New Era Of NIL: What Every Athlete & Creator Can Learn From Dave Chapelle

With the NCAA March Madness tournament coming to a close, there’s never been a better time for athletes to make a name of themselves on social media — and now, monetize it to the tune of millions.

After the NCAA removed its ban on making money off name, image, and likeness in 2021, the lines between athlete and social media creator became blurrier than ever. 17% of NCAA athletes reportedly engaged in NIL deals with USC’s Bronny James, Colorado’s Shauder Sanders, and Iowa’s Caitlin Clark earning $5.8 million, $4.7 million and $3.1 million, respectively.

With the NIL market reaching a staggering $1.17 billion this year, the dust is still far from settled on the rules, regulations, and expectations of how to navigate this new terrain.

As a manager who negotiated many of these types of NIL partnerships myself, I know first-hand how important it is for athletes to look to other industries, including traditional and digital media, for best practices. In fact, there’s a lot to learn from comedians like Dave Chapelle who could serve as a cautionary tale.

The True Madness of NIL Contracts in 2024

It’s not just the price tag of NIL deals that make it uncharted territory; it’s the turnaround time. Look no further than Grambling State guard Jimel Cofer Jr. who recently signed his NIL deal with Buffalo Wild Wings within 24 hours of his team beating Montana State in the tournament on March 21.

Another example is Oakland’s overnight sensation Jack Gohlke who signed a deal with TurboTax shortly after draining ten three-pointers in his team’s upset over Kentucky. Within 48 hours, Gohlke signed a deal and filmed his TurboTax post in the hotel hallway between games with the caption: “Making my moves count behind the three point line 🤝 @turbotax making your moves count this tax season.”

Moments later, Gohlke posted yet another sponsored post; this time with a footwear company called OOFOS. The TurboTax and OOFOS videos currently have 8.5M and 127,000 views on X, respectively, meaning both brands capitalized on Gohlke’s newfound fame. But will Gohlke and other athletes regret these deals in the long-term?

Where NIL Deals Go Wrong

While the terms of those NIL deals and others remain undisclosed, we’re left to wonder how many contract details fall through the cracks when athletes crunch months of back-and-forth into 24 hours while juggling their games and training during this pivotal stretch of their athletic career.

After negotiating hundreds of these sponsorship deals, I know how many brands slip in language that take advantage of the talent’s NIL. Worst yet, too many influencers aren’t aware of these issues until years later.

To understand the most common — and egregious — examples, I combed through the sponsorship contracts I redlined to share what to watch out for. Hopefully this saves athletes and creators alike from signing deals they’ll regret and informs brands on how to update their approach.

First, many brands ask to modify content involving the talent (in this case, the athlete) without their consent. This can result in an edit that doesn’t reflect the talent in the best light. Of course, most brands don’t have malicious intent. But it’s important to involve the talent in content decisions since their brand is also at stake here.

Second, brands often leverage NIL by “whitelisting” content into paid ads. This means that content that Gohlke, Cofer Jr, or others post on their own socials could be turned into a boosted post. The best way to counteract this is to charge for whitelisting and require limitations on how long (or how many impressions) the brand can use the content.

Third, brands tend to place competitive restrictions that teeter on being unreasonable. Of course, it wouldn’t make sense for athletes like Cofer Jr to switch from sponsoring Buffalo Wild Wings to Wingstop next week. But I’ve seen contracts that prevent talent from signing with an entire industry for years (for example, not working with any food products altogether) just for a single post today. In these cases, it’s important to limit the term and even list competitors by name to avoid gray areas.

Cautionary Case Study for NIL

When it comes to NIL, one of the most important case studies comes from legendary comedian Dave Chapelle. Despite being in a different industry, his cautionary tale is important for athletes, creators, and brands to study.

In the early 2000s, Chappelle was one of comedy’s biggest stars and Chappelle’s Show on Comedy Central was a massive success. Years later, he asked fans to boycott the very show that launched him into superstardom.

The reason? Chappelle said he signed a contract with Comedy Central when he was young and eager to get his big break like many NCAA athletes during March Madness. Like Chapelle, they may be selling themselves short without realizing.

In Chappelle’s Unforgiven special, he said “I signed the contract the way a 28 year old expectant father that was broke signs a contract. I was desperate. I needed a way out and it wasn’t good money and it wasn’t good circumstances but what else am I gonna do?”

“All these white people sitting at that table told me ‘trust us Dave it’s a good contract’ and I looked around the table and they all seemed to agree it was a good contract.”

Under the terms of this “good” contract, Chappelle relinquished rights to his name, image, and likeness for Chappelle’s Show in perpetuity. This also meant no residuals or royalties, and no control, which meant he lost millions as a result.

Chappelle only regained control in late 2020 after asking fans to boycott the show. This public pressure led parent company ViacomCBS to negotiate a new deal that, according to Chappelle, paid him millions of dollars.

While many athletes and creators will inevitably build devoted fanbases, few will be able to sway a network like Chappelle’s fanbase did for him. That’s why it’s so important to take time, seek expertise, and find comparables from other industries as athletes pave the path in this new era of NIL.