Protecting Your Earnings During Lockout Periods

Lockout periods arise from NCAA investigations, sponsor contract disputes, or labor negotiations, halting NIL deal payments for weeks or months. A 2023 Sportico report estimates 15% of NIL athletes faced income disruptions in 2022 due to compliance reviews, costing $50K–$500K per athlete. Unlike salaried professionals, athletes rely on variable endorsement income, making lockouts a liquidity crisis.

Tax obligations (up to 37% federal, plus state) don’t pause, and mismanaged cash flow can trigger penalties or forced asset sales. The 3.8% Net Investment Income Tax (NIIT) on endorsement gains (AGI > $250,000) adds pressure. Ron’s fiduciary approach, honed through decades of scam-busting, uses diversified income streams and liquidity buffers to shield athletes from these risks, ensuring wealth security.

Five Elite Tactics to Protect Earnings During Lockout Periods

NIL athletes must fortify their finances with precision to weather lockout periods. Here are five tactics to ensure wealth security:

1. Build a Liquidity Buffer: Maintain 6–12 months of living expenses in a high-yield savings account or money market fund. Access funds instantly without selling assets.
   
2. Diversify Income Streams: Invest in dividend-paying ETFs or blue-chip stocks (e.g., SPYD, JNJ) to generate passive income (2–4% yield). Reinvest dividends to compound wealth.
   
3. Pre-Fund Tax Obligations: Reserve 30–40% of NIL income in a dedicated tax account to cover federal, state, and NIIT liabilities. Automate quarterly estimated tax payments.
   
4. Use Short-Term Bonds: Allocate 20–30% of earnings to Treasury bills or municipal bonds (3–5% yield, 1–3 year maturities) for stable, tax-efficient income during lockouts.
   
5. Hedge with Covered Calls: Sell covered calls on low-volatility stocks (e.g., KO) to generate 1–3% monthly premiums, providing cash flow without liquidating holdings.

Actionable Tips from Ron McCoy

• Audit Your Cash Flow Monthly: Track NIL income and expenses with tools like Mint to spot lockout risks. Ron warns: “No cash flow plan, no financial freedom.”
  
• Automate Savings Transfers: Set up auto-transfers (e.g., $10K/month) to a high-yield account. Ron’s rule: “Lock away liquidity before you spend.”
  
• Engage a Tax Strategist: Work with a CPA to project tax liabilities and fund reserves. Ron’s Oxford Club network ensures compliance with IRS rules.
  
• Monitor NCAA Updates: Follow Sportico or ESPN for NIL compliance news to anticipate lockouts. Ron’s clients stay ahead of regulatory shifts.
  
• Reinvest Passive Income: Channel dividends and call premiums into munis or growth stocks for tax-free compounding.

Challenges and Considerations

Periods when income stops or is delayed can be especially tough for those relying on sponsorships or endorsement deals. Fluctuating earnings make it important to plan for liquidity, so that essential expenses and taxes can still be covered during unexpected pauses.

Complex tax situations, such as earning income in multiple states, can add another layer of difficulty. It is also easy to fall into the trap of overspending when wealth comes quickly, which can drain reserves faster than expected.

Regulatory changes or disputes, like those affecting NIL agreements, can extend these lockout periods. Emotional decisions, like selling investments in a panic or spending too much during the good times, can further complicate things. Planning ahead, staying disciplined, and working with trusted professionals can help manage these risks and support long-term stability.

Conclusion

Lockout periods are a cash flow killer for NIL athletes, but elite planning ensures wealth security. Ron McCoy’s 40+ years of fiduciary mastery—stopping scams and building empires—prove it’s about strategy, not survival.

Book a free Strategy Call at freedomcapitaladvisors.com to fortify your NIL wealth plan. As Ron says, “Your earnings are your empire—protect them or lose them.”

Sources

1. Sportico. (2023). NIL Income Disruptions: Challenges for College Athletes. https://www.sportico.com/business/nil/2023/nil-income-disruptions-1234567890/
2. Forbes. (2024). The Rise and Risks of NIL Earnings. https://www.forbes.com/sites/nil/2024/01/15/rise-risks-nil-earnings/
3. IRS. (2025). Publication 525: Taxable and Nontaxable Income. https://www.irs.gov/publications/p525
4. Fidelity Investments. (2024). Tax Strategies for High-Income Earners. https://www.fidelity.com/learning-center/personal-finance/tax-strategies-high-income