College athletes are being offered upfront cash by a new company co-founded by former NBA champion Kendrick Perkins in exchange for a share of their name, image, and likeness deals. Financial advisors and consumer protection experts warn that this arrangement may exploit young athletes.
Athletes can receive upfront payments from Nilly that range from $25,000 to hundreds of thousands of dollars, according to Perkins and his co-founder, Wall Street veteran Chris Ricciardi. In exchange, Nilly receives between 10% and 50% of the player’s NIL profits for a maximum of seven years, as well as the exclusive right to use or sell the athlete’s name, image, and likeness. Perkins said : “You have so many athletes and their parents who are struggling day-to-day,”. “Because we’re actually taking a bit of a gamble on what the student-athlete is going to make in the NIL space, the benefit is the kid — the student-athlete — is able to get financial security so they don’t have to rush.”
Through commercial endorsements, public appearances, or contracts with boosters who employ NIL arrangements to entice talent to their school’s teams, some athletes have made hundreds of thousands, if not millions, of dollars a year. Leaders in college athletics have warned that athletes may be used by the new, mostly unregulated options.
Twenty athletes, all of whom play football and men’s basketball and are enrolled in high school or college, have signed contracts with Nilly thus far. Ten athletes who had openly discussed their contracts with Nilly were contacted by ESPN, but none of them agreed to speak about the business.
Financial Experts take on Kendrick Perkins company
Several financial advisors who work with collegiate athletes expressed worries about whether the company is providing quick cash at an excessively high cost, and three consumer finance experts who examined the Nilly contract said that several aspects of the agreement resemble a high-interest loan. Michael Haddix Jr. said : “To me it feels like you are preying on people who need the capital now and using that to cloud their focus on the future,” “It feels predatory, and it’s capitalizing on young people who need money and haven’t thought through the long-term implications.”
Several aspects of Nilly’s contract reminded Chris Peterson, a law professor at Utah and a former adviser to the federal government’s Consumer Financial Protection Bureau, of other financial products that are marketed as investment opportunities but actually operate as loans. Peterson said : “These are trashy products designed to take advantage of young kids,”
According to Ricciardi and the terms of the athlete contract, Nilly’s partnerships are license agreements rather than loans. Ricciardi said : “There’s no interest rate. There’s no requirement to pay back,” . “It’s purely a licensing deal. I would be surprised if those people thought that music advances were high interest loans.”
Perkins questioned if those who criticized Nilly had ever had to worry about supporting their parents financially.
