NIL, taxes & Professions

[Caveira]

11 minutes ago, cangemi said:

Not year recieved . Following year

There is a threshold somewhere where you have to pay quarterly or get a penalty.  My accountant says I have to pay.  So I pay.  It’s a pain in the azz doing it 4 times a year    So I think ionel is right here 

Edited April 27 by Caveira

[ionel]

15 minutes ago, cangemi said:

Not year recieved . Following year

That's news to me, generally if no withholding you need to estimate income and pay at least quarterly tax or if excessive income incurr penalty & interest. 

[Caveira]

13 minutes ago, ionel said:

That's news to me, generally if no withholding you need to estimate income and pay at least quarterly tax or if excessive income incurr penalty & interest. 

100% every time I sell my equity I get dinged with the quarterly tax bill.  

[cangemi]

NoUsually quarterly are based on previous year income returns.. not the year of the income.

 

 

[Animal197]

I think a lot of the bigger programs have in house advisors for athletes with significant NIL deals. They don’t want athletes getting in trouble with taxes and etc.

 

one thing I’m wondering is for big-time prospects how long until the state’s tax laws start becoming a recruiting advantage. I believe TN, TX, and FL don’t have state income taxes. I saw when the QB from TN transferred to UCLA, that even though the deals were similar in total amounts (2 vs 1.75 million/year) because of CA income taxes his take home is much, much less in CA than what it was.

 

Probably only a football and basketball issue though.

[ionel]

1 hour ago, cangemi said:

NoUsually quarterly are based on previous year income returns.. not the year of the income.

That doesn't make sense.  If there was an income return in previous year then there was income. 

Most of these athletes receive NIL for multiple years thus NIL in the previous year and thus need to file quarterly or some other tax collection method for the expected income else pay penalty and interest. 

[cangemi]

53 minutes ago, ionel said:

That doesn't make sense.  If there was an income return in previous year then there was income. 

Most of these athletes receive NIL for multiple years thus NIL in the previous year and thus need to file quarterly or some other tax collection method for the expected income else pay penalty and interest. 

I googled it. You may be right. I pay quarterly as estimate.  I think it is quarterly based on what recieved. That said original post correct. Get a professional  tax advisor. 

 

 

[1032004]

On 4/23/2025 at 5:49 PM, GreenandGold said:

It is my understanding that outside NIL deals would continue to operate as they are now, which is unregulated and uncapped. The only "rule" with NIL right now is that schools are not supposed to negotiate or be involved in those deals directly. We all know that's not actually happening but it is the intent.

Aren’t they adding the thing where the deals have to go to a “clearinghouse” who apparently will decide if the athlete’s market value is actually worth that?

[Wrestleknownothing]

17 minutes ago, 1032004 said:

Aren’t they adding the thing where the deals have to go to a “clearinghouse” who apparently will decide if the athlete’s market value is actually worth that?

Yes. Anything over $600 needs to be approved as market value. I imagine there will be some lawsuits over that. Mostly by QBs.

[CHROMEBIRD]

On 4/28/2025 at 5:47 PM, Wrestleknownothing said:

Yes. Anything over $600 needs to be approved as market value. I imagine there will be some lawsuits over that. Mostly by QBs.

Yeah, I've heard that there's questions around whether market value will be determined by city/region, conference, age, or any number of factors; or maybe it'll be some sort of cumbersome weighted algorithm. I believe the intent of the clearinghouse though is to provide a centralized repository where anonymized data can be aggregated and eventually give revenue athletes and coaches a better idea of their worth. For big sports it's about bringing players back down to earth on their actual value (e.g., the basketball player who told Kelvin Sampson it'll cost him at least $2.5M to play for him), and it's making sure that non-revenue athletes get paid what they're worth.

Since now we have PE, VC, hedge funds, and other institutional money getting involved I wonder if could one day create offerings with financial instruments or some other illiquid asset that circumvents the $600 limit. 

[Wrestleknownothing]

7 minutes ago, CHROMEBIRD said:

Yeah, I've heard that there's questions around whether market value will be determined by city/region, conference, age, or any number of factors; or maybe it'll be some sort of cumbersome weighted algorithm. I believe the intent of the clearinghouse though is to provide a centralized repository where anonymized data can be aggregated and eventually give revenue athletes and coaches a better idea of their worth. For big sports it's about bringing players back down to earth on their actual value (e.g., the basketball player who told Kelvin Sampson it'll cost him at least $2.5M to play for him), and it's making sure that non-revenue athletes get paid what they're worth.

Since now we have PE, VC, hedge funds, and other institutional money getting involved I wonder if could one day create offerings with financial instruments or some other illiquid asset that circumvents the $600 limit. 

Financial engineers love a challenge. The one that they have mostly not yet cracked is the David Bowie trade.

Bowie sold the right to his future royalties over a ten year period for a flat payment. It was structured as a bond, but that is essentially what it was.

Others have tried to get into the business of paying students a flat fee in exchange for some percentage of their future earnings. Very few people have wanted to do this though because they fear what will happen if they hit it big, but have to give a big chunk to investors.

The one I have heard of that has had success is Big League Advantage. They are an investment fund that pays minor league baseball players up front cash for a percentage of their future major league earnings. Because so few make the major leagues, more players are inclined to accept. BLA just needs a couple grand slams to compensate them for the strike outs (sorry).

Probably the most famous deals they have done are Elly De La Cruz, who signed away 10% of all future MLB earnings for up front cash. They pay $50k per 1%, so De La Cruz got $500k at a time when he was making next to nothing. The other is Fernando Tatis Jr. who got $350k for 8% at a time he was making $10k per year. When Tatis Jr. signed his $340 million deal BLA was owed $27.2 over the life of the deal. They have done something like 500 deals with about 100 making the majors for some minimum amount of time.

BLA has also been raising money to do NIL deals. So it is coming.

[CHROMEBIRD]

In college, I believe there's an ongoing lawsuit between BLAF and the University of Florida football player, whose name slips my mind atm, who signed away a 15% cut of his pretax pro football earnings, including signing and incentive bonuses, for the next 25 years. He plays for the Chicago Bears now. Anyway, he sued BLAF because he didn't have any support or representation and just saw the upfront $$$ and signed without fulling realizing what he was getting himself into. 

Nilly is another agency that gives college athletes money upfront but I think they take a % of players' total promotion & sponsorship deals (rather than pro salary) for a fixed period of time.

[Wrestleknownothing]

On 4/30/2025 at 2:54 PM, Wrestleknownothing said:

Financial engineers love a challenge. The one that they have mostly not yet cracked is the David Bowie trade.

Bowie sold the right to his future royalties over a ten year period for a flat payment. It was structured as a bond, but that is essentially what it was.

Others have tried to get into the business of paying students a flat fee in exchange for some percentage of their future earnings. Very few people have wanted to do this though because they fear what will happen if they hit it big, but have to give a big chunk to investors.

The one I have heard of that has had success is Big League Advantage. They are an investment fund that pays minor league baseball players up front cash for a percentage of their future major league earnings. Because so few make the major leagues, more players are inclined to accept. BLA just needs a couple grand slams to compensate them for the strike outs (sorry).

Probably the most famous deals they have done are Elly De La Cruz, who signed away 10% of all future MLB earnings for up front cash. They pay $50k per 1%, so De La Cruz got $500k at a time when he was making next to nothing. The other is Fernando Tatis Jr. who got $350k for 8% at a time he was making $10k per year. When Tatis Jr. signed his $340 million deal BLA was owed $27.2 over the life of the deal. They have done something like 500 deals with about 100 making the majors for some minimum amount of time.

BLA has also been raising money to do NIL deals. So it is coming.

Tatis is now suing to get out of his deal with BLA. The updated figures in the story are that he was paid $2 million up front in exchange for 10% of future major league earnings.

https://www.espn.com/mlb/story/_/id/45571919/padres-fernando-tatis-jr-sues-big-league-advance-void-future-earnings-deal-signed-minor-leaguer

Not sure how the House settlement will impact BLA's NIL plans.

[1032004]

20 minutes ago, Wrestleknownothing said:

Tatis is now suing to get out of his deal with BLA. The updated figures in the story are that he was paid $2 million up front in exchange for 10% of future major league earnings.

https://www.espn.com/mlb/story/_/id/45571919/padres-fernando-tatis-jr-sues-big-league-advance-void-future-earnings-deal-signed-minor-leaguer

Not sure how the House settlement will impact BLA's NIL plans.

What are the grounds for the lawsuit?  Was he under 18 at the time or something?  Seems like it would be pretty cut and dry if you sign the contact, no?

[Wrestleknownothing]

5 minutes ago, 1032004 said:

What are the grounds for the lawsuit?  Was he under 18 at the time or something?  Seems like it would be pretty cut and dry if you sign the contact, no?

The story says he was 17. Signed while in the Dominican, but suing under California laws. They are alleging predatory tactics, but no detail behind that.

[Elevator]

On 4/21/2025 at 6:25 PM, Caveira said:

Those who can.   Do.   Those who can’t.   Teach?

Not saying there is some truth to this, but most that teach at top academically competitive universities are enornmously talented and choosing to teach - often over other more lucrative but less rewarding paths.  This is not based on data, but anecdotal and observations resulting from advanced years.  By all means do your own research!

[Elevator]

On 4/27/2025 at 4:41 PM, Animal197 said:

I think a lot of the bigger programs have in house advisors for athletes with significant NIL deals. They don’t want athletes getting in trouble with taxes and etc.

 

one thing I’m wondering is for big-time prospects how long until the state’s tax laws start becoming a recruiting advantage. I believe TN, TX, and FL don’t have state income taxes. I saw when the QB from TN transferred to UCLA, that even though the deals were similar in total amounts (2 vs 1.75 million/year) because of CA income taxes his take home is much, much less in CA than what it was.

 

Probably only a football and basketball issue though.

I do not think schools will face liability for failing to provide tax and financial planning advice. Nevertheless, IMHO it is wise for schools to set up robust quality programs to do so for the long term benefit of their recruited athletes and programs receiving econimic benefits beyond non-taxable scholarships.  There is some risk to schools in entering that space and it must be done with skill and care. I would expect that a larg part of the advice from such programs would be to urge individuals to get a sound personal advisor or advisors with certain registrations, education, certification and even affiliations that can provide some indication of sound training, expertise, supervision, and most importantly ethical standards - all to protect from embezlement, fraud, abuse, and really stupid decisions like an athlete making a large concentrated investment (high % of net worth) into a start up business.

State income tax liaiblities often a modest part of the tax planning and tax compliance challenges - more the tail of the dog that is federal income tax compliance and planning than the dog itself. 

[Caveira]

1 hour ago, Elevator said:

Not saying there is some truth to this, but most that teach at top academically competitive universities are enornmously talented and choosing to teach - often over other more lucrative but less rewarding paths.  This is not based on data, but anecdotal and observations resulting from advanced years.  By all means do your own research!

How many of these are at the top?

In the U.S. (as a sample), the National Center for Education Statistics counted for 2020:

• 189,692 professors

• 162,095 associate professors

• 166,543 assistant professors

• 96,627 instructors

• 44,670 lecturers

• 164,720 other full-time faculty
  — totals to roughly 824,000 full-time faculty

[ionel]

1 hour ago, Elevator said:

Not saying there is some truth to this, but most that teach at top academically competitive universities are enornmously talented and choosing to teach - often over other more lucrative but less rewarding paths.  This is not based on data, but anecdotal and observations resulting from advanced years.  By all means do your own research!

Also most at the top level are engaged in research not simply "teachers."  How do you think your "smart phone" is even possible?