From Field to Finance: The Regulation of Athlete Investing in the NIL Era

Since the National Collegiate Athletic Association’s (“NCAA”) 2021 decision, student athletes can monetize their name, image and likeness (“NIL”). NIL agreements, which are subject to contract law, statutes, and university policies, authorize third parties to provide compensation to athletes in return for using their NIL. 

As reported by Reuters, “athlete investing” remains controversial. Advocates highlight the importance of providing financial security to young athletes, while critics focus on the exploitative aspect of these agreements, especially for individuals from disadvantaged backgrounds who may not have the guidance needed to appreciate the implications.

The agreement between Big League Advantage (“BLA”) and Gervon Dexter Sr., a former University of Florida football player selected in the second round of the 2023 NFL draft, illustrates potential issues with athlete investing. Dexter reportedly challenged the contract in the U.S. District Court for the Northern District of Florida, arguing that the agreement is void because it violates (i) Florida’s NIL statute that was in effect at the time the contract was executed, and (ii) the University of Florida’s rules surrounding NIL. Notably, the previous statute held that an NIL contract “may not extend beyond [an athlete’s] participation in a [college] athletic program” and may not provide a student-athlete compensation “in exchange for athletic performance”.

The lawsuit raises questions about who, if anyone, should oversee NIL agreements involving amateur athletes. Additionally, it emphasizes the potential injustice of constraining young athletes with contracts that were agreed upon well before their professional careers gain momentum. 

The NCAA’s 2021 decision has resulted in varied regulation, and Dexter’s legal challenge also underscores ambiguities in its implementation. The consequences of the Dexter v. Big League Advance Fund II, LP case and whether it will provide clarity on the matter are yet to be determined.