The Business of College Athletics

Managing NIL Risk in a New Financial Era

Originally published August 2026

Name, Image, and Likeness (NIL) allows college athletes to earn money from their personal brand through endorsements, sponsorships, and partnerships. Since the emergence of NIL rights in 2021, college athletics has evolved into a sophisticated, multi-billion-dollar marketplace. What began as a new opportunity for athletes has quickly become a core financial and strategic function for universities, particularly in recruiting and roster management.¹

The NIL marketplace has developed into two distinct chapters. The first, spanning roughly 2021 through 2025, was largely driven by athlete endorsements, donor-backed collectives, and a patchwork of state regulations that created varying competitive environments across universities. During this period, much of the financial risk associated with athlete compensation resided outside the university itself.

The second chapter began in 2025 with the approval of the House v. NCAA settlement. For the first time, Division I institutions that opted into the new revenue-sharing framework were permitted to compensate athletes directly, transforming athlete compensation from a largely third-party ecosystem into one funded and managed by universities themselves.² As universities take on direct financial responsibility for athlete compensation, they also assume new legal, operational, and financial risks.

As a result, college athletics is increasingly operating like an investment portfolio. Universities are committing significant resources to attract and retain talent, yet those investments remain exposed to inherent uncertainty. Injury, roster turnover, and performance variability create measurable financial risks that universities have historically lacked the tools to manage.

In response, new insurance-based solutions are emerging to help align investment with financial protection. These offerings represent an important step toward a more structured approach to risk management in the evolving economics of college athletics.

College athletics has entered a new era where universities are no longer observers of athlete compensation—they are investors directly responsible for managing its risks and rewards.

A New Era in College Athletics

The transformation of college athletics did not begin with the House settlement. Its roots can be traced to a series of legal and regulatory developments that reshaped how athletes could be compensated.

A key milestone was the O’Bannon v. NCAA case, which successfully challenged the NCAA’s restrictions on athletes benefiting from the commercial use of their names, images, and likenesses. The case helped lay the foundation for the NIL era by establishing that athletes could not be entirely excluded from the economic value they help create.³

Years later, the NCAA v. Alston Supreme Court decision further accelerated change by striking down limits on certain education-related benefits for athletes. While Alston did not establish NIL rights, it reinforced growing legal scrutiny of longstanding NCAA compensation restrictions and contributed to the momentum for broader reform.⁴

The first chapter of the NIL era that followed was characterized by rapidly changing state laws, athlete endorsement opportunities, and the rise of booster funded collectives. Universities benefited from enhanced recruiting and retention opportunities, but much of the financial activity occurred outside university budgets and oversight.

The most significant shift occurred in 2025 with approval of the House v. NCAA settlement. The settlement ushered in a new model centered on direct revenue sharing, allowing eligible Division I universities to distribute a portion of athletic revenues directly to athletes. Beginning with the 2025-26 academic year, schools gained the ability to allocate millions of dollars annually through structured compensation programs.⁵

This marks the beginning of the second chapter of athlete compensation. For the first time, universities are not simply participants in the NIL ecosystem. They are central financial stakeholders. Universities now bear direct responsibility for athlete compensation, placing legal obligations, financial exposure, and risk management squarely within the athletic department and broader university administration.

The result is a fundamental shift in how college athletics operates. What was once an external marketplace supported by collectives and third parties is becoming an institutional business function that requires the same level of financial discipline, oversight, and risk management as other major university investments.

The Economics of NIL: From Opportunity to Obligation

As NIL has evolved, it has become a standard part of how universities operate. What was once managed externally by donors and collectives is now embedded within university budgeting, compliance, and strategic planning. Financial decisions tied to athletics increasingly involve not just athletic leadership, but also teams across finance, legal, and risk management.

The scale of investment has expanded accordingly. Revenue-sharing frameworks allow universities to distribute approximately $20.5 million per year to athletes, with the potential for growth over time as caps increase. 4 This figure often represents only a portion of total athlete-related spending when combined with broader NIL activity, including commercial endorsements and third-party agreements.

NIL is no longer optional; it’s necessary. Recruiting and retention are now closely tied to financial offerings, and universities face ongoing pressure to invest in order to keep pace. NIL spending has become both a strategic tool and a regular cost of doing business.

NIL is no longer optional. Programs need it just to remain competitive.

The Risk Shift: Universities Are Now on the Hook

This shift to direct university involvement is more than an operational change. It introduces real financial risks for universities.

In the early years of NIL, most of that risk sat with donors and collectives that funded athlete compensation. Universities played a role, but they were not directly responsible for the investment.

The House settlement has changed that dynamic. By allowing direct payments, it shifts a significant share of that financial risk onto universities. Universities are now committing their own resources, with expectations tied to an athlete’s availability, performance, and ability to stay in the program.

These commitments take several forms, including revenue sharing, NIL-supported recruiting incentives, and multi-year investments in athletes. Together, they create meaningful financial risk tied to uncertain outcomes. At the highest levels of competition, total roster spending can reach tens of millions each year, underscoring the scale of this shift. ⁵

The Hidden Costs of NIL

While the headline figures around NIL investment often draw the most attention, the risks behind them are just as important. One of the most immediate and measurable risks is injury.

An athlete’s availability directly affects both team performance and the value tied to NIL commitments. When injuries sideline key players, universities may still be responsible for fulfilling financial agreements, even if on-field contributions are reduced. Traditionally, college athletics has not had a consistent way to manage this type of risk.

Roster dynamics add another layer of complexity. The transfer portal has made athlete movement more common, creating uncertainty around how long investments will last and whether they will deliver the expected return. Performance variability further adds to this uncertainty, as outcomes do not always align with what programs anticipated when commitments were made.

Taken together, these factors create a risk environment shaped by high-cost investments and uncertain outcomes. With roster spending reaching tens of millions annually at the top levels, much of it without guaranteed return, the need for more structured approaches to managing risk becomes clear.

The Insurance Protection Gap

In professional sports, contract insurance is a well established tool used to manage financial exposure associated with player injuries. Teams routinely insure significant portions of athlete contracts, integrating risk management into their financial strategy.

College athletics, by contrast, have lagged in adopting similar practices. Structural differences, such as the non-employee status of athletes, fragmented NIL agreements, and evolving regulatory frameworks, have historically limited the development of comparable solutions.

The result is a clear protection gap. Universities are now making larger and more direct financial commitments than ever before, yet many of these investments remain unprotected. This gap is becoming increasingly visible as NIL spending grows, and financial stakes rise.

Financial exposure has scaled faster than risk protection.

NIL as an Emerging Institutional Risk

The growing financial complexity of college athletics is increasingly being recognized at the institutional level. In fact, athletics has recently been identified as one of the top ten risks facing colleges and universities for the first time, with NIL-related pressures cited as a contributing factor.⁷

This recognition reflects a broader shift in how athletic programs are viewed. No longer isolated from core financial considerations, they are now integrated into enterprise risk discussions alongside areas such as cybersecurity, compliance, and financial stability.

For university leadership, this elevates the importance of discipline, transparency, and forward-looking risk management in athletic decision-making.

"As our NIL investments have grown, so has the need to protect them. Having a solution that addresses injury risk gives us greater confidence in how we support our athletes while managing financial exposure.”

Big East Athletic Director, Division I Program

Emerging Solutions: A Targeted Approach to Risk Management

As the NIL ecosystem continues to evolve, new solutions are beginning to address specific areas of exposure. One such area is injury-related financial risk, which is both measurable and insurable.

Recent offerings, such as Critical Injury Protection Insurance developed through the collaboration between Zurich North America and Players Health, are designed to help protect university investments tied to athlete availability. These policies provide coverage for NIL-related financial commitments when a qualifying injury causes an athlete to miss a significant portion of the season, typically around 40 percent or more.⁶

The Path Forward

The trajectory of NIL points to continued growth in both scale and complexity. Revenue-sharing models are likely to expand, deal structures will become more sophisticated, and financial commitments will continue to rise across programs.

As this evolution continues, universities will need to move beyond reactive approaches and adopt a more structured way of managing risk. This means not only understanding the financial impact of NIL investments but also putting protections in place where it makes sense.

A clear pattern is beginning to emerge. College athletics is moving through three stages: initial spending, followed by more disciplined management, and ultimately, a greater focus on protecting those investments. Universities that get ahead of this shift will be better positioned to stay competitive while sustaining their programs over time.

In this new environment, success will depend not just on how much universities invest, but on how well they manage and protect those investments.

References

Opendorse, NIL at 3 & NIL at 4 Reports (market growth data) [biz.opendorse.com], [thestudent...visors.com]
RallyFuel, 2025–2026 NIL Market Overview (market projections, $2.75B) [blog.rallyfuel.com]
College Sports Commission, House Settlement Overview (revenue sharing structure) [collegespo...ission.org]
LegalClarity, Revenue Sharing Explained (per-school cap ~$20.5M) [legalclarity.org]
MyPerforma, Revenue Sharing Breakdown (implementation timing and totals) [linkedin.com]
Zurich North America, Players Health NIL Injury Insurance Release (coverage details and trigger threshold) [zurichna.com]
United Educators / Inside Higher Ed, Top Risks Report 2026 (athletics as emerging institutional risk) [insidehighered.com]

About Zurich

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