bronny James, who graduated from high school in May 2023, is valued at $6.3 million. Meanwhile, Arch Manning, the No. 1 football prospect in the Class of 2023, is valued at $2.9 million by On3.
The On3 NIL Valuation, a proprietary algorithm, is the industry's leading index that sets the standard market NIL value for high school and college-level athletes. It signifies an athlete's value at a specific moment in time and allows student-athletes to use their NIL Valuation to understand just where they stand in the market and use it to approach local businesses and companies when trying to negotiate their worth in an NIL deal.
To form the NIL Valuation, the platform uses three primary categories, including social media following and engagement; athlete data, achievements, performance, and media sentiment; and endorsement deals, opportunities, and collective.
Now, if we look at statistics, it shows that only a little more than 7% of high school athletes go on to play sports after high school, with a mere 2% going to play in NCAA Division I Schools. Against this backdrop, many have been arguing if letting high school athletes profit off of their NILs before they quit is really beneficial for them.
According to Karissa Niehoff, the CEO of the National Federation of State High School Associations (NFHS), the national leader and advocate for high school athletics, the organization supports athletes' profiting from their NIL but not for those participating in high school sports because a professional contract at this stage would undermine the values of amateurism. However, it is notable that a similar rationale was used to justify banning NIL use in college athletics not long ago.
In this regard, Niehoff has argued that NCAA sports were never truly amateur in the way high school sports are, considering factors like multi-million dollar facilities and ever-increasing coaching salaries. "High schools are supposed to be opportunities for almost everybody, whereas college really is about elite athletes," she said in July this year, adding even before NIL, "college wasn't fully amateur" as it involved dealing with scholarships, education support, financial gains, and other kinds of benefits.
Another concern for the future of NIL in high schools is seen in the development of collectives. At the college level, university boosters have formed third-party corporations that offer NIL sponsorships to athletes, which is seen as potentially disastrous at the high school level.
Concluding Thought
While the NCAA, which is currently lobbying Congress to provide a national standard, has stated that high school students may engage in the NIL opportunities, doing so may render a high school student ineligible for sports. This creates more incentives for them to transfer to private schools instead of playing for their public high school and impacts college sports competition.
Not to mention, high school student-athletes should be allowed to monetize their interests and passions, start the learning process to maximize their future earning potential and pursue more entrepreneurial opportunities. However, there are many still who feel the same opportunities, i.e., NIL compensation for college athletes should not be afforded to high school athletes.
But the fact of the matter is that enormous sums of money seem to be flowing to everyone but the athletes in the high school sports industry. Hence, it is necessary that youth athletes also get a share in that by having the same NIL opportunities that college athletes only recently began to have.
