Red flags in NIL representation agreements: The devil is always in the details
Name, Image, and Likeness (NIL) rights have opened remarkable doors for both high school and college athletes, allowing them to monetize their personal brands. But with opportunity comes risk — and one of the most underappreciated risks in the NIL space is the representation agreement itself.
As always with legal contracts, the devil is in the details. Many of the contracts currently being presented to young athletes and their families contain heavily one-sided provisions, locking athletes into unfavorable arrangements at a stage of their careers when they have little negotiating leverage and, often, no independent legal counsel in their corner. Below are some of the most concerning clauses we regularly encounter in these agreements.
Perpetual, irrevocable licenses to use the athlete’s NIL
Some agreements grant the agent a worldwide, perpetual, and irrevocable license to use the athlete’s name, image, and likeness — with no additional compensation required, and no expiration date. Under this type of provision, the agent retains the right to exploit an athlete’s NIL for their own benefit even after the representation relationship has ended.
A fair agreement limits any NIL license to the duration of the representation term, restricts its use to activities directly related to providing representation services, and requires the athlete’s prior written approval before each use. Provisions broader than that go well beyond standard industry practice and should be negotiated down before signing.
Asymmetric termination rights and open-ended contract terms
Termination clauses tend to follow a predictable pattern: the agent can walk away at any time, for any reason, on short notice. The athlete, by contrast, can only terminate for defined “Cause” — typically requiring a material, uncured breach — and must then navigate a lengthy notice period while remaining current on all fees and advances.
The practical consequence is significant. If an agent is underperforming, neglecting the athlete, or has simply shifted their focus to higher-profile clients, the athlete has no meaningful exit without a time-consuming and potentially expensive process. A properly negotiated agreement mirrors termination rights on both sides. If the agent can exit without cause on fourteen days’ notice, the athlete should have the same right.
Similarly, rather than setting a fixed end date, some representation agreements run until the “later of” the date the athlete exhausts amateur eligibility or the date they begin competing professionally. The intent is to ensure the agent holds representation rights across the athlete’s entire amateur career, however long that may be.
From the athlete’s perspective, the athlete should have a practical right to exit a relationship that is not working. Tying the contract term to open-ended future milestones without a meaningful early termination right is a structural trap.
Post-termination fee obligations
It is certainly reasonable for an agent to continue receiving commissions on deals they negotiated during the representation term, even after the relationship ends. What is not reasonable is language that sweeps in any opportunity the agency so much as touched — and then extends fee rights to all renewals, extensions, modifications, or substitutions of those deals, potentially for years into the future.
Athletes and their advisors should push to narrow any post-termination compensation tail to deals that were substantially negotiated to conclusion during the term. Additionally, any fee entitlement that could extend into a period after the athlete’s amateur eligibility ends should be carefully scrutinized against applicable governing body rules, including those of the NCAA and relevant state athletic associations.
The absence of fiduciary duty language
Perhaps the most consequential omission in many of these agreements is the complete absence of fiduciary duty language. Agents are broadly understood to serve as fiduciaries to their clients — meaning they are obligated to act in the client’s best interest, disclose conflicts of interest, and obtain consent before representing competing athletes. Yet many agency-drafted agreements carefully avoid any written commitment to that standard.
Explicit fiduciary duty language, along with a requirement to disclose conflicts and obtain written consent before representing a competing client, should be a foundational clause in any representation agreement.
Additional considerations beyond the contracts:
Potential agent registration requirements
A major oversight for many NIL agents has been the failure to register with state agencies as athlete agents. Many state laws consider individuals who negotiate endorsement contracts on behalf of athletes to be sports agents, and NIL agents that fail to register can be subject to fines and personal liability. Registering in one state may not be adequate if the agent is servicing clients in multiple states.
Before signing with any NIL representative, athletes should verify that the agent is properly registered in the applicable state(s) if necessary. Over forty states have some form of athlete-agent laws modeled after the Uniform Athlete Agents Act, and the relationship between NCAA NIL rules, preexisting athlete-agent laws, and new state NIL laws has created a rapidly changing regulatory environment. An agent who is not properly registered may expose the athlete to legal and eligibility risk — and may themselves be operating outside the law.
Fee cap legislation on the horizon
Florida has introduced House Bill 981, which would cap agent fees from NIL deals — marking what appears to be the first known legislative effort to directly regulate agent NIL compensation, which has been rumored to exceed 20% in some agreements. Meanwhile, the proposed SAFE Act at the federal level would require agents to register with a state and abide by clear contract requirements, including a 5% cap on fees. These developments suggest that the regulatory tide is turning in favor of athlete protections, but until such legislation passes and is enforced, athletes cannot rely on fee caps as a given — making careful contract review all the more essential today.
NCAA disclosure requirements
Athletes are required to disclose to their schools information related to NIL agreements exceeding $600 in value, no later than 30 days after signing. The disclosed data includes contact information for all involved parties and service providers, the term length, services rendered, and compensation and payment structure. Athletes and their families should be aware that representation agreements and the deals flowing from them are not private from their institution — a fact that some agents may not volunteer.
Tax implications
One area that athlete’s families frequently overlook is that NIL-related income is taxable. Athletes receiving NIL compensation may need to file 1099 and other tax forms, and certain expenses may be deductible. Some representation agreements contain provisions that affect how income is structured and reported. Athletes should engage a qualified tax professional in addition to legal counsel to further evaluate each athlete’s unique financial circumstances.
The bottom line
NIL has created a genuine opportunity for student athletes to build and monetize their personal brands. It has also created an environment where those involved can take advantage of athletes who are young, enthusiastic, and unfamiliar with contract law and general business and financial principles. Before any athlete signs a NIL representation agreement, an independent attorney should review it. The fine print matters, and the stakes are too high to leave it unread.
