As of July 1st, College Athletes can use their Name, Image and Likeness (NIL) to get paid for marketing and other related ventures. In fact Ohio State QB Quinn Ewers, who reclassified to the 2021 class and joined the Buckeyes in August, has signed an NIL deal for $1.4 million.
Forbes posted an article by Robert Wood about the Tax Shock that collegiate athletes are going to go through on their NIL Deals, many of whom have never filed a tax return in their life. The Jock Tax, a common reference to the taxes paid in each state by a professional athlete when they play in that state, may now apply to college athletes.
The importance of tax planning and financial literacy is now more important than ever. A collegiate athlete that earns 10k, 20k or even 30k could owe as much as 15k in taxes and without planning can be stuck with and IRS bill for 10 years. Furthermore, the rules for NIL deals is different for every state and for every school. he NCAA does not have any standard rules at this point so it is up to the players and their school to make sure the deals are “OK.” Additionally the NCAA eligibility rules STILL APPLY for any money that is NOT NIL. There is so much confusion and unknown potentials for FRAUD, I find it scary for these young student athletes who do not know whom to trust. Family members are already hoarding in on the future success of these kids. Whom do they trust?
I am a business manager/CPA. We regularly work with professional athletes on strategies for taxes, budgeting and business formations. We regularly review insurance, estate plans, deal memos, marketing deals to ensure that are clients have the correct coverage and planning. NOW, we are working with collegiate athletes on the same issues.
A recent article in the Arizona Republic discussed how HIGH SCHOOL ATHLETES can prepare to “cash in”. Four days later, I spoke to a top ranked high school football team, some of whom have already committed to college teams, about NIL.
In this one high school, which currently has a few former players in the NFL, the coach regularly brings in professionals to talk to the kids about life after sport. It was me (a CPA), my business partner (with a Masters in Accounting) and our life/health insurance partner for this 30 minute chat. We were able to speak to them about how, even if they don’t go pro, they can still be involved with sports after their playing days are done, be it after high School, college or 1 or 10 years as a professional, by studying different aspects of the business world who work with athletes. They were transfixed to every word we said.
Some of the students-who had already committed to NCAA Division 1 programs-can start NOW to develop their brand, online presence and register a website.
THE GAME HAS CHANGED
During our filming and development of Beyond the Game, we discovered countless stories of both success, failure, and financial rebirth. What I have discovered over the past 30 years is that athletes that are going through the process of high school, college and professional ranks are smarter, more well- connected electronically and most importantly more “self-aware” of their potential success as well as their potential problems.
Yet, being self-aware can go out the window when that very large check comes into the bank. I still, to this day, have conversations with athletes, despite the horror stories we have heard, about the need to STOP SPENDING too much or “you will be poor”. I am currently working with a few athletes, that despite a multi-million dollar contract, have less than 25,000 in the bank. They come to me, often very late in the game, stating “I need help”. Some will luckily get a large contract in the next year or so and that will be their saving grace. However, some will get injured or cut, and not get that second contract and be done. We try to reach out to the athletes and youth, in general, as early as possible to start the discussion and now with the NIL Collegiate earnings in the millions, the time is more critical that we have these discussions in high school, believe it or not.
The BEYOND THE GAME FILM project has become even more relevant today than it was prior to the NIL Deals, with 18 year olds signing multi million dollar deals that involve complex terms such as Rights, Usage, and more importantly Hold Harmless terms, having the right advisors becomes more critical than ever.
WE are bringing the BEYOND THE GAME FILM to colleges and now high schools across the country to help educate these young men and women about financial literacy and finding the right advisors.