Savannah Schoenherr was fresh off a second-place team finish at the NCAA gymnastics championship last year when a business opportunity hit her inbox: A New York clothing brand offered her $1,500 to model its apparel.
(Bloomberg Law) — Savannah Schoenherr was fresh off a second-place team finish at the NCAA gymnastics championship last year when a business opportunity hit her inbox: A New York clothing brand offered her $1,500 to model its apparel.
She jumped at the chance to benefit from new NCAA policies allowing college athletes to make money off their name, image, and likeness.
“It’s always been a dream of mine to get into modeling,” she wrote back.
Schoenherr and a company director exchanged nearly 15 emails. They discussed clothing styles and measurements and scheduled a photoshoot at a defunct train station 30 minutes from her school, the University of Florida. The company would send her extra money to pay railway authorities for use of the facility, the director told her.
One week later, a $3,000 check arrived. She deposited it, but before she could pay the $1,500 for the supposed facility fee, the check bounced. Schoenherr realized she’d nearly been scammed.
“It was a really scary situation,” she said.
What happened to Schoenherr is part of a larger wave of questionable business deals, disreputable agents, and outright scams targeting college athletes since they gained the freedom to profit off their name, image, and likeness two years ago. And the NCAA, which long fought against athlete compensation, prohibits university staff from offering legal advice to students navigating the offers.
For decades, college programs and the NCAA reaped billions of dollars in television deals and ticket sales, without sharing any of the bounty with the players on the field. The new rules allow athletes to earn money by signing marketing deals, promoting products on social media, and selling merchandise.
News coverage of NIL has focused primarily on six-figure deals for athletes with massive social media followings and how the new policies have changed the face of recruitment.
Yet the majority of college athletes benefiting from the new rules are making small, one-off agreements without help from expensive lawyers or agents.
That has opened the door to new forms of exploitation, including companies asking students to sign away their intellectual-property rights, interviews with two dozen athletes, administrators, and attorneys confirm.
“The environment is ripe for student-athletes to be taken advantage of,” said Jill Bodensteiner, director of athletics at Saint Joseph’s University in Philadelphia and a former member of the NCAA’s NIL legislation working group.
Students said they are getting inundated with proposals to participate in marketing campaigns that require them to pay fees in advance, sometimes receiving meager compensation, or fielding propositions from amateur actors. Some students have signed them.
Bloomberg Law obtained two contracts that expose the vulnerabilities of students to NIL deals. One shows a company taking a potentially exorbitant 40% commission; the other fails to define who would own the athlete’s intellectual-property rights, even after they graduate.
“There is widespread agreement that the entire system around name, image, and likeness needs updating,” NCAA Vice President of External Affairs Tim Buckley told Bloomberg Law. “That process is underway now,” he added, through a working group of athletic directors and institutions aiming to update the bylaws plus efforts before Congress.
Former University of New Mexico track star Kendall Spencer—who in 2015 became the first student-athlete to serve on the NCAA Division I Board of Directors—said NIL’s full complications won’t be evident for years.
“It’s just like concussion,” he said. “You’re not going to see the detrimental effects now. You’re gonna see it five, six, 10 years down the road when someone has signed away their NIL for life.”
A New Era
For a century, college athletes were banned from accepting free lunches from boosters, earning pocket money for hosting training camps, or profiting from autographs. Any money they earned as athletes would make them ineligible to compete at the NCAA level.
It was all part of a vague concept known as “amateurism” that many advocates argued had exploited young athletes.
“Being a student-athlete was basically our job,” said Lauren Cox, a former Baylor University basketball star now playing professionally in Spain. “Yes, we were on scholarship and, yes, we were getting housing paid for, we were getting fed. But at the same time, we are basically doing this job 24/7, and we’re not getting paid for it.”
In 2019, over the NCAA’s protestations, California’s legislature passed the “Fair Pay for Play Act,” a law allowing college athletes to profit off their fame. That, coupled with a 2021 Supreme Court ruling that prevented the NCAA from limiting athletes’ education-related compensation, compelled the NCAA to permit NIL at campuses across the country.
Since then, NIL has helped players earn extra cash, increased recognition of non-revenue-generating sports such as gymnastics and wrestling, and catapulted female athletes into the national spotlight.
It’s also given athletes who don’t plan on going pro the opportunity to make serious money in college. Opendorse, a burgeoning NIL technology platform, projected students would earn more than $1 billion between the summers of 2022 and 2023.
“Many athletes … are using it exactly in the way that it was meant to be used and benefiting greatly from it,” said Leah Clapper, a University of Florida gymnast.
Cox, who served on the NCAA’s NIL legislation working group while at Baylor, agreed the new system, when done right, offers plusses. “It’s a great opportunity for student-athletes, especially the ones who don’t want to play professionally,” she said.
Listen to the Bloomberg Law podcast series on how the NIL era is changing sports.
But unintended consequences of NIL have been far less glossy.
When NIL went into effect, businesses formed en masse to approach a potential client base of 500,000 student-athletes in the NCAA, said Luke Fedlam, a non-agent sports attorney who visits high schools and colleges to warn students of the potential pitfalls of the contracts coming their way.
Fedlam, a managing partner and co-founder of a company called Advance NIL, said he has seen contracts pulled off the internet or poorly drafted without a lawyer’s input, deals he said are crafted to “specifically to deceive students.”
“For decades, schools have told businesses, ‘Don’t do anything that could jeopardize our student-athletes,’” but then the switch was flipped, he said.
More than a dozen other lawyers and professors told Bloomberg Law they’ve seen students marooned into bad business contracts with overly broad language, unclear performance requirements, or missing termination clauses.
“It is really disheartening that people continue to try and take advantage of us,” Amherst College wide receiver Jack Betts said.
Forever Contracts
Two contracts, shared with Bloomberg Law with the names of the licensing companies redacted, illustrate how students can sign away their rights.
One agreement, pitched to basketball players to promote a New Jersey company on Instagram, TikTok, and other social media sites, is just one page and does not say who owns the student’s intellectual-property rights, nor does it define the meaning of net profits.
In another contract shopped to college football players, a Texas apparel company proposed keeping at least 40% of the revenue from merchandise sales, a rate one lawyer described as “obscene.” The same contract includes a two-sentence add-on that would lock in that same percentage for any future profit-generating deals, including autograph signings or sponsorships, effectively turning the company’s relationship with the athlete into that of an agent and a client.
Ellen Zavian, a professional sports agent and attorney, criticized the lack of checks on so-called NIL agents. Professional football agents have to register with the player’s association, pass a legal examination, and cap their commission at 3%. By contrast, the most an NIL agent has to do is pay an application fee to the state; there is no limit on their commission rate.
Maddie Salamone, a former Duke University lacrosse player and ex-chair of the NCAA Division I Student-Athlete Advisory Council, said some of the contracts athletes receive are “nonsensical,” lacking details on the player’s obligations, how much they would be paid, or the length of the contract.
Chief among red flags, she and others say, are clauses requiring students to sign away their intellectual-property rights in perpetuity.
A perpetual IP license gives a company the right to use a student’s social media posts forever. The company may recycle those posts without increasing the athlete’s royalties, even if they go pro and their market value rises.
In an effort to dodge those deals, some states, including Texas, prohibit students from signing NIL agreements that outlast their college careers. Others don’t.
“There are at least five student-athletes that I know personally who have signed away their IP rights in the state of Florida,” said Spencer, the former New Mexico track star who now works as an IP attorney.
Sometimes, as was the case with Schoenherr, the former Florida gymnast now at Louisiana State University, business proposals are not as profitable as they seem. The New York clothing company was legitimate but the person who contacted Schoenherr did not represent the brand. The scammer’s email address has since been disabled.
Mary-Beth Cooper, president of Springfield College in Massachusetts and a member of the NCAA’s Board of Governors, called NIL “a whole new ballgame.” Cooper suspects many businesses are approaching student-athletes and promising they’ll make a lot of money.
“The reality is, I don’t know if that is true. You might make some money and you might not,” she said.
Some deals-gone-wrong don’t make the news due to built-in confidentiality or arbitration clauses. Salamone, the former lacrosse player who now works as a lawyer, recounted one instance in which students who had been duped by a company felt they couldn’t speak out because they were being “threatened” with legal retribution.
Hands tied by NCAA
In many cases, Bloomberg Law found, universities can do little to help student-athletes avoid such contract pitfalls. The reason: NCAA red tape.
The NCAA bars universities from providing services to college athletes, including legal advice, “unless the same benefit is generally available to the institution’s students.”
The NCAA noted that university presidents make up the majority of the Division I Board of Directors, which voted on the policy that includes the prohibition on legal services to students. The NCAA is a “membership-driven organization,” said Associate Director of Communications Meghan Durham.
Spencer contends the policy protects universities from liability.
“If that deal doesn’t go the way you want it to go, guess who’s gonna come back and three years after you graduate, after you’re no longer pro, saying, ‘Hey, I went to you for help, and I didn’t get what I wanted. You’re liable. You gave me bad advice.’ And they’d be right,” he said.
Do you have a news tip about predatory NIL deals? Reach Bloomberg Law reporters Nicole Sadek and Ronnie Greene at
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rgreene@bloombergindustry.com
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Ashley Chiera-Davis, an athletics compliance officer at Virginia Commonwealth University and attorney, said if she reads an NIL contract that raises red flags, she can’t warn the student against signing it. She worries offering legal advice could be punishable under NCAA guidelines, but the guidelines do not explicitly state the penalties.
“In a lot of ways, acting as conservatively as possible isn’t always serving our student-athletes to the best of our abilities,” Chiera-Davis said. The most the university can do is provide NIL education and remind students they have the option of seeking an attorney, she added.
Illinois State University NIL Director Maya Bulger said her university runs NIL programming, too, but if a student signs a poorly written deal that follows NCAA, state, and school policies, “that’s on them, unfortunately.”
Bodensteiner, also a St. Joe’s vice president, practiced law for 15 years. She said her hands are tied from offering legal advice to students mulling NIL contracts.
“If we open that door you will have 30-person NIL departments with lawyers, marketing reps, tax professionals” having to deal with legal and paperwork issues, she said.
‘Kicked Down the Road’
Gary Shipman, the founder of a pro bono sports law clinic at Campbell University Law School in North Carolina, said he doubts the more common small-figure deals get the legal scrutiny they deserve. “Student-athletes don’t know what they don’t know,” he said.
To bridge this gap, some schools have curated financial literacy courses. St. Joe’s, for instance, has published 6 educational NIL handouts to help students understand this new landscape—covering everything from Federal Trade Commission rules to tax implications to copyright issues.
But some students who spoke to Bloomberg Law say institutional support isn’t always enough, particularly when it comes to smaller colleges.
“The reality of the Division III level is that a lot of these schools don’t have the type of resources to be throwing around to support their athletes,” said Amherst football player Betts, who is dubbed the “King of DIII NIL.”
While many universities require student-athletes to submit disclosures of NIL deals, administrators may only check to confirm the student isn’t promoting banned products, such as tobacco or alcohol, or wrongly using the school’s logo in their brand deal, experts told Bloomberg Law.
And, it often doesn’t make economic sense for students to consult lawyers, even if they have the means, said Pennsylvania State University’s former athletic integrity officer Bob Boland.
“The modest size of deals have kept athletes from lawyers who might help them better understand the space,” he said.
But as questions swirl about what students can and cannot do, Chiera-Davis said many student-athletes may feel compelled to sign whatever deals come their way.
“We opened the floodgates … without the opportunity to really even educate them on what was getting ready to happen,” Chiera-Davis said. “The can got kicked down the road until it was split wide open.”
To contact the reporters on this story: Nicole Sadek in Washington at nsadek@bloombergindustry.com; Ronnie Greene at rgreene@bloombergindustry.com
To contact the editor responsible for this story: Gary Harki at gharki@bloombergindustry.com and John P. Martin at jmartin1@bloombergindustry.com
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