NIL Era Exposes Student-Athletes to Financial Fraud and Uncharted Risks
From the desk of Jim Eccleston at Eccleston Law
The evolving world of paying college athletics has opened new revenue streams for student-athletes. According to Wealth Management it has also invited a host of fifinancial dangers that many young players are ill-equipped to manage.
Since the NCAA lifted its ban in 2021, athletes have been free to profit from their name, image, and likeness (NIL). They can secure lucrative endorsement deals, licensing agreements, and other sponsorships. Wealth Management reports that, financial experts warn that while NIL deals present unprecedented earning potential, they also bring substantial risk.
Recent events underscore the growing concerns. As reported by Wealth Management, President Donald Trump signed an executive order aiming to curb what the White House labeled a “chaotic environment” created by NIL-related financial dealings. The order seeks to clamp down on "pay-to-play" schemes, which critics argue have led to an arms race among colleges vying for top recruits. Brand endorsements remain untouched, but the full scope and impact of the order remain unclear.
Wealth Management reports that those developments follow a $2.8 billion NCAA settlement that will allow colleges to pay athletes directly. Starting July 1, schools can distribute revenue subject to annual caps that will increase over time. While many see these reforms as overdue, the sudden influx of money has also intensified risks.
Although some athletes, like Arch Manning and DJ Lagway, are earning millions, many others in less visible sports earn modest sums or fall victim to misleading offers. Financial advisors and former pros note that unlike their counterparts in professional leagues, college athletes receive little to no institutional support.
According to Wealth Management, some advisors have exited the space entirely, citing the difficulties of guiding inexperienced clients through a financial landscape riddled with scams.
Recent lawsuits drive home the point. Former quarterback Jaden Rashada sued University of Florida affiliates over a failed $13.85 million NIL deal. Other cases have emerged from Tulsa and high school programs, with athletes alleging broken promises or exploitative contracts. One NIL company, co-founded by former NBA player Kendrick Perkins, faced scrutiny for offering upfront cash in exchange for future NIL earnings; an arrangement likened to high-interest lending.
While some universities have launched initiatives, like the NCAA’s NIL Assist platform, efforts remain piecemeal. Wealth Management reports that many schools offer limited training or try to align athletes with specific advisors—often creating conflicts. Financial professionals argue that a uniform standard, such as a players’ union or centralized financial education fund, could help.
Adding to the complexity is tax liability. Former NFL player Winston Justice, now CEO of SageSpring Private Wealth, told Wealth Management that many student-athletes do not set aside money for taxes and may face large obligations down the road.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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