A friend of mine who is a deal attorney suggested a pretty neat NIL structure to me this weekend that I thought made a lot of sense:
-Set up a box. Could be a corporation, could be an LLC, makes no difference.
-Box issues 100% of its shares/interests to the recruit/transfer
-The shares vest only upon completion of certain requirements outlined in the NIL contract, same as if you're an employee getting an employer match in the company 401(k), restricted stock etc.
-Box gets funded pari-pasu with completion of NIL requirements
-Recruit/transfer may redeem shares pursuant to the vesting schedule.
-This will not generate a gain/loss for tax purposes because the value of the shares/interests is essentially the cash in the box
You, of course, lay out the milestones in the contract. Easy-peasy. The kid is only ever paid for services rendered and if he/she transfers out then the agreement becomes null and void, doesn't matter how many years remain.
What this avoids is handing someone a bag of cash and hoping they stick around which I understand has been a big problem with some of the QB deals struck recently.