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NIL Deals where the Athlete is No Longer an Athlete

Am I writing this post just to manufacture an excuse to share this video?

I plead the fifth. But the story around Myles Brennan; the name, image, and likeness (“NIL”) deals he signed with Raising Canes, Smoothie King, and Walk-On’s, among others; and his unexpected[1], early retirement from college football is a high-profile example of a situation that will inevitably continue to happen in the post-Alston era of college sports: a company (arguably) doesn’t get the value[2] out of an athlete that they expected when they signed an NIL deal.

Maybe the athlete signs an NIL deal and then underperforms[3] on the field (comparative to the hype that existed when the deal was first signed). Think Spencer Rattler at Oklahoma, who transferred to South Carolina after struggling in a year where he had preseason Heisman hype and reaped the benefits of lucrative NIL deals as a result.

Or an athlete signs an NIL deal and, for whatever reason, ends up not playing a college game. Brennan’s situation isn’t exactly the same – although it is close since he did play some at LSU, just not after he signed his NIL deals – but it isn’t hard to imagine that, especially in a contact sport like football, an athlete suffers a season-ending injury (or worse, a career-ending injury) after signing an NIL deal. What happens in that situation?

In a normal contractual relationship, there would be a termination for cause provision built in that would allow the company to terminate the deal based on the athlete’s failure to perform under the terms of the contract. NFL contracts, for example, are not fully guaranteed, meaning a player runs the risk of losing out on some of the money he is owed if he cannot play for the full term of the contract. But NIL deals are expressly prohibited from rewarding compensation to a college athlete for their performance on the field – although they can reward the college athlete for their (questionable) dance moves in a commercial. While the starting quarterback might be considered more valuable if he’s performing well on the field – increasing the public’s recognition of his name, image, and likeness would theoretically increase his value in a commercial for a chain restaurant in much the same way that theoretically an actor’s appearance in the new Marvel movie would increase their value in, say, a Ford commercial – the NIL deal is not, and CAN NOT, be structured in a way that compensation reflects on the field performance or numbers.

And part of that is the beauty of NIL: you can be a backup player in any sport that has found some way to gain a following at some level that makes you valuable to a company. (I would also argue that for now at least, most of the value in the biggest dollar amount NIL deals that are being signed is in the immense media coverage that results since these deals are still fresh and newsworthy. Heck, even Walk-On’s derived some value from Brennan’s retirement because it thrust their commercials back into the news cycle and all over social media).

These facts make the following post from Darren Rovell a bit illogical:

If it is not clear, Rovell thinks that there is something wrong about Brennan retiring and still being able to reap the benefits of the NIL deals he signed while still on the roster at LSU. Following up on his post for Action Network, Rovell wrote that Brennan’s retirement “could slow the speed and breadth of NIL deals across the college football landscape.”[4] There is merit to this argument, to an extent: sure, stories like Brennan’s and like Rattler’s, while we are at it, might make companies more hesitant to offer huge contracts to college athletes because they run the risk that the player ends up retiring or being not as good as they had hoped, thereby (again, arguably) diminishing the value of the NIL deal the company signed. But it also is just as likely that stories like Brennan’s and like Rattler’s will instead cause companies to restructure their contracts with college athletes – instead of having a contract with an athlete for a year, a company could simply enter into a shorter-term contract with other benchmarks set therein to determine whether the contractual relationship should continue and be renewed.

For example, Walk-Ons could have signed Brennan to a one-month contract for a certain amount of money that required him to be in three commercials for the restaurant during that period. And after that period, they could have reevaluated the impact of Brennan as an advertising figure and decided to re-up the relationship or move on. With Walk-On’s willingness to spend that kind of money in the first place, it is as likely that they spread the wealth around in the future rather than go all-in on one player or, as Rovell thinks may be the case, forego NIL deals entirely. I am not convinced that the “failure” of high-profile and high-dollar NIL deals will slow the speed and breadth of the market: I believe that it will just change the way the market’s participants act.

The companies that signed Brennan to NIL deals were not signing him to a deal, and could not even if they wanted to, that would only pay him if he threw 20 touchdowns for the Tigers this season. The companies signed Brennan to a deal that provided compensation in exchange for Brennan’s appearance in commercials and other advertising efforts. Brennan met those obligations and should be paid accordingly. And nothing is preventing Brennan from continuing to meet any of his obligations under the contract just because he is no longer on the football team.

Freedom of contract is a concept that I think Rovell would agree with me on. After all, Rovell does admit in his article for Action Network that, “Brennan needed to provide his endorsement to receive the money, which he did[.]”[5] The companies were free to structure as much compensation and for as long a term as they wanted when signing Brennan to an NIL deal; that he may not be as valuable to the companies as a NARP (non-athletic regular person) as he would be if he were still a college football player playing in front of over 100,00 people in Death Valley is not an indictment on NIL deals – only a sign that companies are currently willing to enter into athlete friendly contracts because of the value they place on signing the right athlete. The NIL era is still relatively new and as much as college athletes are wanting better education on what certain terms mean in their NIL contracts, maybe the companies signing them also need to better educate themselves.

[1] Maybe it isn’t such an unexpected retirement since he has suffered two season-ending injuries during his career, has already graduated, and would now be playing under a different coach at LSU than the one who was there when he committed. (I would imagine the difference between playing for Ed Orgeron and Brian Kelly is significant).

[2] What the “value” of a college athlete is in any given situation and for any given company is nearly impossible to define and something that makes talks of NIL deals needing to be consistent with fair market value a bit more complicated – but that is another topic for another time.

[3] It is important to note here that when I talk about underperforming on the field, I am not in any way insinuating that the athlete has therefore underperformed under their NIL contract.

[5] Id. (emphasis my own)

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