Insight

NIL Valuation Explained

February 21, 2023
min read

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College sports have been transformed by the recent legislation surrounding college athletes’ Name, Image, and Likeness (NIL). As of July 1, 2021, amateur athletes can now enjoy the right to profit from their NIL for the very first time.1

Since this ground-breaking ruling, many star athletes have already signed seven-figure contracts.2 The NIL industry as a whole is projected to be worth $1 billion by the end of this year.3 While not all college athletes can expect to rake in millions before they graduate, many can still profit generously off their NIL while getting their education.

If you’re a high school athlete or college athlete, you may be wondering how NIL valuation works. In this article, we’ll break down NIL valuation and provide a few strategies to help you maximize your value in the NIL marketplace.

What is NIL Valuation and Why is it Important?

NIL valuation is the estimation of how much a specific college sports player’s NIL is worth at a given point in time.

Before the 2021 ruling, college athletes’ NIL valuations were irrelevant. That’s because they were prohibited from profiting off their NIL by the NCAA.4 This meant that college athletes couldn’t earn any money from signing autographs, selling merchandise, accepting influencer brand deals, or monetizing their social media followings.

Now that this limitation has been lifted, NIL valuation is of immense importance for both athletes and businesses:

  • Athletes – An athlete’s NIL valuation can help them assess how much they’re worth in the NIL marketplace. In turn, they can negotiate their brand deals, endorsements, and sponsorships accordingly.
  • Businesses – NIL valuations also serve as useful metrics for brands searching for the right college sports influencer in their price range.
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Key Concepts and Metrics for Estimating NIL Value

Now that college athletes can cash in on their NIL, many new questions are being asked—most notably, how can an athlete determine the value of their NIL?

College athletes’ NIL valuations can vary quite a bit depending on a variety of factors. Some of these factors include their:

  • Athletic performance and position – An athlete’s game-day performance and position on their team can impact their NIL valuation. Impressive athletic achievements often result in higher NIL valuations.
  • Social media following – The size and engagement levels of an athlete’s following on Instagram, TikTok, Youtube, and other social media platforms also plays a major role in their NIL valuations. Regardless of their athletic performance, many college athletes can boost their NIL valuations simply by growing their online followings. In this sense, college sports stars aren’t that different from other types of online influencers.
  • Media perception – The media sentiments surrounding college athletes can also affect their NIL valuations—being featured in major media publications can increase it, as long as the resulting attention is positive.
  • University ranking – Some colleges are more prestigious than others. Athletes who attend top-ranked colleges often receive a higher NIL deal.
  • Family legacy – If an athlete has family members who are famous within the sports world, it can boost their NIL value. For example, Bronny James, son of Lebron James, boasts one of the highest NIL valuations.5
  • Notable achievements – Athletes who win honorable awards, such as the Heisman Trophy, can expect to see an increase in their NIL valuation.
  • NIL opportunities – Athletes’ previous NIL deal may influence their NIL valuations going forward. For instance, having a history of landing lucrative contracts and executing them properly can boost an athlete’s NIL value and sharpen their competitive edge in the NIL landscape.

How Are NIL Valuations Calculated?

NIL valuations are calculated using algorithms that take into account the factors listed above.

Currently, the leading NIL algorithm is On3’s NIL Valuation industry index.6 At this point in time, On3 states that the most valuable college athletes are:7

  • Bronny James – $7.2 million
  • Arch Manning – $3.7 million
  • Livvy Dune – $3.4 million
  • Mikey Williams – $3.3 million
  • Caleb Williams – $2.6 million

Applications of NIL Valuation in Sports Marketing

So, how is all this money generated from an athlete’s NIL? Here are some common applications of NIL valuation in college sports marketing:

  • Brand endorsement deals – One of the most lucrative uses of an athlete’s NIL is brand deals. Just like other types of influencers, noteworthy athletes can help brands promote their products, services, and events. There are several highest-paid athletes in NIL. For instance, LSU gymnast, Olivia Dunne, just scored a six-figure deal with the activewear brand, Vuori.8
  • Appearances – Another popular way for college athletes to earn money from their NIL is to make public appearances at charitable events. By attending these events, college stars can shed more light on their causes and amplify their press coverage.
  • Autographs and apparel – A simple way for college athletes to earn some extra cash from their NIL is by signing autographs after games or selling merchandise designed with their personal branding.
  • Coaching – Thanks to the update to NIL rules, college athletes can now earn money by coaching others in their sport or promoting summer camps. In 2022, a few Kentucky football players, including Will Levis and Chris Rodriquez, used their NIL to promote a football camp in their town.9
  • Business ventures – Entrepreneurial college athletes can start their own businesses and use their NIL to market them. For instance, Ohio State lacrosse player, Mitchell Pehlke, was finally able to monetize his Youtube following of 14,600 subscribers and transform his passion for video creation into a lucrative online business.10

These are just a few examples of how college athletes can profit from their NILs.

So, what’s still off-limits? While NIL laws and regulations are still being ironed out by the NCAA, states, and universities, one rule is crystal clear: College athletes can’t accept NIL money for committing to a university.11 Thus, coaches and boosters aren’t allowed to entice high school athletes by offering them NIL compensation. In fact, NIL collectives can’t have any part in the recruiting or transfer portal process.12

Strategies for Valuing and Negotiating NIL Deals

If you want to take advantage of NIL deals during your college career, here are a few tactics you can employ to maximize your long-term marketability and profitability:

  • Work with an experienced sports attorney – As a college student, you may feel ill-equipped to navigate the NIL landscape all on your own. After all, signing legally-binding contracts can be a daunting experience.

    A reputable sports attorney can help you negotiate deals that are in your best interest and ensure they meet all relevant state laws and NCAA regulations. They can also break down your contractual obligations so you fully understand them. In turn, you can avoid committing to a contract that you end up regretting.
  • Only accept quid pro quo deals – Quid pro quo deals require you to perform some type of service for your NIL compensation, whether that’s making a public appearance, signing autographs, or promoting a brand on your social media platforms. To stay in compliance with the NCAA and avoid penalties, you can only accept NIL deals that fall within this category.

    An easy way to stay in compliance with this rule is to hold off from accepting any NIL deals until after you’ve committed to a university. This way, there won’t be any question about whether your recruitment decision was influenced by unsanctioned NIL negotiations with your university’s coaches, NIL collective, or boosters.
  • Don’t lose sight of future opportunities – You may want to avoid NIL contracts that lock you in for longer than four years. After all, you never know if you may be the next top draft pick post-college. The last thing you want is for your college NIL contracts to interfere with more lucrative opportunities in the future.
  • Select deals that align with your brand – Depending on your NIL valuation, you may be offered a wide variety of NIL deals throughout your college career. While many may have tempting paychecks attached, it’s important to be discerning about the deals you accept. You want to ensure they align with your long-term values and personal brand.
  • Don’t let NIL endeavors interfere with your athletic performance or education – NIL deals are doing wonders for college athletes, but they shouldn’t take precedence over your academic or athletic performance. Doing well on the court or the field is what afforded you these opportunities in the first place. Thus, you should only accept NIL deals that you can confidently complete while keeping up with the rest of your college responsibilities.

Curastory: Make Easy NIL Money As a Video Content Creator

Now that you understand the basics of NIL valuation and have access to a NIL tracker, you may be wondering how you can get your slice of the pie. Creating content on social media is one of the easiest ways to earn money from your NIL. In fact, social media endeavors currently make up 72% of all NIL activity.13

If you enjoy making videos, Curastory can help you optimize your NIL earnings. We collaborate with our content creators to assist in the production, editing, and distribution of their videos. We also match them with the right brand partners so they can more easily monetize their content. With Curastory on your team, you can earn money from your NIL without spending a ton of time on the ins and outs of video creation.

Are you ready to start cashing in on your NIL? Discover how easy it is to earn money from your videos by reaching out to Curastory today.

Sources:

  1. Sports Illustrated. Year 1 of NIL Brought Curveballs, Collectives and Chaos. Now What?https://www.si.com/college/2022/07/12/nil-name-image-likeness-collectives-one-year
  2. Action Network. Highest Paid College Athletes in the NIL Era. https://www.actionnetwork.com/ncaaf/highest-paid-college-athletes-in-the-nil-era
  3. Front Office Sports. One Year of NIL: Becoming a Billion-Dollar Industry. https://frontofficesports.com/nil-billion-dollar-industry/
  4. CNBC. Supreme Court NCAA ruling and the new future of paying college athletes. https://www.cnbc.com/2021/06/21/supreme-court-ncaa-decision-how-college-athletes-plan-to-cash-in.html
  5. OutKick. Bronny James Has the Highest NIL Valuation in America: Report. https://www.outkick.com/bronny-james-lebron-nil-valuation/
  6. On3. About On3 NIL Valuation, Brand Value, Roster Value. https://www.on3.com/nil/news/about-on3-nil-valuation-per-post-value/
  7. On3. Top 10 On3 NIL Valuations in the NIL 100. https://www.on3.com/nil/news/top-10-on3-nil-valuations-college-football-basketball-bronny-james-livvy-dunne-caleb-williams/
  8. Forbes. LSU Gymnast Olivia Dunne Announces First NIL Brand Deal is with Activewear Bran Vuori. https://www.forbes.com/sites/kristidosh/2021/09/14/lsu-gymnast-olivia-dunne-announces-first-nil-brand-deal-is-with-activewear-brand-vuori/?sh=61e5690c2c78
  9. On3. Levis, Rodriguez among Kentucky Football Stars using NIL to promote Summer Camp. https://www.on3.com/teams/kentucky-wildcats/news/levis-rodriguez-kentucky-football-stars-nil-summer-camp/
  10. The Detroit News. NCAA’s NIL era arrives, some athletes are ready to cash in. https://www.detroitnews.com/story/sports/college/2021/06/29/ncaas-nil-era-arrives-some-athletes-ready-cash/7802985002/
  11. The Washington Post. NCAA targets collectives with new NIL guidelines. https://www.washingtonpost.com/sports/2022/05/09/ncaa-nil-boosters-collectives/
  12. On3. NCAA’s attempt to nix pay-for-play NIL deals not a ‘significant step forward.’ https://www.on3.com/nil/news/ncaas-attempt-to-nix-pay-for-play-nil-deals-not-a-significant-step-forward/
  13. NewsWire. Name, Image, and Likeness (“NIL”) Survey Results: The Evolving Landscape for College Student-Athletes. https://www.newswire.com/news/name-image-and-likeness-nil-survey-results-the-evolving-landscape-for-21651862
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