Quid Pro Quo
Can a third party send a student-athlete a product/service and, in exchange for receiving that gear, encourage the student-athlete to post about the product/service on social media?
No. Providing a student-athlete with a product/service without a contractual guarantee that a NIL deal will occur would be considered an extra benefit (see below for more information) for the student-athlete. Only if there is an agreed-upon arrangement whereby the student-athlete will promote the product/service can the student-athlete receive the product/service.
Caveat: If a student-athlete wishes to test a business’ product or service prior to agreeing to promote it, the business may provide the student-athlete with access to the product or service in a very limited manner (ex., a one hour demo). Thereafter, the business must revoke access to the service or reclaim the product if the student-athlete indicates they do not wish to enter into a NIL promotional deal.
- Do: A student-athlete has a large following on social media as an influencer. A local electronics company has recently launched a new generation cell phone and, recognizing the reach the student-athlete has online, would love to have the student-athlete promote the product.
The phone company direct messages the student-athlete and inquires as to whether the student-athlete would be interested in trying the phone in exchange for posting about the product online. The student-athlete agrees and a written exchange outlining the terms of the deal is finalized (ex.: the student-athlete agrees to five posts over the period of one month in exchange for the new phone).
In this instance, the quid pro quo is firmly established and agreed-upon prior to the student-athlete receiving the phone.
- Don’t: A student-athlete has a large following on social media as an influencer. A local electronics company has recently launched a new generation cell phone and, recognizing the reach the student-athlete has online, would love to have the student-athlete promote the product. The electronics company sends the new phone to the student-athlete’s address and includes a note saying “We are so excited for you to try our newest phone! We have included in this package a complimentary phone for you. We hope you enjoy the new features, and we would be delighted if you would post on social media how much you like this new phone. Please let us know if you have any questions.”
In this instance, the student-athlete received the product without a quid pro quo explicitly in place. Therefore, the student-athlete will have received an impermissible extra benefit.
Can a student-athlete engage in a NIL deal where the activity performed is community service?
Yes. A NIL deal stipulating that the student-athlete engage in a community service activity(ies) in exchange for compensation does constitute a quid pro quo.
- Do: A booster has engaged with a local charitable organization in the past. The booster wants to assist a student-athlete with NIL but does not have a need for the student-athlete to engage in a NIL activity that directly benefits the booster.
Instead, the booster proposes a NIL agreement to the student-athlete whereby the student-athlete will engage in three community service activities with the local charitable organization, and in exchange the student-athlete will receive $2000. The NIL agreement includes a deadline for when the three community service activities must be completed.
This agreement includes a quid pro quo. Though the booster itself is not benefiting from the deal, the student-athlete performs NIL work in exchange for compensation and is therefore permissible.
- Don’t: A student-athlete and third party agree to a NIL deal. The NIL agreement states that the third party will pay the student-athlete $2000, and in exchange the student-athlete is encouraged to engage in three community service activities.
This agreement does not have a mandated quid pro quo, the student-athlete is not required to engage in the community service activities. Therefore, it is an impermissible arrangement.
May a NIL agreement include an arrangement whereby a student-athlete is provided a special purchase code to promote and, in exchange, the student-athlete receives compensation based on a percentage of sales or the number of sales?
Yes. It is permissible for a NIL agreement to include an arrangement whereby the student-athlete’s compensation is a percentage of sales, number of sales, commission-based, etc.. However, it is critical that the compensation is tied to NIL activity performed (i.e., quid pro quo), and the compensation structure is articulated clearly in the NIL agreement. Moreover, for deals where the compensation structure could vary over the duration of the agreement, student-athletes are required to periodically report their ongoing compensation with Stanford Athletics. For example, a student-athlete signs a NIL deal with a third party, logging their initial NIL agreement via the INFLCR Verified App; thereafter, on a monthly basis, the student-athlete logs another deal with the same third party via the INFCLR Verified App, but this time noting the compensation they earned in the prior month).
Can a third party provide a student-athlete with benefits not explicitly included within the NIL agreement?
No. All benefits provided to a student-athlete must be incorporated in a NIL agreement. To provide a benefit not explicitly included within the NIL agreement would constitute an extra benefit. A student-athlete and third party may enter into subsequent or multiple NIL deals. Each NIL deal requires its own terms encapsulating the agreement (the NIL activity and corresponding compensation) and disclosure.
- Do: A student-athlete and third party enter into a NIL agreement where the student-athlete will participate in three public appearances at company trade shows. The NIL deal includes a public appearance fee and expenses for food and lodging while the student-athlete attends the trade shows.
The third party wants to convey its appreciation to the student-athlete after seeing great success following the first trade show. Recognizing they cannot provide the complimentary getaway weekend package to New York as it is not already incorporated into the current NIL agreement, the third party executes a second NIL agreement with the student-athlete where the student-athlete agrees to five social media posts in exchange for a weekend away in New York.
The second NIL deal includes a separate quid pro quo, therefore avoiding an extra benefits violation.
- Don’t: A student-athlete and third party enter into a NIL agreement where the student-athlete will participate in three public appearances at company trade shows. The NIL deal includes a public appearance fee and expenses for food and lodging while the student-athlete attends the trade shows.
The third party wants to convey its appreciation to the student-athlete after seeing great success following the first trade show, so they offer the student-athlete a complimentary getaway weekend package to New York.
This complimentary offering is not stipulated anywhere within the NIL agreement and, by giving it to the student-athlete without any additional NIL obligations, would be considered an impermissible extra benefit.
What is an “extra benefit"?
An “extra benefit” is any special arrangement by a booster to provide a student-athlete or the student-athlete family member or friend a benefit not authorized by NCAA regulations. Receipt of a benefit by student-athletes or their family members or friends is not a violation if it is demonstrated that the same benefit is generally available to Stanford students or their family members or to a particular segment of the student body (e.g., international students).
Fair Market Value
Is there a metric for determining whether a NIL deal falls within “fair market value”?
No, there is no specific metric for determining whether a given NIL deal adheres to the NCAA’s requirement that the rate falls within “fair market value.” Rather, the Stanford Athletics Compliance Office looks at a variety of factors, including but not limited to: comparable compensation arrangements, social media influence, athletic exposure level, work being performed relative to compensation being provided, and a general reasonableness assessment. Stanford recommends student-athletes reach out to the Athletics Compliance Office in advance of entering any NIL deal to confirm the amount of the deal falls within a reasonableness standard of fair market value. Stanford Athletics Compliance will not provide feedback as to any specific terms of the agreement and is only permitted to provide feedback directly to student-athletes.
- Don’t: A student-athlete does not participate on any social media platform and has intermittently competed in their sport over the past few years. A third party reaches out to the student-athlete and offers them $100,000 for creating a social media profile and posting an endorsement of the third party.
Without any additional context, the Stanford Athletics Compliance Office would want to inquire with the student-athlete to learn if there are additional facts or considerations in this case that would warrant this level of compensation as this arrangement, at first glance, does not appear to align with fair market value for services rendered.
- Don’t: A booster is interested in having a student-athlete do a five-minute appearance at their child’s birthday party. In exchange for attending, the booster agrees to give the student-athlete access to their sports car for the duration of the school year.
Without any additional context, the Stanford Athletics Compliance Office would want to inquire with the student-athlete to learn if there are additional facts or considerations in this case that would warrant this level of compensation as this arrangement, at first glance, does not appear to align with fair market value for services rendered.
- Don’t: A booster is interested in having a student-athlete autograph two t-shirts. In exchange for providing the autograph, the booster agrees to give the student-athlete free housing for the summer.
Without any additional context, the Stanford Athletics Compliance Office would want to inquire with the student-athlete to learn if there are additional facts or considerations in this case that would warrant this level of compensation as this arrangement, at first glance, does not appear to align with fair market value for services rendered.
Can a business provide non-cash compensation to a student-athlete in exchange for engaging in a NIL activity?
Yes. Student-athletes can be compensated in non-cash forms, including but not limited to:
- Company discount
- Free or reduced lodging
- Free or reduced meals
- Free or reduced apparel or equipment
- Entertainment activities (concerts, professional sport events, use of a jet ski, etc.)
However, it is important that the non-cash compensation is provided in exchange for work performed by the student-athlete, the non-cash compensation is a fair market value relative to the services rendered by the student-athlete, and the NIL activity is not tied to a student-athlete’s athletic performance or achievement.
- Do: A booster is interested in having a student-athlete do an appearance at their child’s birthday party. In exchange for attending, the booster agrees to feed the student-athlete during the party and provide the student-athlete with tickets to an upcoming Warriors game.
Prohibition on NIL Deal Based on Athletic Performance or Achievement
May an NIL agreement have payment or benefits clause directly tied to a student-athlete’s athletic performance or achievement?
No, an NIL agreement may not have any provision of payment tied to a student-athlete’s athletic performance or achievement.
- Do: A student-athlete is a prominent athlete in their sport and has a chance at participating in the upcoming Olympics. The student-athlete wants to enter a NIL deal now with a third party (not waiting until the conclusion of the Olympics) but recognizes their NIL value may be worth more following their potential success at the Olympics.
The student-athlete and third party execute a NIL agreement whereby the third party will pay the student-athlete $500/session to participate in 10 autograph signings over the course of the year. However, the agreement includes a clause noting that should the student-athlete win an Olympic gold medal, the parties agree that the estimated NIL value (i.e., social media, athletic exposure, etc.) of the student-athlete will increase by double and, in that instance, the student-athlete will receive $1000/session for all remaining autograph signing sessions.
In this scenario, the agreement could not, and did not, include additional payout simply because of obtaining the Olympic gold medal, but rather allowed for a revised compensation rate for future services rendered based on the modified NIL value of the student-athlete.
- Don’t: A student-athlete wants to enter into an agreement with a clause that states that they may receive an additional $10,000 if they are ranked as one of the top five athletes in their sport in college athletics.
This type of clause is directly tied to athletic performance or achievement, and therefore impermissible.
- Don’t: A student-athlete wants to enter into an agreement with a clause that states that they will receive $500 for every goal scored during the season.
This type of clause is directly tied to athletic performance or achievement, and therefore impermissible.
- Don’t: A student-athlete wants to enter into an agreement with a clause that states that they will receive $5000 if they win the Heisman trophy award.
This type of clause is directly tied to athletic performance or achievement, and therefore impermissible.
- Don’t: A student-athlete wants to enter into an agreement with a clause that states that they will receive $1000 if they are selected to participate on the Olympic team, and $5000 if they win a gold medal in the upcoming Olympics.
This type of clause is directly tied to athletic performance or achievement, and therefore impermissible.
Impermissible Inducements to Attend Stanford
May a NIL agreement include a clause stipulating that only if the student-athlete attends and/or remains enrolled at Stanford will they be able to receive compensation?
No, this arrangement would be considered an inducement to attend Stanford, and therefore impermissible.
May a NIL agreement include a clause that the student-athlete must be on the Stanford team in order to receive compensation?
No. The NCAA clarified that NIL terms that require a student-athlete’s participation on the institution’s varsity team is prohibited. While implicit, the NCAA has determined a clause of this nature to be a reward for attending Stanford.
- Don’t: A business offers a student-athlete a NIL deal whereby the student-athlete will serve as a brand ambassador for the next two years. However, there is a clause in the NIL agreement that should the student-athlete leave Stanford or no longer participate on the Stanford varsity team, the ambassador compensation is no longer guaranteed.
The NCAA has determined such a clause within the NIL agreement would be considered a reward for attending Stanford, and therefore impermissible.
May a NIL agreement include a clause that the student-athlete must live in Stanford and/or Palo Alto in order to receive compensation?
No, while certainly less obvious than a clause requiring a student-athlete to be on the Stanford varsity team, the NCAA has interpreted NIL terms mandating the student-athlete be relegated solely to the locale of the institution is, in effect, a reward for attending Stanford, and therefore prohibited.
- Do: A local tennis equipment shop offers a student-athlete a NIL deal whereby the student-athlete will be used in advertisements for the business. The business extends to the student-athlete a one-year contract, with the ability to extend the contract for an additional year at the business’ discretion. If, after one year, the student-athlete is no longer in the locale and the business no longer wants to utilize the student-athlete’s NIL, the business can cancel the agreement per the renewal terms outlined in the contract.
- Don’t: A local tennis equipment shop offers a student-athlete a NIL deal whereby the student-athlete will be used in advertisements for the business for the next two year. However, a term in the NIL agreement states that if the student-athlete moves out of the locale, the business has the option to void the contract.
The NCAA has determined such a clause within the NIL agreement would be considered a reward for attending Stanford, and therefore impermissible.
May a booster or third party provide NIL compensation to a high school or transfer recruit with the explicit or implicit intention that the individual will then attend Stanford?
No. A booster or third party is prohibited from entering into a NIL agreement with a high school or transfer recruit with the explicit or implicit intention that the individual then attend Stanford. Such an arrangement would constitute an impermissible recruiting inducement.
Other / Miscellaneous
Can student-athletes use the Stanford brand (e.g., block S, campus landmarks, Cardinal color, etc.) during NIL activities?
No. Please refer to the Stanford Branding & Policies section for more information and practical examples.
May a student-athlete miss class to engage in NIL related activity?
Student-athletes must work with their professors to seek approval for any missed class time to engage in NIL activities. Stanford Athletics is not able to provide approval for student-athletes missing class.
May a student-athlete miss Stanford Official Team Activities to engage in NIL related activity?
No. Student-athletes may not miss any Official Team Activities, defined under the Stanford NIL Policy to include all Countable Athletically Related Activities (“CARA”) and Required Athletically Related Activities (“RARA”), for the purpose of NIL-related activities.
- Examples of CARA include, but are not limited to:
- Practice
- Competition
- Strength Training
- Film review
- Team meetings
- Examples of RARA include, but are not limited to:
- Athletics related meetings (compliance, academics, etc.)
- Recruiting-activities
- Press conferences
- Travel to and from away competitions
May a student-athlete engage in NIL activities during Stanford Official Team Activities?
No. Per Stanford policy, and in adherence with California law, student-athletes are not permitted to engage in NIL activities during Official Team Activities.
- Do: An electronics company thinks it would be great exposure to have a student-athlete wear their headphones during athletic activities. The company extends a NIL agreement to the student-athlete offering $200 for every non-Stanford affiliated post showing the student-athlete wearing the headphones.
So long as this arrangement is done outside of Official Team Activities, and adheres to Stanford Branding & Policies section, this would be permissible.
- Don’t: An electronics company thinks it would be great exposure to have a student-athlete wear their headphones during Stanford pre-game warms up. Toward that end, the company extends a NIL agreement to the student-athlete offering $200 for every Stanford pre-game warm up that the student-athlete wears the headphones.
This arrangement would constitute an impermissible arrangement of NIL activities during Official Team Activities.