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Predatory NIL

What it is - and how to spot it

You may have heard of predatory loans.

These are loans that are provided by lenders to borrowers with the intent of taking advantages of borrowers through abnormally high interest rates and other unfair loan terms.

Basically, it’s too good to be true.

Unfortunately, predatory NIL is now popping up - and athletes should be careful.

Nilly

Former NBA champion Kendrick Perkins’ company, Nilly, is offering college athletes upfront cash (starting at $25,000) in exchange for a portion of their exclusive NIL rights for up to seven years.

Additionally, the company and its investors receive between 10% and 50% of the player's NIL earnings during that time period.

What to watch for

• Upfront money for ‘returns’ later

  • While the upfront cash is nice (and can definitely alleviate financial strain for athletes and their families), there are ‘penalties’ for said athlete to pay later - namely in the reduction of take-home NIL money.

    • For example: A $1,000 NIL deal [minus] 50% for Nilly [minus] additional fees that are in place [minus] taxes = athlete takes home $200-300. (Of course, this final number is higher if Nilly takes 10-40% instead of 50%, but is still unfair to the athlete.)

• Unfair portions paid out

  • As noted, 50% is abnormally (and unfairly) high amount for any agency to take.

  • 20% is the standard for NIL deals, so Nilly should be taking no more than this amount.

• Length of agreement

  • Seven years is a long time. For elite men’s high school basketball players, that will cover one year of college (or G-League or international ball) and essentially the full length your first playing contract (and subsequent brand partnerships that come with it).

  • Having your NIL rights exclusively given to an organization for your peak monetary opportunities for this amount of time is not right.

• Does this include Collective payouts?

  • If so, this is even more predatory.

    • For example: An elite prospect may earn $200,000 per year from a Collective. Taking away 10-50% = you do the math. (Generally, agents who rep athletes for Collective deals should take 3-5% max, as this is treated like a playing contract.)

• Is Nilly helping athletes secure NIL deals?

  • The only benefit I possibly see is if Nilly is helping secure brand partnerships for their athletes that they might have access to otherwise. (Along with if said brands will carry over with the athletes to their pro playing careers.)

  • If that’s the case, there could be viable cause to partnering with Nilly - but even then, 10-20% should be the standard cut the organization should take. (Not up to 50%.)

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^{I discuss insights and news related to NIL and personal branding for athletes every Wednesday at 12p ET/9a PT.}

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