More Big Brands Brave the Rocky Terrain of Endorsement Deals With College Athletes

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From car dealerships to political-action committees, organizations big and small are striking endorsement deals with college athletes—known as name, image, likeness arrangements—that despite marketer enthusiasm remain a largely untested frontier.

A number of big brands, including

H&R Block Inc.

and Popeyes Louisiana Kitchen Inc., are trying out the NIL space, at times making it a regular part of their marketing plans. But many are treading cautiously—even as the upcoming 2023 March Madness basketball tournaments offer arguably the year’s largest spotlight in collegiate sports.

A Supreme Court decision in June 2021 broke the National Collegiate Athletic Association’s vise-grip on compensation for student athletes, but didn’t directly address the issue of endorsements. So far, that gap has been filled by a gamut of state laws.

Which has left marketers to weigh the marketing potential of an untapped army of youthful influencers against the multifarious risks of a still-evolving arena, executives and observers say.

“It’s been like a year and a half of, ‘How is this going to work?’” said

Alexandra J. Roberts,

professor of law and media at Northeastern University.

Spending on NIL deals with college athletes is expected to hit $1.14 billion from July of last year through June 2023, up from $917 million in the previous 12 months, according to Opendorse Inc., which connects athletes with advertisers. Brands will account for 70% of that spend, with most of the rest coming from so-called collectives, alumni groups that funnel money to athletes, according to Opendorse.

Most pointedly, the absence of federal law regulating NIL deals has created a policy patchwork that varies by state and institution, creating confusion about what brands and athletes can expect. Some universities, for instance, forbid students from wearing their uniforms or school colors in marketing materials.

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The uncertainty has spawned a subcategory of specialty agencies and NIL marketplaces as well as multiple lawsuits, including one in which a group of athletes argued that they should be classified as employees of their school.

“There’s a lot of noise out there in the NIL space,” said

Garrett Yaralian,

who leads the NIL division of talent firm William Morris Endeavor.

Charlie Baker,

the new president of the NCAA, recently suggested the league develop its own standards to regulate NIL deals instead of hoping that Congress takes action, as his predecessor

Mark Emmert

urged. 

Female athletes and meme stars

Given the wide-open field, brands’ strategies with NIL deals vary widely.

Golf Pride, a maker of golf-club grips, never paid for pro golfers’ endorsements, but has signed short-term deals with college players in the past year to connect with its core audience of amateur golfers, said Chief Commercial and Marketing Officer

Eric Gibson.

“This opportunity allows us to utilize athletes as humans instead of spokespeople,” said Mr. Gibson, who described celebrity endorsements at the pro level as “an arms race” that “we just don’t want to get into.”

Golf Pride also aims to use college athletes to showcase the increased diversity of golf’s younger cohort, he said, and hopefully expand the brand’s appeal over time.

Jill Cress, chief marketing and experience officer of H&R Block in a 2018 picture.



Photo:

Patrick T. Fallon/Bloomberg News

Tax-prep company H&R Block first jumped into NIL last year when it saw a brand-building opportunity in student-athletes’ financial concerns around NIL itself.

“We knew that there would be thousands of athletes out there who simply didn’t understand the tax consequences of this new income source,” said Chief Marketing and Experience Officer

Jill Cress.

The brand showcased female players in its 2022 March Madness campaign, called “A Fair Shot,” after research showed that the vast majority of NIL deals go to male athletes.

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Favorability ratings from both Gen Z consumers and parents of college students rose after the campaign, according to Ms. Cress. H&R Block will run a second “Fair Shot” campaign in time for this month’s March Madness.

In January, fast-food chain Popeyes Louisiana Kitchen signed a yearlong contract with Dieunerst Collin, a freshman offensive lineman at Division II Lake Erie College—who is best-known as the star of a nearly decade-old meme in which he makes an awkward side-eyed face in a Popeyes restaurant.

Popeyes has since featured Mr. Collin in social media posts, a billboard in his hometown of East Orange, N.J., and a video released to coincide with the Super Bowl.

“This was the outcome of a gift from the marketing gods,” said Chief Marketing Officer

Jeff Klein,

describing the effort as “a little bit of payback for the free-earned media that [Mr. Collin] has given us for the last 10 years.”

Legal, contractual and political risks

Access to athletes remains the largest hurdle for national advertisers, who have no clear road map like those established by professional players’ unions, according to

Casey Schwab,

chief executive and founding partner at advisory firm Altius Sports Partners, which helps schools manage their athletes’ promotional activities.

“What they’re saying to us is … ‘How do we get to the athletes, because they don’t have agents? Do we call compliance at these schools? Do we call the parents? Do we DM them on Twitter?’” Mr. Schwab said.

Once brands connect with athletes, they often struggle to determine the value of a given individual’s videos and social-media posts. Communication can break down even after contracts are finalized, according to Mr. Schwab, who said his firm has seen several athletes fail to fulfill their responsibilities in time for campaigns to run as planned.

They’re not Kardashians and Jenners who have been doing this for a long time and who have their own legal team advising them.

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— Alexandra Roberts, Northeastern University

The lack of professional representation also means brands must take extra steps to ensure student athletes understand the importance of making proper disclosures and accurate claims, said Ms. Roberts of Northeastern University.

“They’re not Kardashians and Jenners who have been doing this for a long time and who have their own legal team advising them,” she said.

Golf Pride was deterred from pursuing international students by uncertainty over whether such deals would violate their student visas, said Mr. Gibson.

Party politics have also begun to enter the NIL world in a way that could complicate brand deals, said

Curtis Hougland,

chief executive of influencer marketing agency People First.

Before the 2022 midterms, college athletes created paid social-media posts endorsing Congressional and gubernatorial candidates for political-action committees such as Democratic Majority Action, according to Mr. Hougland, who negotiated the deal with the PAC. And the athletes will almost certainly sign similar deals to endorse presidential candidates next year, he added.

“Is it going to create friction? Absolutely,” he said. 

Bigger deals ahead

NIL deals will likely evolve to often include intellectual property agreements with the schools in question, said Mr. Schwab.

Hair-color brand Hally Hair Inc. spent four months negotiating such a deal with Baylor University that includes the sale of branded products on campus as well as more than 100 athletes working as content creators and brand spokespeople, said

Kathryn Winokur,

founder and chief executive.

On the first day of the campaign, Hally Hair recorded four million social-media impressions and a 56% week-over-week jump in sales on Amazon, according to Ms. Winkour, who said the company is now in talks with at least 25 other schools about similar deals.

“This marriage of the licensing agreement and working directly with the students as creators lends itself to a much more explosive moment on campus,” she said.

Write to Patrick Coffee at patrick.coffee@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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