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NAME, IMAGE, & LIKENESS rules overview.

On June 30th, 2021, the US Supreme Court ruled that the NCAA may no longer exclude student-athletes from eligibility to participate in sports at NCAA colleges on the basis that they would be deemed to have forfeited their "amateur" status upon receipt of payment for the use of their name, image, or likeness.

Although this sweeping change on the concept of student-athletes being able to accept payments for NIL, the spirit of the NCAA's original policy is aimed at deterring financial influences that may impact which specific college a player may choose to compete (and also a variety of other student-athlete protections) is still in-tact.

Under the Supreme Court's findings, the application of NIL endorsements may also be used in different applications that have no bearing at all on the NCAA. As example, youth (pre-college) club sports is an example of such application. There is a growing number of highly "followed" pre-college student-athletes (on social media) that are viewed as valuable social influencers and a potential source of endorsement for products, goods, and/or services.  Under the Supreme Court's decision, there is no legal challenge to these student athletes to accept pmt for NIL types of endorsements.

However, there are other obstacles to student-athletes receiving NIL payments that stem from the rules and oversight of the individual states that players revise, and the rules of the specific conferences that the student athletes' schools participate in. As example, there are no current statutes in North Carolina that prevent a minor student-athlete from entering into a NIL contract and accepting payment in exchange for endorsements, so long as the legal guardian enters into the agreement too (as the minor's representative, as a minor cannot legally enter into an enforceable contract.). BUT, most public schools in NC are members of the NCHSF, which is a member of the NHSF (National High School Federation).  By charter, each member school must comply with the rules established by the NHSF.  Because the NHSF considers NIL payments to student-athletes competing in sports as a disqualification event IF the student-athlete exhibit "constructive receipt" of the payments, it is paramount that the fulfillment payments of such contracts must be deferred until the completion of the student-athlete's participation in such conferences.  OR, another approach we observe student-athletes seeking to enter into NIL agreements is to change schools so to participate in conferences not governed by the NHSF, or its affiliates.

At FBC Carolina ELITE, we work with NIL endorsees that seek to engage with high social follower count student-athletes that negotiated NIL payments to be deposited into 529 college savings accounts with the student-athlete named as the beneficiary. This allows actual payment to accounts that can be used by the athlete to attend ANY college or higher education institution, but it delays "constructive receipt" of the payments until the completion of high school, when the funds become eligible for withdrawal for college costs without any penalties (and no taxes on the accumulated growth in the account.)

This method of NIL funding protects the student-athlete from any possible disqualification from their high school's conference participation, and it also provides financial relief for families that their student-athletes do not receive full-scholarships to college.  Additionally, in 2013, the IRS issued a private letter ruling that states that IF a student receives scholarship or grant based college funding, THEN a student can withdraw up to that same amount from their 529 account in the same year 100% tax-free. This establishes that the money in 529 plans may be used tax free up to the actual cost of the higher educational expenses, regardless of other achievement or needs based funding sources that may become available. 

At FBC Carolina Elite, we recognize the extreme costs associated with the development of elite level student athletes.  We believe that the new NIL compensation rules may help to offset the costs associated with the player development process. Furthermore, we believe that many additional elite student-athletes could be developed from our region, except for the cost prohibitive nature of the process and journey.  

 

We will continue to lead as a pioneer and forerunner in providing tools, direction, and resources to get kids to their dream of college hoops. As such, we will follow we will follow developments on the NIL front, and evolve our NIL program to comply with all applicable rules and regulations.