What Is a Valid Business Purpose in NIL? What Athletes Need to Know
10 min read
Most NIL deals are pretty straightforward. A restaurant might pay an athlete to post on social media, a clothing brand might pay them to wear its gear in an ad, or a local business might pay for an athlete to attend an event and meet customers.
The business pays the athlete because it gets something valuable in return.
This is the main idea behind one of the key rules in college NIL: what counts as a valid business purpose? It means there needs to be a real business reason for paying an athlete to use their name, image, or likeness.
Things get tricky when it is obvious money is being paid, but it is not clear why.
If a football player is offered $100,000 but the contract barely explains what the athlete needs to do, just calling it an NIL deal is not enough. There still needs to be a clear explanation for the payment.
This question matters even more now that NIL Go exists. Athletes can have third-party NIL deals reviewed to see who is paying them, what the business gets in return, and whether the payment matches the work.
For athletes and parents, knowing this before signing a contract can help avoid turning a good opportunity into a compliance issue.
The business pays the athlete because it gets something valuable in return.
This is the main idea behind one of the key rules in college NIL: what counts as a valid business purpose? It means there needs to be a real business reason for paying an athlete to use their name, image, or likeness.
Things get tricky when it is obvious money is being paid, but it is not clear why.
If a football player is offered $100,000 but the contract barely explains what the athlete needs to do, just calling it an NIL deal is not enough. There still needs to be a clear explanation for the payment.
This question matters even more now that NIL Go exists. Athletes can have third-party NIL deals reviewed to see who is paying them, what the business gets in return, and whether the payment matches the work.
For athletes and parents, knowing this before signing a contract can help avoid turning a good opportunity into a compliance issue.
What Is a Valid Business Purpose in NIL?
The rule itself is fairly specific.
NCAA Bylaw 22.1.3 says certain NIL agreements must have a valid business purpose related to promoting or endorsing goods or services offered to the general public for profit.
The NCAA also says that raising money to encourage an athlete to attend or compete for a particular school does not meet that standard.
You do not need to be a lawyer to understand the difference. Ask two questions: Why does this business want the athlete's NIL, and what is the athlete doing for the money?
There are plenty of good answers. An athlete could be paid to:
• Create social media posts for a company.
• Appear in a commercial.
• Promote a product or service.
• Attend a store opening or other event.
• Sign autographs.
• Host a camp or clinic.
• License a photo for an advertising campaign.
• Create content for paying subscribers.
These are all examples where someone is using the athlete's name, image, or likeness for a real reason.
It is harder to justify a deal when an athlete gets paid but does not have much work to do, or when someone pays for NIL rights without a clear plan for how to use them.
NCAA Bylaw 22.1.3 says certain NIL agreements must have a valid business purpose related to promoting or endorsing goods or services offered to the general public for profit.
The NCAA also says that raising money to encourage an athlete to attend or compete for a particular school does not meet that standard.
You do not need to be a lawyer to understand the difference. Ask two questions: Why does this business want the athlete's NIL, and what is the athlete doing for the money?
There are plenty of good answers. An athlete could be paid to:
• Create social media posts for a company.
• Appear in a commercial.
• Promote a product or service.
• Attend a store opening or other event.
• Sign autographs.
• Host a camp or clinic.
• License a photo for an advertising campaign.
• Create content for paying subscribers.
These are all examples where someone is using the athlete's name, image, or likeness for a real reason.
It is harder to justify a deal when an athlete gets paid but does not have much work to do, or when someone pays for NIL rights without a clear plan for how to use them.
How NIL Go Reviews NIL Deals
NIL Go is the system used by the College Sports Commission to review certain third-party NIL deals involving Division I athletes.
Third-party NIL compensation of $600 or more generally must be reported. Smaller payments from the same payor can also become reportable once they reach $600 in total. Enrolled Division I athletes generally have five business days to report a new or changed reportable deal.
There is more to the review than asking whether a company has a valid business purpose. Depending on the deal, NIL Go can look at:
• Who is paying the athlete. The payor's relationship with the athlete's school can matter.
• Why the athlete is being paid. There should be a real business reason for using the athlete's NIL.
• What the athlete is being paid. Compensation may be compared with similar NIL work.
The compensation rules were adjusted again in July 2026. Deals between $600 and $15,000 are not subject to the range-of-compensation review until an athlete reaches $50,000 in associated deals during an academic year.
But you still need a valid business purpose. Even a smaller deal can be a problem if there is not a real business reason for the payment.
Third-party NIL compensation of $600 or more generally must be reported. Smaller payments from the same payor can also become reportable once they reach $600 in total. Enrolled Division I athletes generally have five business days to report a new or changed reportable deal.
There is more to the review than asking whether a company has a valid business purpose. Depending on the deal, NIL Go can look at:
• Who is paying the athlete. The payor's relationship with the athlete's school can matter.
• Why the athlete is being paid. There should be a real business reason for using the athlete's NIL.
• What the athlete is being paid. Compensation may be compared with similar NIL work.
The compensation rules were adjusted again in July 2026. Deals between $600 and $15,000 are not subject to the range-of-compensation review until an athlete reaches $50,000 in associated deals during an academic year.
But you still need a valid business purpose. Even a smaller deal can be a problem if there is not a real business reason for the payment.
What the NIL Go Numbers Tell Us
Most NIL deals that get reviewed are approved.
Through July 1, 2026, the College Sports Commission reported 34,195 cleared deals worth $355.24 million. Another 1,812 deals worth $89.85 million did not clear.
So about 95% of submitted deals were approved.
The CSC also reported that 41% of submitted deals were resolved within 24 hours, while 63% were resolved within seven days once all required information had been submitted.
The dollar amounts are also worth looking at. Based on those totals, the average cleared deal was about $10,400, while the average deal that did not clear was about $49,600.
That does not mean a large NIL deal is a problem. A star athlete with a big audience could be worth far more than that to the right company. What it shows is why details matter when large amounts of money are involved. If a business pays an athlete $100,000, it should clearly explain what the athlete is expected to do for that money.
Through July 1, 2026, the College Sports Commission reported 34,195 cleared deals worth $355.24 million. Another 1,812 deals worth $89.85 million did not clear.
So about 95% of submitted deals were approved.
The CSC also reported that 41% of submitted deals were resolved within 24 hours, while 63% were resolved within seven days once all required information had been submitted.
The dollar amounts are also worth looking at. Based on those totals, the average cleared deal was about $10,400, while the average deal that did not clear was about $49,600.
That does not mean a large NIL deal is a problem. A star athlete with a big audience could be worth far more than that to the right company. What it shows is why details matter when large amounts of money are involved. If a business pays an athlete $100,000, it should clearly explain what the athlete is expected to do for that money.
What Does a Legitimate NIL Deal Look Like?
Imagine a nationally known quarterback signs a $250,000 advertising agreement with a major company.
The contract requires two commercial shoots, six social media posts, a photo shoot, two appearances, and permission to use the athlete's image in advertising for six months.
The company can clearly explain what it paid for: it wants a well-known athlete to help sell its product.
Whether $250,000 is a fair payment is a different issue. What matters here is that there is a real business reason for the agreement.
Now imagine an athlete receives $25,000 and has almost nothing to do in return.
A smaller payment does not automatically make a deal safer. If no one can explain what the business got for its $25,000, there could still be a problem with the business purpose.
A good NIL agreement should answer basic questions without making anyone guess:
• What product, service, event, or company is being promoted?
• What exactly does the athlete have to do?
• How many posts, videos, appearances, or other deliverables are required?
• When does the work need to be completed?
• Where can the company use the athlete's NIL?
• How long can the company use it?
• How much will the athlete be paid?
• What is the business getting for its money?
You should be able to read the contract and easily understand what is going on. "We are paying her $2,000 to make four Instagram videos promoting our new running shoe" is clear. "We are paying her $50,000 for future NIL opportunities" is much less clear and needs more explanation.
The contract requires two commercial shoots, six social media posts, a photo shoot, two appearances, and permission to use the athlete's image in advertising for six months.
The company can clearly explain what it paid for: it wants a well-known athlete to help sell its product.
Whether $250,000 is a fair payment is a different issue. What matters here is that there is a real business reason for the agreement.
Now imagine an athlete receives $25,000 and has almost nothing to do in return.
A smaller payment does not automatically make a deal safer. If no one can explain what the business got for its $25,000, there could still be a problem with the business purpose.
A good NIL agreement should answer basic questions without making anyone guess:
• What product, service, event, or company is being promoted?
• What exactly does the athlete have to do?
• How many posts, videos, appearances, or other deliverables are required?
• When does the work need to be completed?
• Where can the company use the athlete's NIL?
• How long can the company use it?
• How much will the athlete be paid?
• What is the business getting for its money?
You should be able to read the contract and easily understand what is going on. "We are paying her $2,000 to make four Instagram videos promoting our new running shoe" is clear. "We are paying her $50,000 for future NIL opportunities" is much less clear and needs more explanation.
The $7.5 Million Nebraska NIL Case
A real case involving Nebraska football shows why the details of an NIL agreement matter.
In 2026, 18 Nebraska football players had proposed NIL agreements with Playfly Sports, the school's multimedia rights partner. The agreements were worth a combined $7.5 million.
The College Sports Commission did not clear the original deals, and a neutral arbitrator upheld that decision in May.
One of the problems involved what is sometimes called "warehousing" NIL rights. Instead of tying the payments to specific NIL work, the agreements involved acquiring rights that could be used later.
The players and Playfly later reworked the agreements and submitted them again. By late July, the CSC had approved restructured NIL opportunities totaling $7.5 million for the same 18 players, with compensation tied to the players fulfilling responsibilities under the new agreements.
The size of the payment is what makes this example important. The $7.5 million did not go away just because the first agreements were not approved.
Instead, the structure of the deal changed. The new agreements clearly listed what the players needed to do to earn the money.
The valid business purpose rule is not meant to limit NIL deals to small amounts. The key is that the deal involves real NIL activity that explains the payment.
In 2026, 18 Nebraska football players had proposed NIL agreements with Playfly Sports, the school's multimedia rights partner. The agreements were worth a combined $7.5 million.
The College Sports Commission did not clear the original deals, and a neutral arbitrator upheld that decision in May.
One of the problems involved what is sometimes called "warehousing" NIL rights. Instead of tying the payments to specific NIL work, the agreements involved acquiring rights that could be used later.
The players and Playfly later reworked the agreements and submitted them again. By late July, the CSC had approved restructured NIL opportunities totaling $7.5 million for the same 18 players, with compensation tied to the players fulfilling responsibilities under the new agreements.
The size of the payment is what makes this example important. The $7.5 million did not go away just because the first agreements were not approved.
Instead, the structure of the deal changed. The new agreements clearly listed what the players needed to do to earn the money.
The valid business purpose rule is not meant to limit NIL deals to small amounts. The key is that the deal involves real NIL activity that explains the payment.
NIL Pay-for-Play vs. Valid Business Purpose
The easiest way to understand the difference is to look at the reason for the payment.
Suppose a restaurant pays a basketball player to create videos promoting its food. The restaurant wants customers, and the athlete provides advertising. There is a business reason for the payment.
Now suppose someone pays the same basketball player because they want her to play for a particular school.
The reason for the payment has changed. It is now connected to where the athlete plays rather than how a business plans to use her NIL.
The NCAA rule specifically says that raising money to encourage athletes to attend or participate in athletics at a school does not satisfy the valid business purpose requirement.
The wording in a contract does not change what is actually happening. If a contract says an athlete is being paid to promote something, there should be real promotional work involved.
Suppose a restaurant pays a basketball player to create videos promoting its food. The restaurant wants customers, and the athlete provides advertising. There is a business reason for the payment.
Now suppose someone pays the same basketball player because they want her to play for a particular school.
The reason for the payment has changed. It is now connected to where the athlete plays rather than how a business plans to use her NIL.
The NCAA rule specifically says that raising money to encourage athletes to attend or participate in athletics at a school does not satisfy the valid business purpose requirement.
The wording in a contract does not change what is actually happening. If a contract says an athlete is being paid to promote something, there should be real promotional work involved.
Why Was My NIL Deal Rejected?
If NIL Go does not approve a deal, do not assume it is because of the payment amount.
Several things can lead to questions during review:
• The payor's relationship with the athlete's school.
• A business purpose that is unclear or does not meet the requirements.
• Athlete responsibilities that are too vague.
• Compensation that raises questions under the applicable review rules.
• Missing information needed to understand the agreement.
It is important to find out what went wrong, because a deal that is not approved at first might still have a chance.
The Nebraska case is a good example. The original agreements did not clear, but revised agreements were later approved.
Depending on the situation, an athlete may be able to revise a deal, cancel it, resubmit it, or use the available arbitration process.
Do not ignore a deal that has not been approved and accept the money anyway. Going ahead with a deal that does not meet the rules can cause eligibility issues. When in doubt, your school's compliance office is the right place to ask before you act.
Several things can lead to questions during review:
• The payor's relationship with the athlete's school.
• A business purpose that is unclear or does not meet the requirements.
• Athlete responsibilities that are too vague.
• Compensation that raises questions under the applicable review rules.
• Missing information needed to understand the agreement.
It is important to find out what went wrong, because a deal that is not approved at first might still have a chance.
The Nebraska case is a good example. The original agreements did not clear, but revised agreements were later approved.
Depending on the situation, an athlete may be able to revise a deal, cancel it, resubmit it, or use the available arbitration process.
Do not ignore a deal that has not been approved and accept the money anyway. Going ahead with a deal that does not meet the rules can cause eligibility issues. When in doubt, your school's compliance office is the right place to ask before you act.
How We Handle Valid Business Purpose at NIL Club
At NIL Club, we focus a lot on valid business purpose because it is closely connected to how athletes earn on our platform. Whether the money comes from fan subscriptions or brand campaigns, there should always be real NIL activity involved. More than 650,000 student-athletes are registered on NIL Club across 2,000+ institutions and 27,000+ team clubs, and we have paid more than $50 million to athletes through the platform.
Athletes can earn in two main ways, and the business purpose is a bit different for each.
Fan Subscriptions
Our team clubs are student-run fan communities. Fans subscribe because they want exclusive content and updates from athletes they follow.
Athletes help promote their clubs and create content for subscribers. The fan pays for access, and the athletes use their NIL to create and promote what that fan is paying for.
That difference matters. We do not just pay someone because their name is on a college roster. The athlete is involved in the club and creates something for paying fans. If you want the fuller picture of how that steady income works, our guide on recurring vs. one-time NIL income breaks it down.
Brand Campaigns
Brand campaigns on NIL Club can take several forms depending on what a company is trying to accomplish. Some brands want to reach college athletes as customers, while others want athletes to introduce products to their own audiences or create content that the brand can use.
The work and payment structure can vary by campaign. Current campaign types include:
• Marketing directly to athletes: A company can offer its product or service to athletes on the platform and pay based on verified results, such as a purchase, sign-up, or other completed action. NIL Club reports that its network includes more than 650,000 verified student-athletes, representing about 5% of the U.S. college population.
• Athletes promoting products to their audiences: Athletes can share participating brands with their followers and earn when their promotion leads to a qualifying purchase or other conversion. In this type of campaign, the athlete is using his or her NIL and audience to help the company reach potential customers.
• Reviews and user-generated content: Brands can work with athletes who purchase or try a product and then create a review, photo, video, or other content based on that experience. This gives the company content from a verified customer that can be used alongside its product listings and marketing. NIL Club reports a 99% completion rate for reviews through this program.
These campaigns do not all pay athletes the same way, and it is not just about posting on social media. Depending on the campaign, payment might be tied to creating content, making a verified purchase, referring someone, signing up, or another clear action.
What matters for a valid business purpose is that you can clearly identify why the payment is being made. A company might pay an athlete to create content, introduce a product to followers, write a review, or help bring in new customers.
In every case, the payment is for a specific activity, not just because the athlete is on a roster or attends a certain school.
Athletes can earn in two main ways, and the business purpose is a bit different for each.
Fan Subscriptions
Our team clubs are student-run fan communities. Fans subscribe because they want exclusive content and updates from athletes they follow.
Athletes help promote their clubs and create content for subscribers. The fan pays for access, and the athletes use their NIL to create and promote what that fan is paying for.
That difference matters. We do not just pay someone because their name is on a college roster. The athlete is involved in the club and creates something for paying fans. If you want the fuller picture of how that steady income works, our guide on recurring vs. one-time NIL income breaks it down.
Brand Campaigns
Brand campaigns on NIL Club can take several forms depending on what a company is trying to accomplish. Some brands want to reach college athletes as customers, while others want athletes to introduce products to their own audiences or create content that the brand can use.
The work and payment structure can vary by campaign. Current campaign types include:
• Marketing directly to athletes: A company can offer its product or service to athletes on the platform and pay based on verified results, such as a purchase, sign-up, or other completed action. NIL Club reports that its network includes more than 650,000 verified student-athletes, representing about 5% of the U.S. college population.
• Athletes promoting products to their audiences: Athletes can share participating brands with their followers and earn when their promotion leads to a qualifying purchase or other conversion. In this type of campaign, the athlete is using his or her NIL and audience to help the company reach potential customers.
• Reviews and user-generated content: Brands can work with athletes who purchase or try a product and then create a review, photo, video, or other content based on that experience. This gives the company content from a verified customer that can be used alongside its product listings and marketing. NIL Club reports a 99% completion rate for reviews through this program.
These campaigns do not all pay athletes the same way, and it is not just about posting on social media. Depending on the campaign, payment might be tied to creating content, making a verified purchase, referring someone, signing up, or another clear action.
What matters for a valid business purpose is that you can clearly identify why the payment is being made. A company might pay an athlete to create content, introduce a product to followers, write a review, or help bring in new customers.
In every case, the payment is for a specific activity, not just because the athlete is on a roster or attends a certain school.
How We Approach NIL Compliance
Compliance is part of how we build opportunities at NIL Club.
Before we make a brand campaign available on the platform, we review it against NCAA guidelines and applicable state NIL rules. We also do not allow campaigns involving prohibited categories such as alcohol, tobacco, firearms, and gambling.
For team clubs, athletes earn by taking part in the club and helping create and promote content for subscribers. For brand campaigns, earnings come from promotional work or other specific actions set by the campaign.
That does not mean we can guarantee that every reportable NIL deal will clear NIL Go, and we would never tell an athlete that it does.
The College Sports Commission makes NIL Go determinations independently. The payor, compensation, terms of the agreement, and an athlete's individual circumstances can still matter.
What we can control is how NIL Club opportunities are set up. We make sure there is a real audience or business paying for something, real NIL activity from the athlete, and a clear reason linking the work to the payment.
We did not create NIL Club to get around the valid business purpose rule. We built it so athletes get paid for real uses of their name, image, and likeness.
Before we make a brand campaign available on the platform, we review it against NCAA guidelines and applicable state NIL rules. We also do not allow campaigns involving prohibited categories such as alcohol, tobacco, firearms, and gambling.
For team clubs, athletes earn by taking part in the club and helping create and promote content for subscribers. For brand campaigns, earnings come from promotional work or other specific actions set by the campaign.
That does not mean we can guarantee that every reportable NIL deal will clear NIL Go, and we would never tell an athlete that it does.
The College Sports Commission makes NIL Go determinations independently. The payor, compensation, terms of the agreement, and an athlete's individual circumstances can still matter.
What we can control is how NIL Club opportunities are set up. We make sure there is a real audience or business paying for something, real NIL activity from the athlete, and a clear reason linking the work to the payment.
We did not create NIL Club to get around the valid business purpose rule. We built it so athletes get paid for real uses of their name, image, and likeness.
What Athletes Should Check Before Signing
You do not need to be an NIL expert to accept money, but you should understand the deal before you sign.
Before signing, make sure you know:
• Who is paying you.
• Why they want to use your NIL.
• What work you have to complete.
• How many deliverables are required.
• When the work is due.
• How the company can use your NIL.
• How much you will be paid.
• Whether the deal needs to be reported.
• Whether your school or state has other requirements.
If you cannot answer these questions, make sure to ask before you sign.
There is also a quick test that can tell you a lot about an opportunity: Why is this business paying me?
"They want me to make four TikToks promoting their app" is a clear answer. "They want me to appear at their grand opening and meet customers" is another. "They want me to create exclusive content for fans who subscribe to our team club" also explains the transaction.
If the answer is simply, "They are paying me $50,000 because I play football here," the reason for the payment is very different.
It is much easier to understand the difference before you sign than to try to explain the deal after it has already been submitted for review. If you are just getting started with NIL, our guide for freshmen covers the basics worth knowing first.
Before signing, make sure you know:
• Who is paying you.
• Why they want to use your NIL.
• What work you have to complete.
• How many deliverables are required.
• When the work is due.
• How the company can use your NIL.
• How much you will be paid.
• Whether the deal needs to be reported.
• Whether your school or state has other requirements.
If you cannot answer these questions, make sure to ask before you sign.
There is also a quick test that can tell you a lot about an opportunity: Why is this business paying me?
"They want me to make four TikToks promoting their app" is a clear answer. "They want me to appear at their grand opening and meet customers" is another. "They want me to create exclusive content for fans who subscribe to our team club" also explains the transaction.
If the answer is simply, "They are paying me $50,000 because I play football here," the reason for the payment is very different.
It is much easier to understand the difference before you sign than to try to explain the deal after it has already been submitted for review. If you are just getting started with NIL, our guide for freshmen covers the basics worth knowing first.
Start Earning Through NIL Club
For us, a good NIL opportunity begins with athletes knowing exactly what they are being paid to do.
Through NIL Club, student-athletes can earn from fan subscriptions and brand campaigns tied to actual NIL activity.
As a student-athlete, you can claim your team's NIL Club at nilclub.com and explore the earning opportunities available to you.
Whether an athlete is making content for fans or doing work for a brand, we want the arrangement to be simple and clear. The athlete gets paid for real NIL activity, and the business or person paying gets something valuable in return. That is the same basic idea behind a valid business purpose.
Through NIL Club, student-athletes can earn from fan subscriptions and brand campaigns tied to actual NIL activity.
As a student-athlete, you can claim your team's NIL Club at nilclub.com and explore the earning opportunities available to you.
Whether an athlete is making content for fans or doing work for a brand, we want the arrangement to be simple and clear. The athlete gets paid for real NIL activity, and the business or person paying gets something valuable in return. That is the same basic idea behind a valid business purpose.
