OVERVIEW
VALUATION OF YOUR NAME, IMAGE AND LIKENESS
You are an athlete or entertainer. People recognize you. So, there is value in your name, image, reputation and goodwill, also known legally as name, image and likeness or “NIL”). The real question becomes how much is your NIL worth? Only when there is a valuation can that seller confidently say “You can buy my house for $300,000 – the appraised market value. The concept is the same in housing. Typically, a house will not sell until there is an appraisal. That appraisal contains well-established methods of valuation to arrive at a market value.
Although housing involves real estate – tangible assets, the same principle applies to intangible assets like goodwill, reputation, trademarked logos, and yes – NIL. Say Nike wants to pay you for the use of your name to endorse a new brand of shoe. Until you and Nike agree on a value for your name, there is no deal. Once there is a valuation, then you, like the seller of a house can have a viable negotiating position because well-established methods of valuation support that number.
The NIL valuation should not be confused with monetization of social media. If your name is attached to ads on a website, the cash paid is monetization. That monetization shows an amount of money at a particular time based on the current ads. The NIL valuation examines both the current revenue and the present value of future benefits.
An example helps with the present value concept. Assume hypothetically two running backs have identical stats, look and act the same, and have nearly identical circumstance. But one running back, George, was on a team that won the Super Bowl. George is healthy and has the same returning linemen that made him successful. The other running back, John, was on the worst team in the league and he had a career-threatening injury in the last game of the season. George, the Super Bowl winning running back would likely gain more money from his name in an endorsement deal. The reason isn’t in the statistics, their images or likeness. The difference is in the anticipated future. George should have more fan adoration and therefore more value to his NIL. A valuation would establish a value based on the increased benefit to the him and the product he endorses.
A valuation of NIL is important because it established an asset. It is an appreciating asset if it is anticipated that the value will increase over time, like George. The valuation then provides a basis for increased net worth. The asset of the NIL can also become collateral for a loan. A lender that can access the assets of the borrower in case loan payments are missed, the more secure the lender feels that it will be made whole on the loan. The assets are pledged to secure the loan. You can therefore envision NIL as an asset that may increase your borrowing power.
If you want to explore how a valuation of your NIL can avail you of the above-described benefits, complete the form below. We’ll get back to you.