NIL Rewards Can Mean Generational Wealth—If Players Seize the Opportunity
Today’s student athletes have much more at stake given the amount of NIL income they are receiving, whether to spend now or save.
With the start of the college basketball season upon us, I’ve been reflecting on my time playing at the University of California, Berkeley, in the 1980s, long before student athletes could monetize their name, image, and likeness (NIL). After graduating, I was excited to get paid to play the game I love—even if it was in Turkey rather than in the NBA! I was young, I was healthy, and I felt I could play (and make money) for a long time.
That first paycheck I received seemed like a fortune for me, and I know my teammates felt the same way. One player was so excited that he promptly went out and spent $27,000 of his $30,000 paycheck on jewelry for himself and his girlfriend. I was surprised by his purchase but didn’t think much of it, given he had another paycheck coming the following month.
Today, long after moving from athletics into investment management, I recognize that those “in the moment” decisions can be very costly if the alternative is not at least considered. For example, that $27,000, if invested in the stock market, would be worth more than $1.4 million in 2024.1 Forgoing that investment is a big and potentially life-changing decision.
Thinking in Terms of Future Value
College athletes today are receiving very large NIL payments, rewards that past generations could only dream of. When I played, we were lucky to get a brown-bag lunch on the bus or a cold pizza slice in the locker room after a game. It was a very different time, but with very little pressure to think about significant income and what to do with it.
In 2024, deals with college athletes are estimated to total around $1.7 billion.2 And since most college athletes won’t go pro, even a modest NIL payment offers an opportunity to get an early start on building a more secure financial life. Whether you’re a star football recruit making $1 million a year or a volleyball player who may get $50,000 across your college career, decisions about what to do with that money will have a lifelong impact.
I recently heard about a local football player who received a $1 million NIL package to play at one of the big-time football colleges. What that player now needs to consider is whether to buy something today or invest some or all of that money for the future. The rule of thumb is that your money doubles about every seven years if you receive a 10% rate of return. (Historical stock returns over roughly the last 100 years have been about that.)3 His $1 million would become $88 million by the time the normal worker retires at age 65. That is an astounding amount.
You Can Have a Good Time—And a Good Future
Willing yourself to defer enjoyment now for security later isn’t easy. Full disclosure: With my first check in 1987, I bought a $9,000 sports car that I ended up selling a year later for $6,000. Not a great investment! Using the loose calculation above, my $9,000 would be almost $306,000 today (37 years later).
Today’s student athletes have much more at stake given the amount of NIL income they are receiving. Understanding the basics of investing, speaking with respected and experienced people in their inner circles, and even hiring a financial advisor who is legally obligated to act in a client’s best interest are all important ideas that must be considered.
Seizing the Opportunity
Even a small NIL payout can be a game changer if handled well, which means gaining a perspective on money and investing, practicing good habits, and making informed decisions. Students who earn NIL payments should be congratulated for applying the discipline and passion to make the most of their athletic gifts. But time and the magic of compounding offer another gift—the opportunity to build lifetime wealth.
Put another way, that NIL payment today is earned. Its value in the future is the gift. Don’t squander it.
Footnotes
1. Based on the performance of the S&P 500 from January 1, 1987, to August 31, 2024.
2. Joe Drape and Allison McCann, “In College Sports’ Big Money Era, Here’s Where the Dollars Go,” The New York Times, August 31, 2024.
3. Based on the performance of the S&P 500 from January 1, 1926, to December 31, 2023.
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