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3 Game-Changing Financial Tips for Student Athletes Scoring NIL Deals

Executive Summary:

Name, image, and likeness (NIL) deals offer athletes exciting opportunities, but also potential pitfalls if not approached strategically.
Athletes should educate themselves on taxes, carefully review contracts, and budget with long-term security in mind.
With guidance on financial obligations, agreements, and smart money management, athletes can maximize NIL benefits while safeguarding their futures.

You are a talented young athlete with a growing public profile. You’ve just been offered a Name, Image, and Likeness (NIL) deal, an opportunity that can put some extra money in your pocket or even, in some cases, make a more profound impact on your financial life. It’s an exhilarating time, but it’s also crucial to approach this new chapter with the right knowledge and mindset.

New Division I NIL Disclosure and Assistance Rules

The Division I Board of Directors recently made some notable updates to its NIL rules, which went into effect on August 1, 2024. Key changes include:

Increased NIL assistance: Schools are now permitted to assist student-athletes in identifying NIL opportunities and facilitating deals with third parties, provided the athlete discloses their NIL arrangements. While schools can help, student-athletes maintain full control over the terms of their agreements.
Expanded disclosure requirements: To receive NIL-related support from their school, student-athletes must disclose any NIL agreement valued at $600 or more within 30 days of signing the contract. This applies to both current and prospective student-athletes.
New NIL reporting platform: The NCAA has launched NIL Assist, a mobile-friendly platform that streamlines NIL disclosure, provides educational resources, and allows student-athletes to review service providers.
Post-eligibility insurance: The NCAA has also introduced post-eligibility insurance for all divisions, covering injuries sustained during participation in college athletics for up to two years after graduation. This includes up to $25,000 for mental health services.

These changes are designed to provide student-athletes with increased NIL-related support and flexibility while maintaining fairness and clarity in the ever-evolving NIL landscape.

Three Essential Financial “Plays” Every NIL Athlete Needs to Know

Whether you’re a college or high-school athlete, or the trusted advisor to a young athlete, here are three critical actions you should take to avoid common financial pitfalls associated with NIL deals.

1. Recognize Your Tax Obligation

One of the first hurdles you’ll encounter in the world of NIL deals is taxes. It’s essential to understand that the money you earn from these deals is subject to taxation. Many young athletes overlook this, often because they’ve never had to deal with taxes before.

To avoid potential financial trouble down the road, consider these steps:

Educate Yourself: Young athletes receiving payments from NIL deals are responsible for paying taxes on that income just like professional athletes. Take the time to learn about taxes, especially how they apply to your earnings. Understanding the basics of taxation will empower you to make informed decisions.
Consult a Tax Professional: Before signing any NIL agreement, consult with an experienced accountant, tax advisor, or business manager. They can help you calculate your tax obligations, identify potential deductions, and develop a tax strategy tailored to your situation. Along with ensuring any federal, state, and local taxes you owe are paid on time (avoiding penalties), a tax professional can also help you navigate more complex situations – such as earning income across multiple states.
Practice Smart Spending: Resist the urge to splurge on electronics, clothes, or cars as soon as the money starts rolling in. Create a budget that considers your future tax payments, living expenses, and financial goals. Staying disciplined with your spending is key to long-term financial success.

2. Execute Agreements Cautiously

Navigating NIL deals can be tricky. There are various state laws and school policies to consider, along with a number of legal “gotchas” to avoid. Here’s how you can safeguard your interests:

Seek Legal Advice: Before signing any NIL agreement, engage a lawyer with experience negotiating NIL and brand endorsements for athletes. An attorney with expertise in sports contracts can help you navigate the important terms in an NIL deal, such as money, exclusivity, length of the agreement, how the brand can use your name, image, and likeness, and an athlete’s delivery requirements. An experienced attorney will help you spot potential pitfalls and ensure the agreement aligns with your long-term goals.
Beware of “Standard” or Simplistic Agreements: When someone refers to a contract as “standard” or provides an overly simplified agreement, that should throw up a red flag. All it takes is the slightest language in your agreement to give a company unfettered rights to use your name, likeness and image in ways you never intended.
Follow Regulations: An experienced advisor will help you navigate specific laws and policies set by your state, school, and the NCAA regarding NIL deals. For example, you cannot share photos or videos in your team uniform with logos from other brands without first getting permission from your school or the brands.

3. Budget Wisely for the Long Term

While newfound wealth can be exhilarating, it’s crucial to manage your finances wisely:

Prioritize Needs Over Wants: When it comes to spending, prioritize essential needs over extravagant wants. Understand this financial windfall may be a one-time occurrence, so focus on building a secure future rather than indulging in immediate gratification.
Future-Proof Your Earnings: Instead of assuming this is a continuous stream of income, treat each deal as if it were your last. Create a budget that accounts for potential future earnings and uncertainties, ensuring you’re prepared for any scenario.
Explore Tax Mitigation Strategies: Consider tax mitigation strategies, such as retirement planning and deferral opportunities, to minimize your tax burden. Consulting a financial advisor can help you explore these options.

Make the Most of Your NIL Opportunities

The legalization of NIL in college and high school sports represents an exciting shift for young athletes. It can offer game-changing money, enabling you to take care of your financial needs, along with building your brand for future growth. But with great success also comes great responsibility. Even professional athletes who’ve reached the highest pinnacles of their respective sports can end up without the financial resources they need if they don’t plan ahead.

The good news is by recognizing the potential pitfalls and seeking professional guidance early in your NIL journey, you can better position yourself for long-term financial success. Remember, it’s not just about profiting from your name, image, and likeness today, but also securing your financial future for tomorrow.

How We Can Help:

Our Entertainment, Sports, and Media practice understands the unique challenges athletes face at all stages of their financial journey. Whether you need assistance with tax planning, contract negotiations, or financial strategy, we’re here to guide you toward a successful future in the world of sports and NIL.

This article was co-authored by Leron E. Rogers, Partner at Fox Rothschild LLP.

How Pro Athletes Choose Winning Financial Teams

Key Takeaways:

Professional athletes need to assemble teams of qualified advisors to properly manage their complex financial affairs, just as successful CEOs build executive teams to run their companies.
The business manager or CFO plays the crucial role of quarterbacking the athlete’s daily financial operations — providing advice, serving as a gatekeeper, and coordinating the overall strategy with other advisors.
Carefully vetting and selecting a highly qualified, ethical business manager is essential, as many professional athletes have fallen victim to mismanaged finances.

As an athlete entering the draft, you are no longer just a player. You are now a professional, paid to play the game you love at the highest level. But along with the title “professional athlete” comes the weight of greater financial responsibility.

The financial profile of a professional athlete more closely resembles a mid-sized, private company than a typical household. While the economics can be exceptional, an alarming number of players lack the support structure necessary to navigate the depth and complexity of their financial requirements.

A professional athlete is the CEO of the brand that bears your name. To ensure the long-term value of that brand, you need to embrace this role and re-imagine your future beyond the playing field.

How to Assemble a Team to Support Your Athletic Career

Six-time NBA champion Michael Jordan once said, “Talent wins games, but teamwork and intelligence win championships.” This is just as true in the business world as it is in the world of professional sports. That’s why the world’s top CEOs make team-building their top priority. The way they approach that process serves as a valuable roadmap for both CEOs and athletes alike.

The Corporate Model

Most businesses share a common structural framework. While details may vary across different industries and global regions, the core elements of the Corporate Model (below) remain consistent. This framework identifies the primary business functions and areas of expertise critical to an organization’s success.

The Corporate Model has been successfully adapted to a wide variety of business categories, evolving as necessary to the unique needs of each organization’s operating environment.

The Hollywood Model

The film and television industry shares many traits with professional sports. The quality of the product is determined largely by the quality of talent in the spotlight — driving significant demand and high salaries for the best actors, directors, writers, etc.

Over the years, Hollywood leaders recognized that many of the same principles of growth and financial governance in the corporate world apply to talent in film and television. This led to the evolution of what we call the Hollywood Model (shown below).

This model identifies the importance of each individual role in the Corporate Model, albeit by different names. For example, the Chief Financial Officer (CFO) becomes the Business Manager, taking the lead on the client’s financial affairs.

The Sports Model

Over the past several decades, the financial lives of professional athletes have become increasingly complex. Salaries, endorsements, appearances, and other sources of income have grown significantly, and so have demands for athletes’ time and attention. However, the average player’s support system has failed to evolve at the same pace. The model below shows how the support team of a typical athlete compares to Corporate Model.

While professional athletes understand the importance of experience, expertise, and teamwork, they often lack a clearly defined model for building their teams off the field. The majority of highly publicized financial failures in professional sports stem from athletes who were either (a) missing key role players on their teams, or (b) trusting important roles to inexperienced or sometimes even unscrupulous acquaintances.

The MGO Model

At MGO, we have been fortunate to work with some of the most successful executives and entrepreneurs in the world — as well as many of the biggest names in sports and entertainment. As a result, we have come to know the traits and practices that drive success across industries.

The MGO Sports Model identifies and defines the roles critical to success — and aligns the work of leading advisors under a common vision. While each role is important, we encourage you to begin with the person who will serve as the quarterback of your daily financial life: your CFO/Business Manager.

Roles and Responsibilities of Your Business Manager

While each member of your team plays a vital role, the CFO/Business Manager is the person with the most tangible daily impact on your financial life.

Here are four ways your CFO/Business Manager contributes to your team:

Quarterback – Your business manager leads your financial operation, responsible for hands-on, real-time execution of the financial plan. This includes establishing budgets, paying bills, and monitoring the expenditures of anyone with access to your accounts or credit cards.

Advisor – Business managers serve as on-call financial advisors, working closely with you on your most important financial decisions — including family estates and trusts, marketing and name, image, likeness (NIL) deals, tax planning (including international tax), major purchases, potential investments, and charitable contributions.

Gatekeeper – High-profile athletes can be targets of investment scams and unwarranted requests for financial support. When these propositions come from friends, family, and former acquaintances, your business manager can serve an important gatekeeper function. By establishing a recognized first point of contact for all financial requests, most questionable requests can be filtered out before they reach you.

Strategist – Your business manager works closely with your entire roundtable of advisors, ensuring that everyone is aligned and working together to implement a common strategy.

Selecting a Trusted Business Manager

Despite the critical role played by CFOs/Business Managers in the financial lives of their clients, most states require no credentials to use the title. As a result, there are people with little or no accounting experience using that title today.

Many of the highly publicized financial challenges in sports and entertainment have stemmed from unqualified and/or unethical advisors serving in the role of business manager for high-profile clients. That’s why we suggest doing your own due diligence before hiring the quarterback of your financial team.

Things to consider when selecting a CFO/Business Manager:

Is the business manager a licensed CPA (certified public accountant)?
Is the business manager’s firm a licensed CPA firm?
What systems and certifications do they have in place to safeguard your money and data privacy?
What services will the CFO/Business Manager provide? For example…
- Financial Planning
- Bill Pay and Cash Management
- Tracking Income/Receivables
- Negotiating/Overseeing Major Purchases
- Overseeing Insurance/Risk Management
- Tax Consulting/Preparation
What types of reports will you receive? (ask to see samples)
How is bill pay managed? How are payment authorizations handled?
Do they have a dedicated staff? Do they have experience with similar clients?

Need Help Navigating the Complexities of Your Financial Journey?

MGO’s dedicated Entertainment, Sports, and Media team understands the unique challenges athletes face and provides tailored solutions that align with your goals. Reach out to us today to learn how we can help you achieve financial success beyond the field.

From Artist to Enterprise: How Top Business Management Advisors Help Today’s Music Artists Monetize Their Brands

Executive Summary:

The music industry has changed drastically, with artists now having more control over their careers and revenue streams beyond deals with record labels.
Artists today need to view themselves as enterprises with diverse income opportunities including live shows, merchandising, licensing deals, streaming royalties, content creation, and catalog sales.
To fully capitalize on these opportunities, artists must surround themselves with a team of expert advisors to help navigate all the financial, accounting, and business intricacies involved.

The journey to success in the music industry is no longer a straight line. While the path to earning substantial revenue previously only had one route — through a major label — those days are gone. The digital age has ushered in a new era, where artists have many direct pathways to their fans and an array of new revenue opportunities.

But with new opportunities comes new challenges. Today’s artists have to figure out how to navigate, manage, and optimize numerous complex revenue streams with little guidance. This is why having a trusted team of advisors is essential to ensure you are getting the most from your artistic output — both in terms of building your fan base and your financial future.

Here’s how working with a top advisor can help you transform from artist to enterprise, adept at building diverse income streams and overcoming any associated financial hurdles.

1. Live Performances: Looking Beyond the Spotlight

Live performances and touring remain pivotal for musicians to generate income. However, the financial success of a tour is not just about what you’re getting paid; it’s also about what you’re spending. That’s why meticulous planning is essential. From production costs to transportation, a trusted advisor ensures every dollar is accounted for before signing any contracts. Artists can also leverage performances for additional revenue through avenues like live streaming, behind-the-scenes access, or even concert films (i.e., Taylor Swift’s Eras Tour film). Advisors can help structure those deals to optimize the highest take-home payout.

2. Merchandising: Capitalizing on Brand Appeal

Merchandising offers a lucrative avenue to capitalize on an artist’s brand and deepen fan connections. Advisors can guide artists through various merchandising paths — from direct sales to brand collaborations to affiliations — to help them determine the best financial option. While direct sales may seem the most appealing on paper (where you might see numbers like “90% profit”), the associated responsibilities, such as sales tax management and warehousing, shipping, and staffing considerations, need careful evaluation. A seasoned advisor helps strike the right balance between profit and practicality.

3. Licensing and Sponsorships: Negotiating the Right Deal

Licensing and sponsorships have become integral to the music industry, with brands using music to sell everything from cars and sneakers to movies and fast food. Advisors play a crucial role in evaluating and negotiating these deals — ensuring you are getting fairly compensated for your name and image, and the opportunity aligns with your brand and goals. The evolving licensing landscape—with artists now able to self-publish and go through Spotify, Apple, and other platforms—has made getting licensing deals done easier. One independent artist we work with got a six-figure deal when a network went to TuneCore looking for music to use in a TV show.

4. Streaming Revenue: Making the Most of Royalties

Music streaming platforms dominate the music consumption landscape today. While streaming royalties may be lower than what an artist receives from radio spins, terrestrial radio cannot touch the real-time data streaming provides (providing demographics of who is listening to your music, where they are listening, etc.). When it comes to managing streaming royalties, it pays to have a trusted advisor to track your royalties across all platforms — analyzing streaming data and royalty statements to ensure proper payment and identifying any discrepancies. Advisors also can strategize royalty planning, including estimated tax payments on royalties to avoid penalties, and help negotiate more favorable distribution deals with streaming platforms, exploring creative arrangements and exclusive partnerships.

5. Creator Content: Creating a Consistent Revenue Driver

In today’s creator economy, valued at over $100 billion, creating content is a powerful revenue stream. Many music artists are augmenting their income to the tune of six-to-nine figures a year by creating content for TikTok, YouTube, podcasts, NFTs, as well as a variety of other media and platforms. Advisors can guide you in navigating the challenges that arise from managing online content revenue — which often trickles, and then floods in, from multiple sources, and can quickly become unwieldy without a system in place to manage it. Proper financial management, including tax planning and budgeting, becomes crucial as content creation becomes a more prominent income source.

6. Catalogue Monetization: Structuring Your Ideal Sale

High-profile artists like Dr. Dre and Justin Bieber have recently sold their catalogue rights for large chunks of change. Catalogue monetization is the one time you are in complete control of your asset; you can carve out whatever deal you want (10-year, 20-year, 50%, 80%, etc.). Advisors guide artists in choosing the right partners, structuring deals, and determining the extent of the catalogue to sell. Your advisor will also help you weigh the tax considerations of collecting royalties versus selling all or some of your catalogue (royalties are taxed at 37%, while catalogue sales are taxed at 20%), and set up your sale in the most tax-efficient manner possible (for example, installment sale vs share sale). This one-time opportunity demands careful deliberation, and having the right team advising on nuances is paramount.

Building the Team Around Your Team

Moving from artist to enterprise means building a team to help you succeed. Your advisors are your team around your team. Much like a corporation brings in consultants, having seasoned business advisors available when you need them will help you make informed decisions to grow your brand and secure your financial future.

How We Can Help:

Our Entertainment, Sports, and Media (ESM) practice helps music artists at all stages, from rising stars to legends, offering financial, tax, and business management services to help you build your brand and maximize opportunities. Contact our ESM team today to learn how we can help take your music career to the next level.

5 Things You Don’t Know About the Tax Implications of a Divorce

You’ve figured out who gets the beloved Hermès Kelly bag. You’ve split custody — of both the kids and the dog. The boat’s been sold. And, miraculously, everyone’s feeling pretty amicable. Divorce: it’s not something you ever anticipated, but it’s happening, and you feel prepared.

We just have one question: have you hired a Certified Divorce Financial Analyst (CDFA®) yet?

The truth of the matter is, your attorney can do a lot, but they can’t provide all the guidance you need. Read on to learn the five things you don’t know about the tax implications of a divorce — and why you should hire a CDFA for your own financial security and peace of mind.

1: Be prepared for the long haul

It’s great that you and your former spouse are on good terms now, but you want to make sure you understand the divorce’s full scope of financial impact. Splitting everything down the middle sounds easy, but things are rarely simple, and the process could take longer than anticipated — especially if you want to make sure your interests are being looked after. As soon as you’ve decided on a divorce, equip yourself with financial knowledge by hiring a CDFA. If you know your interests, you have control over how they are handled, giving you the upper hand, preventing you from being blindsided later — no matter how long the “long haul” ends up being.

2: Know your long-term tax liabilities for the assets you’re divvying up pre-divorce

Whether it is interest-free bonds, the house you raised your kids in, your retirement fund, or a timeshare to Walt Disney World, there will be tax consequences and implications for the assets you divide between the two of you.

Often, people look at the fair market value of jointly owned property instead of a property’s tax basis, assuming that this is enough to go on when divvying up. But let’s say you have two different assets you’re splitting “fairly”: stock options and undeveloped land (you never did get around to building that second home together … ). Both assets are valued at the same amount. So, naturally, it makes sense for you to get one, and your spouse to get the other. That is, until one of you sells your asset, and you get a hefty tax bill. This is considered a tax carryforward, and you should understand them before the divorce is finalized.

Tax carryforwards are important to consider when dividing assets because of the tax consequences — and planning opportunities — that could exist in the future. They include carryovers like:

net operating loss carryovers,
business tax credit carryovers,
capital loss carryovers,
excess business loss carryovers,
investment interest expense carryovers, and
suspended passive activity loss carryovers.

Tax regulations give you a great framework, but unfortunately, they do not tell you how these carryovers should be allocated between you and your spouse; instead, you must decide. A CPA should be leveraged to identify the tax considerations, as well as any potential impact they could have on each spouse.

3: Rely on a seasoned professional to gain the full financial picture

You don’t want to think this way, but you need to be prepared for the fact your spouse may have been getting away with unsavory tax practices you were not aware of when you were married. And if so, you need someone on your side. A CDFA can help you gain the clarity and understanding you will need to strategize so you are satisfied with the choices you make during a divorce long after the marriage is dissolved.

For example, imagine your spouse purchased a Mercedes-Benz G-Wagon SUV during the marriage. At the time, you thought everything was above board. But your analyst uncovers that the G-Wagon’s full value was written off because of the weight, thus showing a lower annual income — negatively impacting you and your likelihood of a fair division of property and income.

To combat this, your CDFA would provide a lifestyle analysis. This entails scrutinizing everything from tax returns to credit card transactions, which could uncover hidden trails of unreported income or assets in the uncovered discrepancies. The party’s liquid assets may not support their current standard of living with business class flights abroad and stays at the newest Dorchester Collection hotel. An analysis would show the warning signs.

The examinations and reports gathered by an analyst can show both you and your attorneys a clear picture of the financial matters you’re dealing with on both sides, which can contribute to an equitable resolution between parties. This applies whether you settle or go to court. If it’s the latter, your CDFA can be an invaluable witness on your “team.”

4: Conduct a financial analysis early in the divorce process

As we mentioned, projecting financial impacts for both the short- and long-term is critical to understanding how you will be affected by the divorce. Have your CDFA prepare an independent analysis of the tax consequences under different scenarios, so you know possible outcomes. This will not only create a framework for you moving forward, but it will prevent your partner from successfully sneaking around and attempting to pull the wool over your eyes. These financial analyses can also include a review of the last income tax return filed by your spouse.

5: Remember, this service pays for itself

You may be tempted to forgo a CDFA in the throes of your divorce, thinking it’s just another bill to pay. But the truth is, the service they provide does pay for itself. If fraud or misuse is identified at any point in the divorce process, you will save yourself money in the long run having prepared for these tax liability scenarios, and when it comes to figuring out your assets, you will be able to see beyond the current fair market value, so you won’t be blindsided later on.

Our perspective on hiring a CDFA for your divorce

At the end of the day, think of the financial side of your divorce like a puzzle: you need each and every piece in order to complete the picture. While you may be on good terms with your spouse now, things are rarely simple when money is involved. It is far better to see the puzzle in its entirety now instead of picking up a piece that got edged under the sofa later and discovering you’ve been misled or treated unfairly.

Hiring a CDFA purges the emotion from the situation, which is exactly what you must do to ensure your financial security.

At MGO, we can help. Our Private Client Services practice puts you and your story first.

Empowering Clients Through the Language of Business

Warren Buffett said, “Accounting is the Language of Business.” We like that quote so much we put it in our mission statement: “To empower clients through the Language of Business.” To us, it’s all about measurement. Not just the financials, but the full spectrum of qualitative and quantitative measures that help us transform complex financial data into meaningful insights. Empowering decision-makers to face their toughest challenges with clarity and confidence. This simple ethos sums up our approach to assurance and audit services – today and into the future.

Our values

Ideas rule

At MGO we want to know what you’re thinking. We believe ideas are the building blocks of opportunity. While other firms often focus on cookie-cutter solutions and cloned engagement teams, we focus on critical thinking and innovation. Success at MGO isn’t limited to a rigidly defined career path or job description. Our people look at challenges and see opportunities. Got an idea? We’re listening.

Build something

At MGO we don’t believe opportunity should be a narrowly defined, strictly managed roadmap for advancement. Quite the opposite. We’re creating an environment where smart, entrepreneurial people can define their own path. We offer the tools and support to identify opportunities and create solutions. There’s an opportunity for each of our people to build something of their own.

Straight talk

In an industry riddled with self-promotion and a growing expectations gap, integrity will always stand out. No gloss or polish necessary. At MGO we’re not interested in hype…or spin…or meaningless jargon – and neither are our clients. We believe in clear, concise, courageous conversations – without the embellishments and disclaimers. We know the importance of listening and the value of taking a position. Simply put, our job is to tell it like it is.

Help first

We believe the fastest way to succeed is to help others succeed. It’s a value that goes deeper than a simple commitment to teamwork. It’s about creating an environment where individuals are invested in one another. A commitment to help first – whether it’s an employee, a client, or a vendor – establishes trust and a win-win mindset that fuels performance.

Go beyond

There is one common thread that runs through every major milestone in the history of our firm: We have consistently overcome conventional expectations of what we can be – of what we can accomplish – together. Simply put, “good enough” is rarely “good enough.” We are committed to going the extra mile for our clients…our colleagues…our communities. We encourage our people to think bigger, to challenge limitations and boundaries, and to challenge ourselves. We believe our only limits are self-imposed.