As the NCAA and its member institutions scramble to comply with the impending terms of the House v. NCAA settlement, a new tactic has emerged among athletic departments hoping to avoid employee classification for college athletes: label the new revenue-sharing payments as “royalty income.” It’s a clever workaround, one that promises compliance with IRS standards, immigration law, and the NCAA’s hands-off employment stance—all without triggering payroll obligations or labor protections.
But beneath the surface, this maneuver isn’t just legally shaky—it’s another glaring sign that college athletics’ leadership is playing defense instead of solving structural problems. And for international student-athletes, the consequences could be career-ending.
The Royalty Illusion
Here’s the pitch: Instead of treating athlete compensation under the House settlement as wages or salary, schools will issue Form 1099-MISC designations labeling the funds as “royalties” for the use of a player’s name, image, and likeness (NIL). These payments, the argument goes, are for the licensing of intangible property—not athletic labor.
This classification is particularly attractive because royalties are not subject to payroll taxes, nor are they considered “employment income” under F-1 visa restrictions for international students. In theory, this lets schools legally pay all athletes—citizens and non-citizens alike—without risking immigration violations or triggering a redefinition of athletes as employees.
But as immigration and tax attorneys Ksenia Maiorova and Amy Maldonado explain in their detailed piece for AthleticDirectorU, that theory falls apart under scrutiny.
A Legal Tightrope Walk
Under both tax and immigration law, the key distinction between royalty and wage income comes down to activity. Passive income (e.g., book royalties or licensing fees) is generally permitted for international students on F-1 visas. Active income (like pay for performing, working, or—in this case—playing a sport), is considered employment and strictly prohibited unless explicitly authorized.
Even if the checks are labeled “royalties,” if the underlying activity is seen by authorities as labor, the risk of violating federal law is high. The U.S. government has historically shown little tolerance for semantic games in immigration enforcement. The notion that playing football on national television, wearing licensed gear, in front of tens of thousands of fans can be classified as “passive” income stretches credibility.
Put simply: you can’t just repackage labor as licensing and expect federal agencies to look the other way.
Who Loses the Most? International Athletes
International student-athletes already walk a tightrope. They’re limited in work opportunities, barred from most NIL participation unless deals are entirely passive, and constantly at risk of visa violations if they misinterpret a gray area.
Labeling House payments as royalties might give schools a legal fig leaf, but it leaves international athletes exposed. If immigration authorities interpret their payments as unauthorized employment—and there’s good reason to think they might—these athletes could lose their visa status, face deportation, or be barred from re-entry into the U.S.
For athletes who already face barriers to access and representation in NIL and legal reform efforts, this isn’t a small oversight—it’s a systemic exclusion.
No Worker Protections, No Clarity, No Voice
The royalty workaround also helps institutions delay the uncomfortable but necessary conversation about employment. If schools can claim athletes aren’t employees, they avoid collective bargaining, payroll taxes, workers’ comp, and the broader reckoning over what athlete labor really means in today’s billion-dollar college sports ecosystem.
But kicking the can down the road doesn’t solve the problem. It just creates a patchwork of legal fictions, opaque practices, and growing resentment. Athletes—especially those impacted most, like international players—remain in the dark about their rights, risks, and long-term prospects.
Who’s Actually Shaping This Future?
Despite the rhetoric of reform, the power players crafting the future of college sports compensation don’t seem especially interested in athlete input. As the House v. NCAA settlement inches closer to implementation, we still have no clarity on how international athletes will be protected. There’s no explanation for the rationale behind roster limits. And there's zero visible momentum toward a student-athlete driven collective bargaining model.
It’s not just that international athletes are being left behind—it’s that the entire structure is being built around avoiding their concerns, not addressing them.
If this is what the new era of athlete compensation looks like—patchwork labels, vague promises, and ignored objections—it’s hard to see it as a win. Because when solutions are designed without the people they’re supposed to serve, they’re not solutions at all. They’re just delays.
