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Give up your comp for 15 years?

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Rob Hillas

September 15, 2023

Really how much would someone have to pay you for 15% of your total comp for the next 25 years?

It’s not a common deal, but these sorts of arrangements happen in sports. Gervon Dexter, who was drafted by the Chicago Bears earlier this year, signed a Name, Image, and Likeness (NIL) Agreement with Big League Advance Fund (BLA) and was paid $436,485. Less than a year later the Chicago Bears selected Dexter in the second round of the NFL draft and signed him to a 4 year, $6.72 million contract. That means that BLA would receive over a million dollars, or 2.3 times the money Dexter initially received just on his first contract. AND BLA then gets 15% of everything that comes after. Dexter has sued BLA in federal court.

Here are some important takeaways from the whole scenario:

  1. Not all NIL Agreements are the same.
    Most NIL agreements only cover the time an athlete is in college and end when the athlete leaves school. That sort of arrangement makes sense because all kinds of things happen after an athlete is done with collegiate competition. They can go pro, they can go to med school, they can start a band. This agreement, however, covered a much longer period of time, which is atypical to say the least.
  2. A small number of words can have a HUGE impact.
    The agreement states: “[i]n consideration for [Dexter’s] NIL Services and other obligations described herein, including, if applicable the Extended Term,”. Five words: if applicable the Extended Term change this agreement from something that ends when Dexter is no longer eligible for college athletics to 15% of his NFL earnings.
  3. There was very little time for deliberation. According to the lawsuit:
    Gervon Dexter received the contract on May 16th at about 8 o’clock at night.
    He’d signed the contract about 14 hours later.
    The agreement was countersigned about two hours after that.

Our thoughts: We aren’t here to say that if this was a good deal or a bad deal, or if something nefarious occurred. We don’t know because we weren’t there and there are many good reasons to sign a contract that may seem peculiar to someone without all the facts. We do think, however, that this sort of arrangement highlights the importance of transparency. When you’re using a PlainVanilla agreement you get instant feedback on what’s normal and what’s unusual. It’s critical information that allows everyone to get to the right deal for them AND know more about what they’re signing. It’s especially important when the deal is moving quickly like this one did. Less confusion and more information mean better deals and fewer lawsuits.

We think everyone is in favor of those outcomes.

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