In today’s college sports landscape, Texas athletes have more opportunities than ever to profit from their name, image, and likeness (“NIL”). However, with opportunity comes complexity. Between state laws, NCAA rules, and school-specific policies, a single misstep in an NIL contract can jeopardize an athlete’s eligibility, income, or reputation. Below are the key areas every Texas athlete should understand before signing an NIL agreement.
Disclosure to Your Institution
Texas law requires student-athletes to disclose any proposed NIL contract to their university before signing. This disclosure must be done exactly as prescribed by the school’s compliance office, usually through a designated portal or form. Failing to submit the contract correctly, or at all, can render the agreement invalid or threaten eligibility. Athletes should always keep proof of submission and written confirmation that their school has received the contract. Even if an NIL deal seems minor, disclosure is not optional and serves as the first safeguard against future disputes.
Avoiding Conflicts With School or Team Contracts
Furthermore, under Texas law, an NIL deal cannot conflict with your school’s existing commitments, department policy, or team contract. For example, if your university has an exclusive sponsorship with Nike, you cannot personally endorse Adidas under your NIL rights. The same principle applies to beverage companies, car brands, and other sponsors with exclusive rights at your institution. If a potential conflict is discovered, you typically have ten days to resolve it before the deal can move forward. The best way to avoid problems is to research your school’s current sponsorships and consult compliance staff early in the negotiation process.
Compensation Rules and Prohibited Payments
Under Texas law, NIL compensation cannot be tied to athletic performance or participation. For instance, you cannot be paid per touchdown, per game started, or for committing to attending a particular school. NIL deals must be based on legitimate marketing or promotional value, not your athletic statistics or enrollment decisions. Additionally, universities themselves cannot directly pay you for NIL activities. Any clause that ties payment to your on-field performance or university status should raise a red flag and be reviewed by an attorney.
Use of School Logos and Trademarks
Another frequent area of confusion involves the use of school logos, uniforms, and facilities. Unless your university gives written permission, you cannot include the school’s official marks, uniforms, or other branded property in your NIL promotions. Even filming a paid advertisement on campus or posting a photo in your team jersey may violate this rule. If your NIL deal requires you to show team-related imagery, ensure that your contract includes explicit, written approval from the school before content goes live.
Restricted Industries and Sponsorships
Texas places specific restrictions on what types of businesses student-athletes can endorse. You may not sign NIL deals with companies involved in alcohol, tobacco, vaping, gambling, steroids, firearms (if you are not legally permitted to own one), or adult entertainment. Even businesses operating in grey areas, like fantasy sports or betting apps, can create problems. It’s best to err on the side of caution and seek guidance before signing any agreement that might conflict with state or university policy.
Duration and Post-Eligibility Terms
Texas law states that NIL contracts cannot extend beyond the athlete’s period of participation in intercollegiate sports. Once your eligibility ends, the NIL contract must end as well unless you enter a new, independent agreement after graduation. Be wary of contracts that attempt to lock you into obligations years after you’ve stopped playing. These provisions can limit future opportunities or violate NCAA and state regulations. A lawyer can help you identify and remove such restrictive clauses before you sign.
Financial Literacy and Tax Responsibilities
Many Texas universities now require NIL participants to complete financial literacy and life-skills training. NIL income is taxable, and failing to plan ahead can result in unpleasant surprises come tax season. Every athlete should keep careful records of income, expenses, and contracts, and consider working with an accountant who understands athlete taxation. Even small NIL deals can create reporting obligations, and ignorance of tax law is not a defense.
High School Athletes and Age Restrictions
For younger athletes, Texas law restricts NIL deals until after enrollment in college. High school athletes under 17 cannot sign NIL contracts, and even those 17 or older must typically wait until they are officially part of a collegiate athletic program. Signing a deal prematurely can disqualify you from high school or college sports. Families should seek legal advice before allowing minors to enter any NIL negotiations or promotional agreements.
Exit Clauses and Termination Rights
Every NIL contract should include clear exit terms for both the athlete and the sponsor. These clauses protect you if circumstances change, such as transferring schools, suffering an injury, or if the sponsor’s brand reputation shifts. Avoid agreements that impose severe penalties or demand repayment of compensation if you can no longer perform. A fair contract should protect your autonomy and allow for mutual termination under reasonable conditions.
Conclusion
The NIL era represents a tremendous opportunity for Texas athletes to build personal brands and secure financial independence. But with that opportunity comes responsibility. Understanding your rights, reading every clause carefully, and consulting an experienced attorney are essential steps toward protecting your future. If you’re a Texas athlete, sponsor, or university representative navigating NIL contracts, Romano Law is here to help.
Contribution to this blog by Kennedy McKinney.