Royalty

A royalty is a percentage payment made to the athlete on each sale of merchandise, content, or other revenue-generating output tied to the deal. Royalties are most common in product-licensing NIL deals — co-branded merchandise, signature shoes, trading cards, video games, jersey sales — where the brand expects volume and the athlete wants upside beyond a flat fee. The key variables are the royalty rate (typically 5–15% for athlete merchandise, lower for established athletes with higher upfront guarantees), the royalty base (gross revenue vs. net revenue after returns, marketing, manufacturing costs), the reporting period (monthly, quarterly, annual), audit rights, and any minimum guaranteed royalty. Athletes should always negotiate audit rights — royalty disputes are the single most common payment dispute in licensing deals.