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Athleprenuers: Making NIL Deals With Student-Athletes

By News Creatives Authors , in Small Business , at August 3, 2021

Michael Dennis Murphy, known as @TheRealMikeMurphy, is a modern-day Automotive Business Leader, Entrepreneur & Social Media Influencer. 

An athleprenuer is an athlete and entrepreneur. As of July 1, college athletes gained the opportunity to become a new type of entrepreneur as they are now allowed to be compensated for their name, image and likeness (NIL).

I was behind one of the first businesses to complete a NIL deal with a student-athlete, but you can be in the second wave. Here is the process I recommend for making these deals:

Step #1: Start with identifying your business’ return on investment.

Unless you have an unlimited supply of money, every good business decision should be based on a return on investment, so this is a good place to start. What percent or how much money out of your advertising budget do you want to spend on influencer endorsements? 

When trying to create a budget for a student-athlete, ensure that you stay under the umbrella of normal compensation. A good example is to look at a third party for valid compensation. If your NIL deal is based mostly on social media, then use a third-party vendor to value the student-athlete’s accounts, followers and engagement. Lastly, based on the term of the contract, it is fair to ask for a discount from the student-athlete. Every university is slightly different, so I recommend reaching out proactively to a student-athlete’s university for more direction on compensation. 

Step #2: Determine your price.

When thinking about how much you can afford to pay each collegiate influencer, first consider the student-athlete. How much money does it take to inspire and motivate a student-athlete in your market, at your alma mater or in your city? Start your negotiations around this dollar amount.

Since there is little history on how to price NIL deals, here is my four-tier approach to annual compensation:

Tier 1: These are the student-athletes who have the potential to be award winners on a national or international scale. I suggest starting at around a $20,000 annual rate, though they can go higher.

Tier 2: These are the student-athletes who compete on a national scale with 10,000+ followers on Instagram. I recommend a $10,000 to $20,000 range.

Tier 3: These are the student-athletes who compete on a regional scale with 10,000+ followers on Instagram. Consider a $5,000 to $10,000 range.

Tier 4: This includes all other student-athletes on scholarship. I suggest trying the $250 to $5,000 range.

Step #3: Find the student-athlete who fits your company.

Start by writing down a list of what you are looking for. Here are four questions to answer in order to help you find the right student-athlete:

1. What gender do you want to represent your brand or company?

2. What sport do you want to represent your brand or company?

3. What university or college do you want the student-athlete to be from?

4. What is your ideal social media reach (number of followers) and frequency (how active they are) for the student-athlete?

Once you’ve answered these questions and identified a handful of student-athletes, look for the individual who best represents the value of your brand or company.

Step #4: Create a win-win.

Start by identifying what the “desired work tasks” will be for the student-athlete. What do you want the student-athlete to do for compensation? Check with compliancy departments at the desired colleges and universities to get a clear understanding of what a student-athlete can and cannot do in your state. For example, you can not pay student-athletes for touchdowns. Here are some potential desired work tasks:

1. Labor: Do you want the student-athlete to work a physical labor job?

2. Marketing: Do you want the student-athlete to market your brand or company?

3. Sales: Do you want the student-athlete to sell goods and services for a commission?

4. Endorsement: Do you want the student-athlete to testify that they use your brand or company?

5. Memorabilia: Do you want the student-athlete to autograph goods to make them more valuable?

6. Coaching: Do you want the student-athlete to use their intellectual properties to improve the performance of your brand, people or company?

Step #5: Celebrate the signing day!

The last step should be the most fun. Think of an innovative and unique way to communicate to your audience, your employees and your community that your company has entered into a NIL deal. For example, in addition to announcing the deal on social media, I used a large fake check to symbolize the deal and I customized apparel with the company’s logos for the athletes to wear to increase brand recognition. Posting videos of the big celebration can also generate buzz around the deal.

NIL opportunities are new and exciting, with endless possibilities. This is an excellent time for businesses to form a partnership with college athletes to help brand their products or services. And it can be a win-win for student-athletes as well because they are able to earn income while they are in school. 

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