College athletes starring in bank marketing: NIL rule changes mean new opportunities

Banks are looking to leverage the growing name, image and likeness universe.

By Nic Mayne and Max Forer

On July 1, 2021, the National Collegiate Athletic Association adopted major changes to its longstanding prohibition on student-athlete participation in marketing opportunities, ushering in a new era for college athletics. Beginning with California’s Fair Pay to Play Act in 2019, lawmakers in nearly every state introduced legislation protecting the right of student athletes to enter into agreements to use their name, image and likeness, or NIL, rights in exchange for compensation. In response to these state legislative efforts, the NCAA eventually passed an interim NIL policy, opening up new opportunities for student-athletes for the first time.

As attorneys advising educational institutions, donors, sports brands and other stakeholders on the impacts of NIL modernization, we have had the opportunity to observe the evolution of the NIL market firsthand as it has grown from an upstart state legislative effort to a multimillion-dollar sports marketing behemoth. Throughout that experience, we have identified potential opportunities for clients in other industries, including clients served by our banking practice team. While bank marketing may not be the first thing that occurs to most when considering NIL, we recognize that most of the banks we work with have successfully utilized sports marketing to reach potential clients and increase community recognition. In addition, many bank marketers, particularly those focused on wealth management practices, may have an existing athlete client base. With those synergies in mind, here are two ways NIL impacts bank marketers, and some of the legal and compliance hurdles to be aware of.

NIL modernization and new sports marketing opportunities

Bank marketers are no stranger to the professional and college athletics markets. Many banks have numerous local, regional or nationally focused in-arena signage, on-site activations and perhaps even foundational presenting sponsorships or naming rights deals with sports teams and venues (active deals include Bank of America Stadium, Chase Field, Citizens Bank Park, Comerica Park, KeyBank Center, M&T Bank Stadium and PNC Park). In addition, many banks have had marketing success with professional athlete ambassadors. Chase has partnered with Serena Williams and Steph Curry. In 2021, some estimate that as much as 58 percent of all sport and athlete sponsorship deals in North America were from financial service companies, spending more than $770 million per year on sports marketing endeavors. Clearly, bank marketers understand the sports industry’s value and have found ways to capitalize on the attention sports can bring to their products and services.

With the advent of NIL, an entirely new market of potential athlete ambassadors is available to bank marketers for the first time. Some banks have already jumped into the NIL fray—the Bank of Hawaii, for example, entered into eight deals with University of Hawaii student-athletes just months after the NCAA’s policy change. While the NIL market remains in its infancy, the student-athlete market may also present more micro-influencer options for banks, chances to get involved in regional activations that utilize full teams or larger student-athlete groups and opportunities to develop ambassador relationships with young stars prior to their professional careers—all of which may ultimately have a more cost-effective price tag than sports marketing campaigns with established professionals.

NIL for compensation and new client opportunities

In addition, NIL evolution presents new client opportunities for banks and wealth managers, as many student-athletes begin receiving compensation, sometimes substantial, for the first time. According to early estimates, spending in the first year of the NIL era approached $1 billion and may far surpass that figure in the coming years. With student-athletes formerly restricted to scholarship income alone, some young NIL stars can earn significant money for the first time, and are then facing tax, investing and financial planning issues for the first time as well. Student-athletes will need significant guidance on how NIL money affects their financial futures. And these potential customers that previously may not have even had a bank account, now have the potential to benefit from a wide variety of bank products and services.

This creates opportunities for banks to market to a broad base of new, young, potential lifelong customers, both through traditional marketing streams and possibly new ones. Investing in ambassador partnerships with key college athletes may serve to create opportunities with other student-athletes and the student body as a whole. Who doesn’t want to bank where the quarterback banks? NIL marketing may lead to NIL customers.

In addition, a variety of other businesses and organizations are popping up as a result of NIL rule changes. Agents and other professional service providers are entering the market or expanding their service offerings to include options for college athletes. New software, data analytics, consulting and compliance companies are being formed to support student-athletes, institutions, agents and other stakeholders.

And donors are finding new ways to engage with student-athletes, including through the formation of donor “collectives,” a term based on booster groups formed to pool money to support the creation of NIL opportunities for student-athletes at a particular institution. But which now refers to a wide variety of organizational forms, including NIL marketing agencies, 501(c)(3) nonprofits and booster clubs with an NIL focus. In addition to these new stakeholders also being potential bank clients, many donor groups and institutional consultants are also focused on providing educational support for student-athletes and may be looking to partner with banks in building unique on-campus programs for student-athletes.

Legal and compliance hurdles in the new NIL landscape

After lobbying for federal legislation and considering comprehensive policy updates to address NIL changes, the NCAA ultimately decided to take a fairly passive approach (at least for now) when it adopted its interim NIL policy. Under the interim policy, student-athletes may participate in NIL opportunities for compensation and retain professional service providers, subject to the restrictions of remaining NCAA bylaws.

Three key compliance prohibitions to keep in mind in structuring a NIL deal are:

  • All NIL deals must have quid pro quo. A student-athlete may not be compensated unless work is performed, and subsequent NCAA guidance suggests that each NIL deal must be based on an independent analysis of the value the athlete brings to the deal.
  • NIL deals may not induce a potential student-athlete to attend a particular institution.
  • International students may be restricted from participating in NIL deals under the terms of their F-1 student visas.

In addition, student-athletes must comply with applicable provisions of state law (in states that have passed NIL legislation) and school policies, both of which may include restrictions on deals that conflict with school sponsorships, impose restrictions on when and where student-athletes can take part in NIL opportunities and require reporting of NIL deals to compliance personnel, among other requirements. In light of these compliance considerations, while the NIL presents exciting new opportunities, it is critical to structure deals with the advice of counsel familiar with applicable NIL law and policies.

The NIL market continues to grow and seems likely to become a key part of any bank’s sports marketing strategy. Bank marketers who understand the NIL landscape and are able to help structure compliant deals and find ways to reach these potential new customers will provide tremendous value to their organizations.

Nic Mayne and Max Forer are attorneys at Miller Nash LLP in Portland, Oregon, and co-lead the firm’s nationally recognized name, image and likeness team. They can be reached at [email protected] and [email protected].