The NIL & Revenue-Sharing Shift: Why Parents Need to Pay Attention

In 2025, college sports entered a new era. The combination of Name, Image, and Likeness (NIL) deals and the adoption of revenue-sharing models—brought on by a landmark legal settlement—has completely reshaped the recruiting landscape. On paper, it looks like a win for athletes, but in reality, it’s a system filled with complexity that parents and players cannot afford to ignore.

The Fine Print: Taxes & Performance Pressure

For every headline-making NIL deal, there’s a fine-print reality: athletes must pay taxes on NIL earnings, often without guidance. Parents and athletes who don’t set up proper financial structures risk tax penalties that can wipe out the benefits of these deals. Even worse, many NIL agreements include performance clauses—if an athlete doesn’t produce on the field, the contract can shrink or disappear. What looks like guaranteed money is, in many cases, tied directly to on-field success.

“Families hear the number, not the details,” one compliance officer told ESPN. “You have to treat NIL income like a business, because that’s what it is.”

The Unequal Playing Field of Collectives

Adding another layer of complexity are NIL collectives—donor-funded organizations designed to pool money for athlete compensation. But not all collectives are created equal. Powerhouse programs with deep-pocketed alumni bases can offer six- or seven-figure packages, while smaller schools scramble to keep pace.

This disparity has turned collectives into competitive weapons, shaping winners and losers in real time. Top high school recruits are being swayed by the promise of bigger NIL payouts, leaving mid-major and historically underfunded programs struggling to attract elite talent.

“Collectives are the new arms race,” an FCS coach explained. “It’s not about facilities anymore—it’s about who can guarantee the bigger check.”

The Funding Gap

For schools like HBCU Morgan State and other smaller programs, sustaining NIL and revenue-sharing obligations is a steep challenge. Many rely on “buy games”—lucrative matchups against major programs—to generate funds. Others turn to grassroots fundraising and creative donor campaigns. Without competitive financial packages, even talented programs risk losing recruits to schools with stronger NIL support.

Why Parents Need to Get Informed

Parents are now stakeholders in their child’s athletic career in ways they’ve never been before. Understanding tax responsibilities, contract terms, and the true value of NIL deals is critical. Athletes need trusted advisors, whether that’s financial planners, tax experts, or compliance officers, to ensure the deals they sign provide real, lasting benefits.

The NIL and revenue-sharing era offers unprecedented opportunity, but also unprecedented risk. Those who are prepared will thrive. Those who are uninformed may not only lose out on money but also jeopardize their eligibility, their brand, and their future.

The Bottom Line

The balance of power in recruiting is no longer just about wins and losses on the field. It’s about financial infrastructure, NIL collectives, and the ability to sustain revenue-sharing models. Parents and athletes who understand this landscape—and navigate it wisely—will find themselves ahead of the curve in a system where business acumen is just as important as athletic talent.