NIL agreements, especially those with exclusivity contracts, are mentioned within the NIL space often. An exclusivity contract prevents an athlete from signing deals with competing brands or with certain industries for an extended period of time. Some of these agreements also restrict athletes from promoting or using similar products from competing brands.
While these types of contracts aren’t often viewed favorably, there may be a few reasons why an athlete would lean towards signing an exclusive NIL deal. Below are a few benefits and disadvantages athletes should consider if they’re approached with an exclusivity clause from a potential NIL partner.
Benefits of Signing an Exclusivity Contract
Your partnership checks off all the boxes. With so many options available, it’s possible athletes can find a company that matches many, if not all, of the goals they have within the NIL space. With athlete’s time being limited each day (meaning time spent practicing, studying, competing, etc.), you may not want to juggle multiple NIL deals. Instead, it’s possible to find one company that provides you with everything you’re looking for in an NIL opportunity, such as an agreed upon fee structure, creative discretion, company-provided resources, and more.
The opportunity could lead to bigger opportunities. Maybe you haven’t received as many NIL offers as you expected. Consider making that first/one exclusive opportunity work through a short-term NIL deal. By signing one contract for a few months or a year, you can build your portfolio of work and provide other companies reasons why they should partner with you in the future. This could lead to more contracts with companies in similar or various industries.
Disadvantages of Signing an Exclusivity Contract
You might limit your current earning potential. With the NIL space evolving each day, new partnerships might pop up while you’re in contract. This could lead to missed opportunities to work with other businesses while also limiting the earning potential you have as an athlete.
Future options could be limited, as well. Some NIL deals can continue from an athletes’ college playing days to their professional playing careers. While this might be an exciting long-term partnership, athletes could be preventing themselves from NIL opportunities that don’t exist yet. Protecting your future NIL and earning potential means keeping your options open, especially if your plans change. Many professionals advise against undergraduate athletes signing contracts that last more than four years.
Overall, it’s important for athletes to have legal representation to prevent them from signing into an agreement that’s not in their best interest. Making sure you understand all of the terms, expectations, fee structures, and other requirements will make a difference in the types of NIL opportunities you receive.