The Need for Numbers, NIL for Good, and Emergence of Platforms Specific to Universities
September ended quite spicy. We had a congressional hearing on the 30th to discuss federal NIL legislation. The day prior, the National Labor Relations Board General Counsel Jennifer Abruzzo issued a memo stating her position that some collegiate athletes are employees under the National Labor Relations act and therefore are afforded all statutory protections. Finally, Senator Richard Burr introduced legislation, NIL Scholarship Tax Act, that states that athletes that make over $20k in NIL compensation are subject to taxation on their athletic scholarship.
While all of these may have huge implications for collegiate athletes moving forward, I’m not ready to write about any of them. However, here’s a short synopsis:
Congressional Hearing: While it seems everyone agrees that a federal bill is necessary, the contents of it is still up in the air. I can’t imagine that we will have one passed this school year.
NLRB Memo: I’m not sure of the immediate implications of this memo but it is definitely another hit against the NCAA amateurism model and demonstrates, once again, that the government no longer has the NCAA’s back.
NIL Scholarship Tax Act: Burr states, “It’s critical that we help protect the successful collegiate sports model that has provided students with educational and professional opportunities for more than a century.” I can’t be the only one missing the connection between protecting the college sports model and taxation on athletic scholarships for exceeding an arbitrary threshold in NIL earnings. From my non-legal background, I don’t see this bill going anywhere anytime soon.
Onto the Fun Stuff…
The Need for Numbers
Call me impatient, but I’m ready to analyze some data to better understand this industry and make more projections of where we’re headed. While I’m grateful that INFLCR and Opendorse have put out some industry insight reports based on the disclosures by the athletes of the schools they’re partnered with, it’s definitely nowhere near a complete picture of what has transpired over the past few months.
Regardless of the completeness of the data, football athletes have been the early leaders in the “NIL race” for both the number of transactions and the amount of compensation. This was easy to predict, especially given that football is the first revenue-generating sport to compete after NIL reform went into effect.
As we progress through fall, I anticipate there will be a massive spike in NIL transactions and earnings. There may be ambush marketing around the bowl games (and I’m interested to see, in time, if the bowl hosts try to implement something similar to Rule 40 at the Olympics). Also, there will be a spike in partnerships between brands and basketball athletes as we get closer to their season.
The “seasonality of NIL” will be an interesting trend to follow. While national partnerships may be for a full year or even multiple years, the majority will likely be for the few months that the collegiate athlete is most in the spotlight: during their season and peaking right before a championship run.
Quick Hits: NIL Network Numbers
NIL For Good
Collegiate athletes continue to impress me by hosting clinics in their community, donating NIL earnings to charity, and using their NIL to fundraise for amazing causes.
BAFA Clinic: Joe Mawad, a former Texas A&M football athlete, partnered with BCS together to organize a clinic for local foster kids. About a dozen current Aggie football players participated.
DGD Fund: Five Georgia football players founded DGD Fund to foster a fundraising drive for five different charities of their choosing.
Cam Johnson, Vanderbilt Football: Dedicated all September sales to area partners of the National Down Syndrome Society.
Be11eve Brand Shop: UCLA quarterback Chase Griffin launched a social enterprise with a community first model. An initial partnership is with the LA Regional Food Bank Backpack Program that helps ensure children who rely on school meals don’t go hungry on the weekend.
Rachael Lukacs, Georgia Gymnastics: Rachael is working with Iconic Leos to design her own leotard; all proceeds will go to Lydias’s Place which is a local nonprofit that helps young adults who have experienced foster care or homelessness.
Want to see more NIL For Good Stories? Check them out here.
NIL Platforms Specific to Universities
In 99% of institutions, any employee of the university is prohibited from arranging NIL compensation for current or prospective athletes.
However, a trend is starting to emerge: Donors, alumni, and even a local Chamber of Business are popping up platforms to help athletes of a specific institution (or even a specific sport/position within a university) to monetize their NIL.
To help UM’s football players monetize their NIL through sponsorship procurement in order to reestablish Miami’s tradition of greatness.
To help build the most creative and effective NIL marketing programs to maximize revenue for Oregon student athletes.
To provide fans with exclusive access to, and experiences with, their favorite athletes on the current team and those athletes in the future. By providing these experiences, it allows The Gator Collective to compensate athletes for their NIL.
A community effort to encourage engagement between businesses – both local and out of the area – with students as allowed under NIL.
To make Indiana University the leader in NIL opportunities for its student athletes. We want current players and recruits to know that if you come to Indiana, and stay at Indiana, the fanbase has your back. Not just when it comes to showing up for games and cheering our tails off, but financially, you will do very well at Indiana.
Texas Tight Ends
To sponsor the Texas tight end room and to maintain yearly endowments to attract and keep top TE talent in the program.
As a former D1 collegiate coach, the development of this trend makes my head spin.
The positive part of me thinks it’s a fantastic idea and a great opportunity for fans to support their favorite schools without breaking the bank.
The strategic side of me sees the massive recruiting advantage this provides: If an athlete is choosing between a school with a platform like the ones listed above and one that doesn’t have one, does all-but-guaranteed NIL earnings sway them? While guaranteeing NIL compensation is impermissible by the NCAA’s interim policy, these “super fans” don’t have much, if any, accountability. While we had dozens (maybe hundreds) of “bag men” providing under the table compensation before, now there may be thousands of people sliding into a prospect’s DMs. Also, similar to the facilities arms race, will we see these groups continuing to “one-up” each other on who can provide the most guaranteed compensation? I can see this being a massive source of pride for donors, alumni, and superfans.
Finally, the motherly part of me is deeply concerned*. These initiatives get superfans closer and more directly involved with athletes than they’ve ever been. Star collegiate athletes have already dealt with the “dark side” of being a public figure prior to NIL reform. Does a superfan donating to their favorite team empower them more? Does that fan feel more entitled to send an athlete a nasty direct message after a poor performance, referencing that they’ve “given them money”? Unlike businesses that are partnering with athletes, or even whole teams, an individual doesn’t have the same accountability.
On the flip side, will the athletes feel increasingly indebted towards fans and compelled to engage more outside of the agreed upon terms? Whether this additional pressure would come internally from the athlete or externally from fans demanding their attention, collegiate athletes are already near both their physical and mental capacity.
I hope I’m wrong but I’m worried that an unintended consequence of these platforms is the exasperation of issues that have already been around in the social media era.
*Division Street and Happy Valley Talent don’t appear to have the fanfunding element so I’m less concerned with them.
Looking forward to a busy October and seeing what trends continue and any new initiatives that launch!
Questions, comments, concerns? I’m always happy to chat NIL! Email: Michelle@nilnetwork.com