USC Trojans QB recruit Malachi Nelson and the new NIL world for prep superstars

Quarterback Malachi Nelson supplanted Arch Manning for the No. 1 ranking in the 2023 ESPN 300 based off his increased arm velocity and leadership skills against top-tier talent. Gary Coronado/Los Angeles Times via Getty Images

Malachi Nelson is the No. 2 recruit in the Class of 2023, a 6-foot-3 quarterback who committed to USC in November and projects as the heir apparent to Trojans star Caleb Williams.

Nelson brings with him the typical gilded résumé that accompanies an elite recruit -- his first scholarship offer (from Auburn) came in eighth grade, he boasts 32,000 Instagram followers and gaudy prep statistics at Los Alamitos High School (Los Alamitos, Calif.) that include 70 touchdown passes and more than 5,000 passing yards.

Where Nelson veers from the long line of Southern California quarterback prodigies is that he's expected to agree to nearly a million dollars in endorsement deals by the time he enrolls at USC after the 2022 high school football season.

Nelson told ESPN that he has signed a name, image and likeness deal with The h.wood Group, a Los Angeles-based global hospitality firm with more than 30 restaurants and clubs worldwide that are frequented by boldfaced names like Drake and the Kardashians.

With California the first state to allow high school athletes to profit off their name, image and likeness, Nelson is emerging as the face of a new generation of football recruits, for whom endorsements can come long before the first college practice.

The h.wood Group was co-founded by a pair of USC grads, former Trojans walk-on quarterback John Terzian and his partner Brian Toll. Nelson is slated to promote SLAB, a local Texas-style barbecue restaurant with multiple locations, through social media and by hosting USC tailgating events.

"It's cool to be a part of it and be at the front of everything that's happening, especially in the high school space," Malachi Nelson said. "It's good to get to this point where people are getting rewarded for what they do. It's amazing to be at the front of it."

Nelson and his father, Eric, stressed they're approaching NIL carefully, with Eric Nelson saying he has spent a lot of time picking the brains of Carl Williams -- father of USC's Williams -- and Craig Young -- father of Alabama's Bryce Young -- in order to best navigate this new world.

What the Nelsons have learned so far is simple: Don't "chase money" and be judicious about with whom they affiliate themselves. Nelson's goal since age 6 was to play football in the NFL, and they're careful not to do anything that would distract from that goal. That has meant saying no to quite a few deals.

"This is all fun and it's good to be comfortable now," Malachi Nelson said. "At the end of the day, we're chasing the NFL and that second contract when you really get paid. All of this is lining up to get to that point."

In the meantime, Nelson is enjoying being a trailblazer in the NIL world, with guidance from manager Justin J. Giangrande of Levels Sports Group. With the No. 1 recruit in 2023, Arch Manning, avoiding the NIL space, Nelson is primed to be perhaps the highest-profile test case for a top football recruit in the Class of 2023.

Nelson jokes about the truism of the loosely regulated world of NIL -- "Nobody at this point knows what they're doing." And with that as the backdrop, he's embracing his role as one of the faces of a new world for high school athletes.

That includes starring in social media posts for SLAB with his dad, as Malachi slathers sauce on ribs in the restaurant's kitchen before Eric tells his son that he doesn't need to work his "summer job" anymore because NIL is legal in California.

"The people and the relationship is something that I love," Nelson said. "All those guys over there, the things they do ... It's something that I wanted to be a part of, and it's where I'm going to be spending my time over the next couple years. To be part of that is big."

What does that mean in day-to-day reality for the Nelson family?

Eric Nelson is a senior pastor at Calvary Chapel WestGrove in Garden Grove, California. He has three kids, including Malachi, with his wife of nearly 20 years, Naomi.

The most tangible impact might be that Malachi has upgraded his car from a 1999 Ford Escape -- nicknamed The Dragon -- that had no bumper and an affinity for unreliability.

"If I had a dollar for every time I had to pick them up with The Dragon," Eric Nelson said with a laugh. "It had a mind of its own. It would break down and wouldn't start and you'd do nothing to it and two hours later it starts up."

The added income from Malachi has been a help for a single-income family living in Orange County. Malachi said "it has been awesome" to help out his family. Eric stresses that he and his wife haven't taken any money from Malachi, but that their son is "self-sufficient" financially now, which has been beneficial.

Malachi has upgraded from The Dragon to a 2022 Mercedes AMG GLE 53 Coupe, which isn't part of an NIL deal. (Louisville-bound quarterback Pierce Clarkson, another highly regarded 2023 recruit from Southern California, has the same car and Nelson joked: "He copied me.")

Malachi also was able to buy his mom a "dream purse" from Louis Vuitton, which prompted tears of joy upon receipt.

While there's been the occasional flashy item, there's also been a business education. Eric Nelson said his son has learned strategic financial thinking at an early age. The influx of money has also doubled as a college-level business course playing out in real time.

"He's been able to think about long-term investments, real estate and those types of things," Eric Nelson said. "He's been able to put himself in position to think about ... wealth. He's been able to establish himself, start an LLC and work with a business manager to utilize these things to make sure his kids' kids don't want [for anything]."

When Terzian walked on at USC in 2000 and 2001, it was during the twilight of the Paul Hackett era. In theory, he backed up Carson Palmer. In reality, he joked that if all the quarterbacks in front of him on the depth chart got hurt -- which included Matt Cassel -- they'd have put in the kicker before him.

But Terzian did have a defining skill that resonated around USC: hosting recruits. He built a reputation for hospitality that worked for luring blue-chippers -- he said star Trojans receiver Mike Williams was a memorable player he helped host and land. And that eventually blossomed into a sprawling business that has put him in position to again help USC football.

Terzian was attracted to the "pioneer" aspect of being on the frontlines of NIL, but said the heart of the deal came down to meeting Nelson and his family. He said Nelson's deal is "less than six figures."

"I think the most important thing for me was how he and his family all are -- they're just great people first," Terzian said. "That's something you can't teach or buy or learn. The one thing that's always guided what we do ... it really comes down to the person."

Both Terzian and Nelson acknowledge this partnership wouldn't have made sense if Nelson had kept his original commitment to play for Lincoln Riley at Oklahoma. But with Nelson staying home and Riley's arrival giving USC an adrenaline shot of relevance in Los Angeles and at Terzian's alma mater, the deal made sense.

With NIL going through its first full cycle in California and the nearly dozen states that have passed NIL laws, Nelson's path will help set a blueprint for future high school stars.

"We have been very patient and calculated when approaching NIL partnerships to align with Malachi's brand" said Giangrande, the Levels Sports Group Co-Founder and Managing Partner. "Malachi is the face of a new era of elite high school student-athletes able to monetize their brand through the highest caliber of partnerships."