People assume that the athletic departments and universities are making significant money off of these kids. I wonder how much of that is perception (revenue) vs. reality (net). I'm not opposed to the players getting some spending money. The question is what is reasonable. Is suspect that every NIL dollar is roughly one less that gets donated to the school. The following is trying to rough out some numbers for myself. I figure I might as well share what I find.This money is a drop in the bucket compared to the money made off of these athletes over the last three decades.
There are reports that the B1G could command up to $1 Billion annually for it's next tv contract after the current one (6 years/2.64 B) expires in 2023.
That's one billion per year for one major conferences' media rights. Just try and imagine where those amounts of money go.
The kids deserve Every. Single. Penny.
A bit of digging shows that *ignoring infrastructure costs*, UIUC numbers for the last 3-4 pre-covid years were roughly:
- Football makes ~$30M/year
- Basketball makes ~$10M/year
- Every other sport loses $900k-1.8M/year. So many sports lose ~900k/year that I wonder if it is the budgeted loss.
Now lets look at the major FB/BB infrastructure costs:
- The Assembly hall renovation was estimated at ~$170M. (About $80M of which came directly from State Farm and donors.)
- The Memorial Stadium has had ~$160M in renovations since 1985 (Most of which in the one big renovation.)
- The $30M Ubben upgrade is supposedly all coming from private donors. Count it as you see fit.
This puts an absolute upper limit on the value of the entire basketball team at $10M/year. After infrastructure costs this number is likely closer to 2-3M/year. When someone builds a brand, provides the venue, advertises, sells the tickets, etc, they usually get a non-trivial chunk of the profits. What percentage is fair? Choose your number and reduce the 2-3M by that much. If you think a 50/50 split is reasonable (choosing something), then that says that the entire "fair" NIL for all of the players combined is $1-1.5M, or roughly 100k each. Their scholarships, food etc are worth ~60k/year. (And already accounted for in the department profit/loss, so adjust as you will. By the 50/50 rule, 30k should count against the players fair share.) That makes the average fair pay ~70k/player. Some players are clearly worth more than others.
Closing thoughts:
- UIUC as part of the Big10 has a signficantly larger profit than most schools, so any numbers we generate here are going to be toward the upper end for colleges in general.
- The athletics department, that is swimming in money is $~325M in debt, and banks won't touch them. They have to get loans from the UIUC foundation.