Dollars for Touchdowns: The Rise of the Paid College Athlete

November 13, 2021 was a great day to be a Kansas football fan. That evening, the Jayhawks pulled off an improbable 57-56 victory over the University of Texas when KU walk-on tight end Jared Casey caught the winning two-point conversion in overtime.

In seasons past, Casey’s catch would have been the end of the story, although a story repeated many times by Jayhawk faithful. However, with the NCAA changing its rules and allowing college athletes to be paid for the use of their name, image, and likeness, Casey is being featured in local paid advertisements for Applebee’s restaurants.

Casey and thousands of other college athletes nationwide are part of a new era, as companies seek to tap the 20-billion-dollar-a-year industry of college athletics for advertising opportunities. This ends more than 70 years of NCAA restrictions over the ability of collegiate athletes to be paid while playing sports.

The Rapid Pace of Change

For the NCAA, the end of amateurism seemed to develop all at once. This past summer, the NCAA was almost forced to develop interim rules in response to more than two years of pressure from various state and federal legislators, student athlete protests, and finally the United States Supreme Court’s decision in NCAA v. Alston. In a unanimous decision, the Court in Alston ruled that the NCAA violated antitrust laws in preventing college athletes from receiving “educational benefits,” including free computers or paid internships.

Sensing the rising tide, just weeks after the Alston decision, the NCAA approved interim rules to allow college athletes at all levels to receive payments for use of their “Name, Image and Likeness” (NIL). Almost overnight, the endorsement deals began to arrive for hundreds of college athletes across the country.

College Athletes at All Levels Become Paid Endorsers and Social Influencers

The new rules immediately resulted in multiple paid advertising opportunities for college athletes at all levels. These included cash and product endorsement deals, including:

  • Opportunities to drive new cars from dealerships seeking to associate their vehicles with famous local athletes
  • Corporate appearance fees, like the $50,000 being reported for all University of Texas offensive linemen who agree to make charitable appearances for the nonprofit group Horns with a Heart
  • Highly lucrative endorsement deals to individuals like Alabama’s Heisman Trophy winner Bryce Young, who in his sophomore year received more than $1 million from various corporate advertisers, and Hercy Miller, a freshman basketball player at Tennessee State basketball player who signed a $2 million endorsement deal before setting foot on campus (and just announced days ago he is leaving the university).

While these deals are impressive for any 18- to 22-year-old college athlete, as my 11-year-old daughter reminds me frequently, TikTok and YouTube are where the money really resides. Anyone doubting the popularity of collegiate sports need only look at the social media following for college athletes across all sports, from track and field to swimming.

Olivia Dunne, a sophomore gymnast at LSU, has more than 5 million followers on Instagram, Twitter, and TikTok, easily making her one of the most valuable athletes in all of sports. College basketball stars Paige Bueckers of Connecticut and Jahvon Quinerly of Alabama have similar followings.

Even professional wrestling is seizing the opportunities, as World Wrestling Entertainment (the WWE) recently announced in a news release signing multiple college athletes to deals that provide media and communications training in exchange for endorsement of the WWE on social media.

College athletes with large social media followings can expect as much as six- and perhaps seven-figure advertising contracts.

What’s Next?

Given the fast pace that corporations are moving at utilizing the name, image, and likeness of college athletes, it’s difficult to predict what restrictions might be placed on this new economic opportunity. Current NCAA rules are limited and subject to later development. For now, the focus is on preventing “pay for play” situations, where cash and other incentives are used to try to guide athletes from choosing one college over another.

It’s even more difficult to assess what impact such rules can even have, when it’s so obvious what schools can provide the most exposure to athletes seeking the benefits from playing college sports. Federal legislation is always a possibility, and the majority of states have already passed laws that in some way regulate NIL opportunities.

However, given the millions that can be made, particularly at large institutions, and the ability to monetize social media, the bottom is likely already out of the tub.

The New Reality

The new reality for many athletes and their families is that after more than seven decades, young people are finally able to monetize their part of a multibillion-dollar industry. While the financial opportunities are great, there will be new challenges, not the least of which is the need for many college athletes to hire a slew of attorney, agents, and financial advisors at a young age.

What should not be lost in all of this is the opportunity for thousands of college athletes to use the opportunity to secure their financial future before they ever graduate. Trusted financial advice is key, and at Clayton Wealth Partners, we encourage working with CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals, who are required as fiduciaries to act and advise solely in the best interests of their clients. As a fee-only firm, Clayton Wealth Partners adheres to those same fiduciary principles.

If you have a young athlete who has questions about the new NIL rules or may need financial advice, please feel free to give us a call and arrange a consultation with one of our CFP® professionals.

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Clint Patty, J.D.

As Managing Partner, Clint serves on the management team providing leadership, supporting business development efforts and providing client consultation.