Student†athletes were given the chance to profit from their names, images and likenesses last summer after the NCAA approved a new policy allowing them to earn money from endorsements, sponsorships, social media and more.
But, according to one Florida attorney, this new opportunity comes with some unforeseen hurdles.
Peter Schoenthal, a criminal defense attorney and entrepreneur, told FOX Business in a recent interview that student-athletes are not getting proper guidance when it comes to NIL deals, and the biggest issue they will face this year could be on Tax Day.
“We’re not doing a good enough job in the space to educate student-athletes on what’s important. Yes, it’s important to make money. Yes, it’s important to build your brand, but what comes with that? Taxes are the main thing ,” Schoenthal explained.
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“We have seen so many student-athletes that have no idea what a 1099 is. We have so many student-athletes that weren’t aware what a W9 is. You had student-athletes that weren’t aware that when they made money they had to put some aside to pay their taxes.
“You’re really walking yourself into a very scary situation.”
Schoenthal spent time coaching youth football in Florida. Many of his athletes went on to play at Alabama, Miami, Florida State and LSU. But when the chance to start making money presented itself, he feared they weren’t aware of all that went into these deals.
“How are these kids going to pay taxes? I do not want to represent them in federal court on tax evasion charges,” Schoenthal said.
“Right now, we are asking student-athletes to venture into this new landscape where they’re unsure of the rules, and they’re unsure of the law, both as it pertains to NILs and taxes. And we’re asking 18- 21-year-olds to just figure it out.
“We’re focusing on the things that bring in money, which is great, but we’re not putting in the same effort and same energy towards protecting them when they get their money and protecting their money. And it’s just becoming a new way to take advantage of student-athletes, and taxes is something that’s going to be an issue this first year especially.”
Schoenthal is the founder and CEO of Athliance, an NIL management and education firm that advises college athletes with regulations while still making the most of NIL opportunities.
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“We license our software to universities so when student-athletes get NIL deals they can input the terms so compliance can review it to make sure they’re not getting taken advantage of or breaking any rules and by disclosing their deals and the terms we provide the student-athletes with what we call fact tax reporting,” he explained.
“Student-athletes will always know who paid them, how much, what service and what state so they can file the proper taxes and give that report to accountants to make sure I don’t have to represent them in federal court ever.”
Schoenthal recalled several “misconceptions” he’s heard about these deals when speaking to college athletes, an issue that will present itself on tax day.
“You’re going to see a lot of student-athletes, I believe, on a payment plan with the federal government, and I think a lot of this has to do with the fact that we didn’t properly educate these students well enough so that they were prepared for this.”
The new era of NIL deals has been met with reluctance by some. Alabama head coach Nick Saban said in an interview with The Associated Press that the current structure is not “a sustainable model.”
“That creates a situation where you can basically buy players,” Saban said. “You can do it in recruiting. I mean, if that’s what we want college football to be, I don’t know. And you can also get players to get in the transfer portal to see if they can get more someplace else than they can get at your place.”
Paying a player to attend a particular school is still a violation of NCAA rules, but NIL deals have quickly become intertwined with recruiting, both among high school prospects and the growing number of college transfers.
“It’s fine for players to get money. I’m all for that. I’m not against that. But there also has to be some responsibility on both ends, which you could call a contract. So that you have an opportunity to develop people in a way that’s going to help them be successful,” Saban said.
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Schoenthal agreed with Saban, pointing to legislative issues.
“I think it’s altering the landscape, but I don’t think that’s necessarily a bad thing,” Schoenthal said. “I think college athletes should have been able to profit off of their name, image and likeness forever. In our country – in a capitalistic society – you are always able to profit off of who you are if you’re able to offer a value or service.
“The problem with the space right now is we don’t have uniform legislation with actual enforcement going on. So the space has become the wild west, and when you have the wild west, you have wild actors and people trying to take advantage of it.”
Schoenthal is doing his part to educate college athletes on those deals and what will be most beneficial for them in the long run
“When you look at financial literacy, this is where, when we figure out the space, the name, image and likeness deals have the ability to be the greatest thing that ever happened to college athletes because the education is now, finally practical.”
The Associated Press contributed to this report.