Red Flags in NIL Contracts
How to Protect Yourself from Bad Deals
NIL opportunities can open doors for athletes — but not all contracts are created equal. Some agreements are written to favor the company, not the athlete, leaving you locked into unfair terms or losing control of your personal brand.
This guide highlights the most common red flags to watch for in NIL contracts so you can protect your rights, your eligibility, and your future.
red flags in nil contracts
Overly Broad Exclusivity Clauses
🚩 The Problem: Some contracts prevent you from working with any company in a whole category (like “all food and beverage brands”) instead of just a single competitor. That could block you from bigger, better deals down the line.
✅ What to Do: Limit exclusivity to a specific product or brand (e.g., “energy drink” instead of all beverages). Always ask for clarity in writing.
Unfair Termination Rights
🚩 The Problem: Contracts that let the company end the deal anytime, for any reason — but don’t give you the same option. This leaves you unprotected if circumstances change.
✅ What to Do: Make sure termination clauses are balanced. You should be able to end the contract if the company doesn’t pay, breaks the agreement, or damages your reputation.
Hidden Fees or Expenses
🚩 The Problem: Some contracts make athletes responsible for paying out-of-pocket expenses like travel, production costs, or even “administrative fees” tied to the deal. These costs can eat away at your compensation.
✅ What to Do: Clarify who pays for what. If you’re expected to cover expenses, it should be clearly outlined — and fair.
Conflicts with School or NCAA Rules
🚩 The Problem: Signing a deal without disclosing it to your compliance office can risk your eligibility. Some contracts may also violate NCAA rules without you realizing it.
✅ What to Do: Always run deals through your school’s compliance office before signing. Protect your eligibility first.
No Clear Payment Terms
🚩 The Problem: Contracts that don’t spell out when and how you’ll be paid, or leave payment amounts vague (“as determined by the company”).
✅ What to Do: Insist on specific payment amounts, methods, and deadlines. If compensation is product-only (free gear), confirm whether that’s acceptable to you.
Overly Complicated Legal Language
🚩 The Problem: If a contract is full of legal jargon that you can’t understand, chances are it’s not written in your favor.
✅ What to Do: Ask questions. Have a lawyer or trusted advisor review the contract. Don’t sign anything you don’t fully understand.
Lifetime Usage Rights
🚩 The Problem: A company asks for the right to use your name, image, or likeness “in perpetuity” (forever). This means even after the contract ends, they could still use your image without further payment.
✅ What to Do: Limit usage rights to the term of the contract, with clear expiration dates. If they want long-term rights, negotiate ongoing royalties.
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