‘This is a really great opportunity for student athletes’: Sandra Richards on the NIL bill

Morgan Stanley Global Sports & Entertainment Managing Director Sandra Richards sat down with Yahoo Finance’s Sibile Marcellus to discuss the NCAA’s NIL bill, how the business of sports will change for college athletes, and what Morgan Stanley is doing to support amateur athletes.

Video Transcript

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SIBILE MARCELLUS: Welcome back to "A Time for Change." It's been about two weeks since the NCAA announced that college athletes can finally profit off of their name, image, and likeness, which is often referred to as NIL. And we're already seeing some very lucrative deals even for athletes who haven't even played their first college game yet. But how do they manage that financial windfall and figure out which partnerships to make? I sat down and spoke with Sandra Richards, managing director of Morgan Stanley's Global Sports and Entertainment Division, about how her team is helping college athletes figure this all out.

SANDRA RICHARDS: Financial education is the cornerstone of what we do in our Global Sports and Entertainment Business. So we're able to go out and offer our programs, especially to these college athletes who are getting opportunities that they're seeing that could be from 10,000 to, you know, 100-- or I mean, we saw a $2 million contract. But what do you do with that? How do you ensure that you're preserving what you're getting at this time while you're in college? You know, you're probably not even thinking about that. But that's something that we want to make sure that these college athletes have the information at hand and make an informed decision when it comes to their finances.

SIBILE MARCELLUS: And going forward, will college athletes make up a significant portion of your business?

SANDRA RICHARDS: It remains to be seen because it's still pretty new. And you have a number of headlines where you're seeing these big deals come across. But that is still for us to determine in the future. But in terms of from a client base or even just supporting these college athletes, while they may not be clients now, it is still imperative to us that they are still getting out on the right financial footing, whether they're going to go off and go on to a professional career, or they're going to go into corporate America or be entrepreneurs. We still want them to be armed with the right information.

SIBILE MARCELLUS: Well, is now kind of like the wild west when it comes to college athletes' earnings? Or is the infrastructure in place if they get that big break to sign, for example, a multimillion dollar deal?

SANDRA RICHARDS: I mean, it is interesting just, again, to watch the headlines, just like everyone else, about the varying of the deals, the level of the deals, the types of deals that these student athletes are getting. When we think about these student athletes, again, it is important to us that they are armed with knowing how to navigate not only just the deals that are coming to them, but putting their team in place.

Who do they need to have? Do they need to have a financial advisor? Do they need a CPA? Do they need an attorney? So it's the education, but also building the team around them to help them navigate through what is, as you said, the wild, wild west. You need some help in navigating that space, especially you have this new.

SIBILE MARCELLUS: And you said about building a team. So Morgan Stanley helps college athletes with that. But when do you decide to actually take them on as clients? Is it after they've signed a deal worth thousands or millions of dollars, or is it before? What's your threshold?

SANDRA RICHARDS: Well, there are some stipulations where it comes from the rules with the college-- the colleges and universities, as to when a financial advisor can really engage. And we're still waiting to see how those rules start to play out. But typically, right now, in this phase, we're more of offering a service, which is focusing on financial education. Typically, with college students, prior to the NIL, it was when they were declaring for the draft, whether it was the NFL, NBA, WNBA, and the like. So it's still yet to remain seen how the rules are going to play out. But for right now, we're just offering the service of financial literacy and education to these players.

SIBILE MARCELLUS: Football and basketball are the traditional moneymakers when it comes to college sports. Will this impact other athletes?

SANDRA RICHARDS: Absolutely, I think that if you-- certainly if you have a brand, when you think about social media and the following that volleyball players and lacrosse, I think that there's a wide open opportunity for these athletes to make money, either in local endorsements, national endorsements, regional types of businesses, trying to engage these student athletes. I think there's the world of opportunity is going to be open to others outside of the NFL or football and basketball.

SIBILE MARCELLUS: So how do you position your athletes for their wealth to grow over the long term versus a big payday?

SANDRA RICHARDS: So really, I mean, before you-- I would say that our advisors are hooked in having these conversations with the athletes and their clients in that what do you-- what are you in this for? What are you trying to achieve? What is your end goal? And so no matter what deals are coming to you, you can determine, is this the deal right for my brand? Is this going to help me to get to my end goal quicker or slower, faster? But at the end of the day, it's putting the plan in place. What is your plan? What do you want to ultimately achieve? Then you can navigate through and look at how these deals can help you get to your ultimate goals.

SIBILE MARCELLUS: And what are the financial implications for college athletes trying to make money right now, but hoping to turn pro?

SANDRA RICHARDS: Well, one is just making sure that you understand the opportunity that's at hand in terms of when you get these deals, understanding how to ensure that you don't get caught up in some tax issues of not paying taxes and all the other things that come along with making money and becoming a brand and endorsing certain brands and how you are paid. Understanding the difference between a W-2 and a 1099, like what does that mean?

I think this is a really great opportunity for these student athletes. And these college athletes at this time, especially in an age of social media and the opportunity that they have, is just make the best of it. Make the most of it. And how to make the most of it is making sure that you're clearly informed and educated about the opportunities.

SIBILE MARCELLUS: Make the most of it, but what about those traps? What advice do you give to college athletes to avoid those traps that are out there?

SANDRA RICHARDS: So that's when you have, like, that team that I talked about earlier, is constructing that team and helping that team to help you navigate, whether it's your press person or your media person. Is this the right brand I should associate myself with? When you talk to your financial advisor, I have this opportunity. They gave me a 10-year deal. Is this right? And how the payout structure is, is this right? Talk to your accountant. Is this a great opportunity for me? Is this locking me in?

And certainly, having the legal team reviewing all documents before you sign it. Look, it can be a situation where you can be caught up in some situations that can't be-- you can't unwind. But again, education helps you to look at things. And time, time is on your side that you don't have to rush because somebody put a deal in front of you. Take your time. Look at it, and evaluate it. And talk to your team.

SIBILE MARCELLUS: NCAA has also talked about possibly having some kind of federal law to kind of oversee how different states deal with this issue. What's your take on that?

SANDRA RICHARDS: Well, you know, it could be interesting. Because if you look at-- if you just have, like, a top of the house mandated law that everyone is governed by, then, you know, if you take a school that allows a student to wear their intellectual property during a brand deal, where another school probably doesn't do that, then is the school going to have a competing war for recruiting? Is everybody on the same playing field?

So I think that those are some of the things that the NCAA is certainly, I'm sure, is having those conversations, is that the schools end up being the playing field that you don't have your schools or your conferences going at each other when things are uneven.