College sports have changed a lot lately, especially with the introduction of Name, Image, and Likeness (NIL) money. Now, student-athletes can get paid—and colleges in low-tax states are using that to their advantage.
It’s not unlike what pro teams and celebrities have done for years. Suddenly, state tax policies are a new part of the recruitment game, and it’s shaking things up in ways we’re only beginning to see.
The Rise of NIL Money in College Sports
With NIL, college athletes can make money from their personal brands. That includes branding deals, autograph sessions, and a bunch of other promotions.
Some undergrads are reportedly raking in millions each year. Colleges in low-tax states have caught on, using those financial perks to lure top recruits.
Florida and Texas: Leading the Charge
Florida’s lack of income tax has made it a hot spot for athletes looking to keep more of their earnings. The University of Central Florida even went viral after posting about the state’s tax advantages on social media.
Texas Christian University is on the same page, promoting both its tax benefits and its sunny weather. Both states are making a strong case for athletes who want to maximize NIL income.
The Professional Athlete Playbook
This whole approach isn’t new for professional athletes. They’ve factored in state taxes for years when signing contracts.
Take a $50 million deal with the Miami Dolphins—it’s simply worth more than the same deal with the LA Rams, thanks to California’s higher taxes. Sports economist Andrew Zimbalist says it’d be surprising if college athletes weren’t paying attention to this, even if there’s no hard data yet.
More Than Just Taxes
But honestly, taxes are just one part of the puzzle. Former NFL player and analyst Femi Ayanbadejo points out that athletes care more about the total money, playing time, and their draft chances.
Sure, saving on taxes is nice, but it’s usually not their top concern.
Regulation and Protection of NIL Agents
The growth of NIL deals has brought a new wave of agents. The Federal Trade Commission (FTC) has started keeping an eye on them to make sure they’re not taking advantage of student-athletes.
Recently, the FTC sent letters to 20 schools to check if they’re following the Sports Agent Responsibility and Trust Act. The goal: protect athletes from shady practices.
The Role of Major Donors
Big donors and boosters have a huge influence here, too. Miami, for example, has UFC’s Dana White and mega-booster John Ruiz in its corner.
Indiana’s got billionaire alum Mark Cuban helping out. Having these backers gives schools an extra edge when it comes to attracting athletes.
The Impact of the Transfer Portal
The transfer portal, introduced in 2018, has given college athletes more freedom to switch schools. Now, they have more control over where they play and what opportunities they chase.
Zimbalist describes the top players as basically free agents. They’re out there, seeing who can offer them the best deal—on and off the field.
Building a Winning Program
Still, there’s more to building a winning team than just NIL money or tax breaks. Neither Miami nor Indiana, this year’s national title contenders, cracked the top ten in NIL spending.
As Ayanbadejo points out, coaching, team culture, and the right system matter just as much. Indiana’s turnaround from perennial underdog to title contender is proof that money isn’t everything in college sports.
Conclusion
NIL money is changing the way college sports recruiting works. State tax policies are starting to play a bigger role too.
Tax advantages matter, but they’re just one part of the whole story. Players still care a lot about things like playing time, coaching, and the strength of a program.
Honestly, nobody knows exactly how all these changes will shake out. But it’s hard not to wonder what college athletics will look like in a few years.
Want to dig deeper? Check out SAN’s comprehensive article on NIL payouts and state tax strategies.
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