Consider the case of Arch Manning, college football’s most sought-after recruit in 2022. With the seismic shift that college sports have experienced in recent years, the conversation has evolved from ‘Should college athletes be paid?’ to ‘How much will a collegiate athlete earn from their name, image and likeness (NIL) deal?’ For example, it is alleged that Arch Manning has NIL deals amounting to a staggering $3.2 million. This is a large sum of money for a nineteen-year-old. While most of the focus on NIL deals revolves around oversight of the process and the transfer portal, little has been discussed about the difficulties beyond the field for coaches, schools, and agents.
Collegiate athletes, especially elite athletes, enter college as valuable assets. Their names are plastered across ESPN and local media, and they can establish personal relationships early on due to a strong foundation of social capital. However, they also face the risk of being a target for exploitation. This unique status of today’s collegiate athletes, with their high visibility, strong branding, and potential for significant NIL earnings, highlights the necessity of preserving assets and being aware of the benefits of a prenuptial agreement if they marry during college.
Moreover, it’s crucial to recognize the potential financial risks. Consider this, only 1.6% of all NCAA football players make it to the NFL, and a mere 1.2% of college basketball players make it to the NBA. For student-athletes in sports without a professional league, their athletic endeavors likely end upon graduation. In the unfortunate event of a career-ending injury, the athlete may have to rely on the money earned in college for a good portion of their life. For a collegiate athlete, a prenuptial agreement is a shield, protecting the athlete from losing a significant portion of any income, including NIL income, to their spouse.
So, what exactly is a prenuptial agreement? It’s a contract a couple enters into before marriage that outlines how assets and debts will be distributed if/when the couple divorces or legally separates. For a collegiate athlete, creating a prenuptial agreement can serve as a defense against those who may try to take advantage of a financial windfall, ensure the sincerity of the relationship, and protect the assets. It can also establish a lump sum alimony payment or assign a percentage of the student-athlete’s assets as alimony in the event of divorce, providing a secure future for the student-athlete.
For purposes of this article, the money earned by a student-athlete from their NIL opportunities is an asset. Comparatively speaking, for professional athletes, money is grouped into three categories: (1) guaranteed, (2) non-guaranteed, and (3) potential future earnings. Guaranteed money are salaries, signing bonuses, and roster bonuses. Non-guaranteed money would be money that an athlete earns based on performance, for example, bonus incentives. Potential future earnings are money a player may get based on their success in their playing career. A collegiate athlete must understand these terms because they do not earn “guaranteed money” or “non-guaranteed” money (this could change in the near future because of three class action lawsuits). For now, the money student-athletes can earn can only come from NIL opportunities. As such, the NIL money student-athletes can earn can vary yearly based on the player’s performance on the field, popularity, and marketability and should be considered potential future earnings. Because of the current state of things, NIL money earned can vary yearly, so a student-athlete may wish to focus more on assigning a fair percentage of the assets as alimony instead of a lump-sum payout. This will ensure that the student-athlete can sustain their lifestyle and protect any future earnings made, i.e., being a professional athlete.
Finally, all student-athletes should consider a prenuptial agreement because a non-disclosure clause can be written into the agreement. Again, for now, collegiate athletes’ income can only come from their NIL opportunities. In the age of social media, word can get out quickly regarding a nasty divorce, damaging the brand and money-making opportunities. Therefore, it is necessary to have a non-disclosure agreement in the prenuptial agreement.