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The 2022 rules from the National Collegiate Athletic Association (NCAA) allowed student athletes to benefit financially from their name, image, and likeness—known as “NIL” —for the first time. US collegiate sport was already a “$14 billion industry”, according to a recent Financial Times headline.
This change made it so students who excel at football, baseball, basketball, tennis, volleyball, soccer, and many other sports could be directly approached by companies and agents seeking to negotiate lucrative advertising and sponsorship deals.
In this article, we’ll explore the challenges presented by the NIL rule, what universities need to be aware of, and how to mitigate these risks;
While the NIL rules continue to bring opportunities for athletes, it exposes academic institutions to significant reputational risks. In July 2023, stakeholders from the NCAA met to agree on new terms that would further protect students and universities, such as more education on NIL policies, standardized contract terms, and more disclosure and transparency of deals.
This meeting was a direct result of the increased risks they saw students subject to. Student athletes and their trusted academic brands will be damaged if students accept money from a third party implicated in unethical or illegal activity, or work with an agent who isn’t what they claim to be. Ultimately, this could limit a school’s ability to raise donations or even recruit students in the future.
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The NCAA rules give colleges and universities final approval over proposed contracts between a student athlete and a third party. At this point, the athletic department or academic administration must carry out robust due diligence on these entities to identify potential reputational or legal risk and continue to monitor them after a contract is signed. Their research should cover:
This extensive list covers many of the most common threats that NIL policies open for universities. Regularly understanding how student athletes and their potential sponsors or affiliates are perceived is incredibly important to uphold institutional reputation.
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Fortunately, tools are readily available for help with ongoing risk mitigation. Using tools to monitor the risk of lists of potential sponsors or donors is a great way to stay ahead of any pitfalls. That could look like setting up alerts, developing portfolios for possible third parties, and even circulating key findings to every stakeholder.
Media monitoring can also play a part in risk management as you can screen for adverse media that could cause reputational damage. By staying in-the-know about media coverage and public perception, an institution can ensure that student athletes are only partnering with vetted, trustworthy parties.
In the next section, we’ll look deeper into how technology can help manage these risks.
One of the largest threats facing institutions in the wake of the new NIL protocols is unverified, unsavory third parties partnering with student athletes and putting their schools in legal or reputational trouble.
For instance, if an NCAA athlete is approached by a vendor who has ties to countries or organizations on a sanctions list, their institution could face legal consequences. Or, if a sponsor works with a student athlete in a big deal—like an athletics brand offering money for social media posts—but that company ends up dealing with a public scandal, it could reflect poorly on the athlete’s institution.
That is why it’s incredibly important to stay up to date on all partnerships and potential new business due to NIL opportunities by regularly scanning for risk with a due diligence solution. Institutions should be checking sanctions, blacklists, PEP lists, public records*, litigation history, and more, so that possible NIL contracts are vetted and approved before athletes begin their relationship.
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Like mitigating risk by checking important lists and legal records, it’s also important to monitor the media perception of potential partners. Consider an athlete receiving a deal from Pepsi due to their NIL flexibility; right now, Pepsi might be a great partnership opportunity, but in 2017, the brand was flooded with negative pushback when an ad featuring Kendall Jenner was called tone deaf and inappropriate. Keeping abreast of public sentiment through traditional and social media monitoring could help you avoid unwanted negative attention.
Using a media monitoring tool to scan headlines, social media, and receive 24/7 alerts for particular keywords, can help prevent PR catastrophes for universities and athletes alike. Performing simple analytics of how a company is perceived by the public — like a social listening report—ensures that new partnerships are worthwhile and low-risk for the athletes and schools.
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The new NIL regulations for NCAA athletes create an unprecedentedly lucrative time for college athletics programs—but it’s also an unprecedentedly risky time. College-level athletes and their institutions might not have the proper tools, teams, or media training to fully understand the risk of new partnerships, but it’s important to get up to speed on risk mitigation.
Tools like Nexis Diligence+™ and Nexis Newsdesk™ allow for complete due diligence checks and media monitoring through regular alerts, reporting, analytics, and portfolio building so that new companies can be thoroughly vetted before athletes sign on to a deal. Then, you can stay on top of their public sentiment in real time to ensure partnerships remain beneficial and above board. Get started with a free trial today.
* Access to U.S. Public Records content is subject to credentialing. Due to the nature of the origin of public record information, the public records and commercially available data sources used in reports may contain errors.
Due to the nature and origin of public record information, the public records and commercially available data sources used in reports may contain errors. The LexisNexis Public Records services are not provided by “consumer reporting agencies,” as that term is defined in the Fair Credit Reporting Act (15 U.S.C. §, et seq.) (“FCRA”) and do not constitute “consumer reports,” as that term is defined in the FCRA. Accordingly, these LexisNexis services may not be used in whole or in part as a factor in determining eligibility for credit, insurance, employment, or another eligibility purpose in connection with which a consumer report may be used under the FCRA.