Since name, image, and likeness ("NIL") became permissible for NCAA student-athletes on July 1, 2021, businesses and players in the space have continued to find unique ways of providing compensation to student-athletes, with collectives being the most obvious example. However, a new means of compensating student-athletes has emerged in the form of "athlete investing". In essence, athlete investing involves a company that "invests" in a student-athlete by compensating them to use their NIL and if the student-athlete ends up receiving a major sports league contract, the company is entitled to a percentage of that contract.
The practice of investing in athletes became popular when Big League Advance (doing business as Big League Advantage; "BLA") developed a business model to find talented teenaged baseball players, primarily in less affluent Central American countries, and provide them with cash payments up front in exchange for a percentage of their future earnings if they received an MLB contract. Now, BLA has begun partaking in athlete investing in the realm of NCAA football. One might be inclined to ask though whether an NIL contract can encompass a student-athlete's future professional sports earnings.
The answer to this question may be provided in a recent lawsuit filed by Gervon Dexter against BLA. Dexter is currently an NFL player for the Chicago Bears, who signed an athlete investment/NIL contract with BLA while he was a student-athlete at the University of Florida. Under the contract, Dexter received $436,850.00 from BLA and in exchange, BLA was allowed to use Dexter's NIL for promotional purposes and was able to collect fifteen percent (15%) of Dexter's pre-taxed NFL earnings for twenty-five (25) years. In the complaint, Dexter alleges that the contract is unenforceable because it violates Florida's NIL statute and the University of Florida's NIL rules because the contract extended beyond Dexter's participation in a college athletic program, which was not allowed under Florida's NIL statute (which has been amended since to remove this prior restriction) at the time the contract was signed. Furthermore, Dexter argues that the contract cannot be enforced under Florida's NIL statute because it effectively provided a college athlete with compensation in exchange for athletic performance, or in other words, the contract paid Dexter a fixed amount for a percentage of his future earnings, which was dependent on his athletic performance and whether he performed well enough to play in the NFL. Importantly, the outcome of the case is still pending and may even be settled in arbitration if the court grants BLA's motion to compel arbitration. As noted above, the case could play a key role in determining whether an NIL contract can encompass a student-athlete's future professional sports earnings.
Ultimately, Dexter's case highlights the evolution of NIL in collegiate sports and how athlete investing under the guise of NIL has begun to make its way into college athletics. This is another example of the need for student-athletes to understand the nature and the specifics of the NIL contracts they are signing, the benefit to obtaining legal counsel to review NIL contracts and for institutions at both the high school and collegiate level to continue to educate their student-athletes on these types of contracts and the ever changing NIL landscape.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
