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The Shift in the Game

The landscape of collegiate and professional sports has undergone a fundamental transformation. With the advent of Name, Image, and Likeness (NIL) rights, athletes are no longer just competitors; they have become sophisticated business entities. This evolution has opened a new frontier of opportunity, but it has also created a complex web of legal, financial, and operational risks that require a strategic, defense-oriented approach to manage.

Unprecedented Case Law

In June of 2025, the U.S. District Court for the Northern District of California approved a settlement in the landmark House v. NCAA class action suit (the House Settlement), furthering the shift in collegiate athletics away from the longstanding amateurism. As a result of the House Settlement, schools across Division I NCAA athletics are now contracting directly with their student-athletes to share revenue in exchange for the rights to use the student-athlete’s Name, Image, and Likeness (NIL).

The novelty of these agreements has given rise to unprecedented cases between universities and former student-athletes, as well as universities versus each other. In the fall of 2025, the University of Georgia and its NIL Collective filed a claim against standout defensive end Damon Wilson II for an alleged breach of contract regarding his transfer from Georgia to Missouri, claiming Wilson owes $390,000 in liquidated damages for leaving the team prior to the end of the term specified in the alleged agreement. Wilson’s position is that the liquidated damages provision is unenforceable because it is designed as a penalty for transferring. This case will garner lots of attention from both universities and athletes as it is likely to set the precedent of the enforceability of liquidated damages provisions in these contracts.

Moreover, in late June of 2025, the University of Wisconsin filed suit against the University of Miami alleging tortious interference after star defensive back Xavier Lucas left Wisconsin and enrolled in Miami just weeks after signing a two-year NIL contract with the University of Wisconsin. Wisconsin alleges that a staff member from Miami and a prominent alumnus met with Lucas and offered him money to breach his contract and transfer to Miami. 

These two cases are representative of the current issues facing this new era of collegiate athletics, and being the first of their kind, are expected to shape the landscape moving forward.

The Contracts

Student-athletes primarily navigate two types of NIL contracts: Third-Party NIL agreements and Revenue Sharing agreements. Third-party agreements typically occur between a student-athlete and a brand or a collective. A collective is an organization of donors and boosters who raise money for the purpose of entering into NIL agreements. An example of a Third-Party NIL agreement would be an agreement between a star football player and a shoe brand where the athlete agrees to wear the shoes before and after games in exchange for compensation. 

Revenue Sharing agreements are contracts between the student-athlete and the university, where the athlete grants the school rights to license their NIL in exchange for a share of revenue. Critically, these cannot be "pay for play" agreements; universities are legally barred from paying a student-athlete to play a sport. These contracts will also specifically clarify that the athletes are not employees, but student-athletes.

Current Issues and Effective Mitigation Methods

Currently, the NCAA is exercising minimal oversight regarding this new age of collegiate athletics. Therefore, there are no uniform agreements for either Third-Party NIL contracts, or Revenue Sharing contracts. This environment allows universities and third parties to utilize disproportionate bargaining power, often inserting harsh provisions that can lead to serious consequences if an athlete breaches the contract. The most common breach occurs when an athlete enters the transfer portal prior to the end of a specified term.

The most common way for an athlete to breach either contract is by entering the transfer portal prior to the end of the term specified in the agreement. The college football transfer portal is a two-week window which opened on January 2nd, and allows student-athletes to notify their current schools of their intent to transfer and allows other universities to legally recruit them penalty free. However, universities often structure their agreements to end after the transfer portal closes so that an athlete who enters the transfer portal will forfeit any subsequent compensation due under the agreement.

Furthermore, the student-athlete may be subject to a “Portal Penalty” clause. Portal penalty clauses are clauses in the Revenue Share or Third-Party NIL agreements which come into effect when there is a termination of the agreement. These portal penalty clauses typically require re-payment of prior compensation or the payment of liquidated damages, as in the Damon Wilson case. Payback clauses are especially harmful if the athlete terminates or breaches the contract towards the end of the contract, after the athlete has received most or all of the compensation.

The lack of uniformity, disproportionate bargaining power, and potential legal consequences of these agreements emphasize the importance of representation for student-athletes seeking to be compensated for their NIL. 

The QPWB Umbrella

While the sports world focuses on the "offense" of signing the next big deal, QPWB focuses on the defense. As a firm, we understand that growth without the proper protection of those gains is fundamentally at risk. QPWB partners Mark and Michael Clouser co-chair the firm’s Sports & Entertainment practice group and bring over thirty years of experience representing professional athletes. During the NIL era, the Clouser brothers have negotiated some of the most lucrative NIL deals in college football, but their primary focus remains defensive vigilance.

They ensure that student-athlete clients retain their transfer portal rights and that all compensation in agreements is received prior to the opening of the portal to avoid the common "pitfalls" found in standard contracts. The lack of uniformity and the disproportionate bargaining power in these agreements emphasize why having trusted, experienced representation is essential for any college athlete.

In sum, these complex compensation agreements will continue to control the financial relationship between student-athletes and their universities. Our mission is to ensure that while athletes build and grow their brands, their interests and assets are aggressively protected against the rising tide of litigation and predatory contract provisions.

Key Takeaways:

• The Best Offense is a Great Defense: In the aggressive and litigious NIL landscape, growth is vulnerable without proactive protection against payback clauses and predatory contract provisions.
• Strategic Asset Protection: Moving NIL income into an LLC provides a primary defense against personal liability by separating business activities from personal assets.
• Secure Transfer Rights: Ensure contract terms do not impede your ability to utilize the transfer portal penalty-free.

This article is intended for informational purposes only and does not constitute legal advice. Please consult with an attorney to discuss your specific legal situation.