Navigating Athlete Name, Image and Likeness Part 2

Name, Image, & Likeness Rights for Marketing Part 2

Execution

Navigating athlete name, image and likeness rights and usage in sports can be complex. It requires a deep understanding of the details that make up this multi-billion dollar industry. In part one, we broke down the creation, activation, and selection process for campaigns within the NIL quadrant framework. Now we’re ready to get started with the next step: execution.

Once your decision is made, you will start the process of securing rights to using athlete(s) name, image and likeness in your promotion or product. There are many different stakeholders involved in the execution process, and a myriad of options to consider within each quadrant. To properly navigate the NIL space in sports, be prepared for the following:

Negotiation

Get to know the party or parties you will need to approach to secure access to athlete NIL.

Agents

The majority of professional athletes will retain the services of an agent, a legal representative who procures employment and endorsement opportunities for the athlete. These individuals are incentivized to maximize the value of contracts while minimizing time commitment and risk for their athlete clients.

Unions

Most active (and some retired) athletes are members of labor organizations that provide formal representation to negotiate compensation and terms of collective bargaining agreements with their respective professional sports league. In exchange for membership, athletes oftentimes sign a Group Licensing Agreement, providing the union the exclusive ability to sell the name, image and likeness rights of all union members to the sports marketplace.

Compensation

Understand the type of payment you will be providing the athlete(s) in exchange for use of their NIL.

One-Time

The majority of endorsement agreements with professional athletes provide a lump-sum, (often up-front) payment for the athlete’s participation in a promotion. Factors impacting the level of compensation can include things like the type of promotion, length of the promotional campaign, the athlete’s personal time commitment, the photo/video/audio rights from media featuring the athlete, category exclusivity and more.

Royalties

To secure the name, image and likeness rights to one or many professional athletes, you’ll need to sign a licensing agreement with the athlete or the union who owns their group licensing rights. These licensing agreements are based on paying the licensor a percentage of all revenue generated from selling products bearing their name, image and likeness (these payments are called royalties). To protect the value of their rights, most licensors will require an upfront payment before signing a licensing agreement. This upfront payment is often an advance against royalties — a non-refundable fee paid up front — in anticipation of future royalty receipts.

Coordination

Setup the the processes required to create value from the NIL rights you have acquired.

Logistics

If you’re running a promotion, you’ll need to select the appropriate date, time, duration, of the event while coordinating setup, the consumer experience, tear-down, pre-event marketing, post-event customer communication and more. When developing product featuring athlete name, image and likeness, you’ll need to consider product design, material procurement, manufacturing, packaging, inventory management, sales, shipping, receiving, revenue management and more.

Media

Creating content for your promotion or product requires deep understanding of your target audience, establishing ways to connect with consumers, communicating a clear vision, building a team around you to bring the vision to life. Be prepared to set a timeline, acquire permits or permissions, hire creative talent, secure proper funding, coordinate pre and post production checklists, direct the scene and polish your media before sharing with the world.

Distribution

Select the channel you will be using to connect consumers with your business through the use of athlete NIL.

Places

In every business class, you’ll hear lectures on the four P’s of marketing – price, product, promotion and place. None of these are more important than place. You can price a product perfectly and promote it to the ideal audience — but if they don’t have access to the place you’ve chosen to provide your product or promotion, they won’t be able to buy it. Choosing the right place to host a promotion or sell your product is critical to maximizing the value of the name, image and likeness rights you’ve secured.

Platforms

If you’re running a promotion, you’ll need to select the appropriate date, time, duration, of the event while coordinating setup, the consumer experience, tear-down, pre-event marketing, post-event customer communication and more. When developing product featuring athlete name, image and likeness, you’ll need to consider product design, material procurement, manufacturing, packaging, inventory management, sales, shipping, receiving, revenue management and more.

Based on the way you’re planning to use athlete name, image and likeness, you are set to face a different combination of these four factors. Here’s what to expect based on each of the four quadrants:

Physical Promotions

How to negotiate participation, compensation, coordination and distribution for athlete appearances, speaking engagements, autograph signings, photo or video shoots, audio recordings and more.

Negotiation: Agents

Once you’ve identified the ideal athlete(s) for your promotion, you’ll contact their agent to negotiate their participation. Be prepped to pitch the ‘why’ behind selecting each athlete and the unique opportunity to align for the promotion. Agents will focus on the potential for category exclusivity, potential conflicts, promotion date and duration.

Compensation: One-Time

To determine compensation, agents will emphasize the athlete’s unique fit for your promotion and base the player payment on a ‘gut-feel’ for the market and factors like category competition, the going rate for athletes of their caliber, and past deal sizes for similar promotions. You’ll most likely bring a check to the physical promotion and hand it to the athlete or their agent before the event begins.

Coordination: Logistics

Once you’ve negotiated the athlete’s participation in your promotion, you’ll need to lock in the date/time/duration of your physical promotion. You’ll also need to plan travel to and from the event (and potentially lodging) for the athlete, their agent, manager, or any other members of their support team who may be in attendance.

Distribution: Places

Ideally you’ve selected an athlete who is in close proximity to your target market, so you’re able to minimize travel for the athlete and consumers (in-turn increasing likelihood of attendance).

Physical Products

What to expect when you’re leveraging athlete name, image and likeness to manufacturing jerseys, trading cards, bobbleheads, apparel, hats, socks, keychains, posters, action figures, puzzles, and more.

Negotiation: Unions

To create physical products bearing athlete name, image and likeness, you will most often need to sign a licensing agreement with a players’ union. These unions have entire business units focused on selling group licensing rights to product manufacturers and will be prepared to learn more about your business proposition while indicating competition within the market and their existing licensees.

Compensation: Royalties

Once you’ve earned the opportunity to sign a licensing agreement, you’ll need to consider different ways to pay royalties. The actual royalty rate is not usually up for negotiation — but you should be prepared to discuss the annual revenue potential and agree to an up-front guaranteed payment balanced with ongoing royalty payments.

Coordination: Logistics

With licensing agreement in hand, you’ll move into the production phase — designing, manufacturing, distributing your product all while tracking which athlete’s name image and likeness is used on each product and reporting revenue back to the licensor. These revenue reports are required for your ongoing use of athlete NIL rights and are used to determine your royalty payments on a monthly or quarterly basis.

Distribution: Places

One of the most challenging parts of pushing physical product bearing athlete name, image and likeness is connecting with buyers from retailers that will purchase your product at wholesale and place them in stores throughout their territory. Connecting with the right buyers and getting space on shelves is critical to the success of your physical product.

Digital Products

What you need to know about athlete name, image and likeness rights before deciding to develop video games, mobile apps, websites and more.

Negotiation: Unions

In the technology era, unions are seeing more and more pitches to leverage athlete name, image and likeness within digital products. In console gaming, most unions and leagues are locked into exclusive licensing agreements with major video game companies. Unlike physical products, you’ll be in position to leverage hundreds of athletes in your digital product — unions like this, as it provides more members the opportunity to earn direct royalties from use of their NIL.

Compensation: Royalties

A percentage of every sale of your digital product featuring athlete name, image and likeness will be paid to the licensor who provided you the NIL rights. Make sure you’re pricing your product accordingly.

Coordination: Media

The scale of your digital product can vary tremendously. Building an informational mobile app that includes athlete name, image and likeness can take months and require a low amount of cash investment. Creating a globally recognized video game franchise can take years and a boatload of cash. In the digital product space, how big you go with athlete NIL rights depends on the size of your imagination (and bank account).

Distribution: Platform

If you’re building a mobile app, is it free with in-app purchases? Is it available on iOS and Android? If you’re launching a website, is athlete NIL being used behind a paywall? Is it mobile friendly? If you’re creating a video game, is it for Xbox, PlayStation, Nintendo, PC? Is it an annual release, or one-time only? Picking the right platform for your digital product comes with plenty of questions — answering correctly has major impact on the revenue potential for your business.

Digital Promotions

Things to consider before planning to use athlete name, image and likeness in sponsored posts on social media, display advertising, podcast commercials, pre-roll or post roll advertising on videos and more.

Negotiation: Agents

When you approach an agent with a digital-only promotion opportunity, they will undoubtedly attempt to expand the deal to include physical promotions or long-term commitment to one another. Before you contact an agent about your promotion, make sure you know the specifics of your promotion — how many posts you’re looking for, which platform(s) included in distribution, the type of media and duration of the campaign.

Compensation: One-Time

While agents have had a century of data points to help determine compensation for physical promotions, digital promotions require a new way of thinking. Before discussing compensation for digital promotions with an agent, know the size of the athlete(s) digital audience and be prepared to align the payment amount with the athlete’s follower count. Note that no matter the research you provide to justify the amount you offer an athlete for a digital promotion, their agent will ask for a higher amount and lean more on subjective data than defensible objective insights from other forms of digital advertising.

Coordination: Media

With the agreement in hand, it’s time to create media for your digital promotion. Are you doing to have the athlete create the content themselves, or are you going to set them up with a local photographer or videographer to coordinate? Perhaps you’ll create the content on your own and simply ask the athlete to share the media on their own social/digital channels. Either way, getting the media + message right for your digital promotion requires a combination of art (aligning your brand with the athlete’s brand) and science (knowing what drives your audience to engage).

Distribution: Platform

Selecting the ideal platform for your promotion requires a deep understanding of your target market — where they engage, who they engage with, and what catches their attention within each medium should impact your distribution strategy. Before you’ve selected the right athlete, written the right message, created the right media and chosen the right time for your campaign, you should select the platform for your promotion. Starting with your target market and building your digital promotion from their will ensure your use of athlete name, image and likeness generates the strongest connection with consumers and success for your business.

Name, Image, Likeness athlete marketing execution

So, now you’ve seen the framework for NIL Execution.  Next, we’ll dive into measurement– stay tuned for an in-depth look at knowing what to measure, how to do it, and more in Part 3 of Navigating Athlete Name, Image and Likeness.

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