The NIL business model

[Curbelo Fanboy]

NIL- Is it a business model doomed to fail?

I suspect it is & will run it's course in the next few years. Look at the Washington QB. How many times will schools be able to "pass the collective hat" & still get people to contribute when what they are paying them for is out the door at the next turn.

I mean how many times would a guy pay for a prostitute if she keeps stealing him blind at the end of the night. Eventually he's gonna find some other way to get his kicks. Weird analogy I know but best I could think of.

Heck Troy Aikman helped pay for Iamaleava & he already said he won't do it again since he announced he is transferring from UCLA. That pattern will repeat itself over & over again at all but the top of the top programs.

 

[Birdus]

I believe that transfer limitations and a monetary cap would be two positive steps.

 

[Mr. Tibbs]

I don't understand why it isnt paid out monthly. not as a paycheck. but just like most stipends are

 

[STLini25]

There are winners and losers. You cited examples of it not working out. You failed to cite Indiana as an example of it working out. You failed to cite Trinidad Chambliss of an example of it working out.

Will it evolve and will there be winners and losers? Yes. Are boosters still going to continue to pay NIL to student athletes? Yes.

 

[sbillini]

I don't think it's going to fail at all. The train has left the station and it ain't coming back. Despite the high profile headlines, i would guess 99% of NIL deals are doing fine. In the case of the high profile stuff, I think as the model evolves and more guardrails are put into place, it'll stabilize. as has been discussed umpteen times in this board, things like multi-year contracts, salary caps, etc. Or it might look like a different model all together. But the concept of NIL in college sports is here to stay, imo.

Regarding the UW QB - i'm pretty convinced it was purely a financial decision knowing that UW would fight it and the assumed legal/settlement costs etc. were all incorporating into the thinking/math. This type of stuff happens all the time in the corporate world. Ethical, no. Legal - perhaps not. Criminal, certainly not. The courts will figure out the legal stuff.

 

[Mr. Roberts]

NIL is the wild, wild west. No rules, no limits, and no place for angels. Everyone is a free agent every year. It is a non-keeper auction fantasy league with no limits on spending to build a team..

I do not see how this is even remotely sustainable. Ultimately, the teams with the most cash will buy whoever they want, and the rest of the donors and fans will eventually lose interest. As much as I have enjoyed these last two years, competing with our peers to be 7th best in the Big Ten will get old. I fear college sports (as we know them) are on borrowed time.

 

[thefalcon5]

it’s time to consider players employees. I don’t like it, I don’t like this era, but the unstoppable force is already in motion.

That opens waaay more doors both good and bad, but would allow for things like CBAs and other rules to be in place. The NCAA as a dictating authority is doing absolutely nothing, perhaps the bare minimum at best and it’s losing legal battles left and right.

Anyone still clutching to amateurism is fighting a battle completely lost in everything but name.

At this point I want consistency and fair play. And frankly protection both for player and school (and by extension donor).

 

[the juiceman cometh]

I suspect it is & will run it's course in the next few years. Look at the Washington QB. How many times will schools be able to "pass the collective hat" & still get people to contribute when what they are paying them for is out the door at the next turn.

I mean how many times would a guy pay for a prostitute if she keeps stealing him blind at the end of the night. Eventually he's gonna find some other way to get his kicks. Weird analogy I know but best I could think of.

Heck Troy Aikman helped pay for Iamaleava & he already said he won't do it again since he announced he is transferring from UCLA. That pattern will repeat itself over & over again at all but the top of the top programs.

I think you're failing to consider just how much money these boosters have. For example, Mark Cuban, a major Indiana booster, has a net worth of $6 billion. Let's say he foolishly liquidated his assets and put that entire $6 billion into a low yield savings account returning 1% interest. Let's say he also wanted to spend $50 million on NIL just to make Indiana's football team the highest paid in the country. It would take him approximately 3 days to recoup that investment from his 1% interest.

Using your prostitution example, a transfer QB "stealing" $4 million from Mark Cuban would be equivalent to the prostitute taking $133 from a median net worth guy. At that point, isn't that just the cost of doing business? The guy that doesn't think the service is worth $133 is going to stop, but there probably is a guy out there who thinks $133 is worth it, so the oldest profession continues to get older.

 

[BoiseBaller]

How much is Khan putting in for UI?

 

[hooraybeer]

would be kind of an intimidating time to be a parent of one of these high profile athletes. a lot of promises being made, a lot of money being thrown around, a lot of new grifter positions being created trying to get a piece of that money. how do you keep your kid safe? who can you trust?

 

[ChiTown]

Talking about Cuban,now he’s more willing to give more to the NIL.

https://twitter.com/x/status/2008941837952721169

 

[mallen]

I think you're failing to consider just how much money these boosters have. For example, Mark Cuban, a major Indiana booster, has a net worth of $6 billion. Let's say he foolishly liquidated his assets and put that entire $6 billion into a low yield savings account returning 1% interest. Let's say he also wanted to spend $50 million on NIL just to make Indiana's football team the highest paid in the country. It would take him approximately 3 days to recoup that investment from his 1% interest.

Using your prostitution example, a transfer QB "stealing" $4 million from Mark Cuban would be equivalent to the prostitute taking $133 from a median net worth guy. At that point, isn't that just the cost of doing business? The guy that doesn't think the service is worth $133 is going to stop, but there probably is a guy out there who thinks $133 is worth it, so the oldest profession continues to get older.

Everyday lurker - first time poster, I love the craziness on here.
This is a perfect example of Boosters money that 99% of the population can't comprehend. Let me add something else - The company I work for bought out another company 2 years ago and the guy who owned it worked a deal into his purchase that my company has to pay 2% of the sales to his college alma mater specifically for NIL Funds. When we have 90 mil in sales on that business of books my company has to write a check to that college for 1.8 MIL and my company has no affiliation to that college but here we are helping an enemy succeed. LOL and that is happening right here in central IL - think of it globally how much that is going on.

 

[spotter]

I don't want to see a NIL cap. That is just a minor obstacle for cheaters to cheat around.

I would like to see players get one "free" transfer. If they transfer a second time, they must sit out a season. That might curb some of the insanity.

 

[Battle89]

I think you're failing to consider just how much money these boosters have. For example, Mark Cuban, a major Indiana booster, has a net worth of $6 billion. Let's say he foolishly liquidated his assets and put that entire $6 billion into a low yield savings account returning 1% interest. Let's say he also wanted to spend $50 million on NIL just to make Indiana's football team the highest paid in the country. It would take him approximately 3 days to recoup that investment from his 1% interest.

Using your prostitution example, a transfer QB "stealing" $4 million from Mark Cuban would be equivalent to the prostitute taking $133 from a median net worth guy. At that point, isn't that just the cost of doing business? The guy that doesn't think the service is worth $133 is going to stop, but there probably is a guy out there who thinks $133 is worth it, so the oldest profession continues to get older.

While I agree with your overall point, not sure the math is correct here.

1% of $6B is $60M, annually. Over three days that closer to half a million dollars. After tax, $300-400K depending on his rate.

Again agree he could give the full year's amount to IU (yuck) and 'suffer' by dipping into the principal.

 

[lstewart53x3]

I don't want to see a NIL cap. That is just a minor obstacle for cheaters to cheat around.

I would like to see players get one "free" transfer. If they transfer a second time, they must sit out a season. That might curb some of the insanity.

I wouldn’t be mad at that, it’ll obviously just never happen without a complete overhaul of the rules. Would limit a player’s ability to earn and that’s what all of the lawsuits were about.

 

[Mr. Tibbs]

I don't want to see a NIL cap. That is just a minor obstacle for cheaters to cheat around.

I would like to see players get one "free" transfer. If they transfer a second time, they must sit out a season. That might curb some of the insanity.

yea, but its not possible without an anti-trust exemption from congress, or a CBA if the players unionize as employees and then agree to it.

But I think the schools are going to stick with the wild wild west for a few years first, tho. Buckle up

 

[fuddrules]

As much as I have enjoyed these last two years, competing with our peers to be 7th best in the Big Ten will get old. I fear college sports (as we know them) are on borrowed time.

It beats battling Indiana to keep out of the basement.

 

[aaeismacgychel]

I suspect it is & will run it's course in the next few years. Look at the Washington QB. How many times will schools be able to "pass the collective hat" & still get people to contribute when what they are paying them for is out the door at the next turn.

I mean how many times would a guy pay for a prostitute if she keeps stealing him blind at the end of the night. Eventually he's gonna find some other way to get his kicks. Weird analogy I know but best I could think of.

Heck Troy Aikman helped pay for Iamaleava & he already said he won't do it again since he announced he is transferring from UCLA. That pattern will repeat itself over & over again at all but the top of the top programs.

I am of the opinion that NIL the way it currently is will be destined for failure, and my major supporting argument is the similarities to the pre-salary cap NHL. 90s hockey was very similar in atmosphere to current NIL in which bidding for players started becoming a runaway train making it only profitable for a small portion of the teams in the league to field a competitive team. Where the "have nots" were basically forced into a decision between going bankrupt trying to maintain a competitive team or to purposely field the least competitive team possible but getting a meager profit. As such, the league was forced to the precipice of bankruptcy and for the team's own good a salary cap was implemented despite it not being popular for the players.

We are currently in the Wild West phase of NIL where prices will continue skyrocketing until the money is no longer there to support it and the separation between haves and have not becomes fully realized. At that point the system will start collapsing.

That said, I think something changes before then. The question is what. I don't believe collective bargaining will be feasible here as insurance/disability needed to cover players will probably be cost prohibitive for colleges as all college athletes regardless of sport would be able to similarly challenge they're university employees. And since almost all NCAA sports operate in the red as it is, this would be a massive cost. Such a massive cost in fact it would likely be the end of most college sports.

I still think the answer is multi-year legal contracts with NIL clearing houses that includes insurance, money management, vested salary that's backloaded, and has buyout clauses to get around that issue. And I do think that's the direction things are trending. That said, for everyone to play by the same rules there, that would likely require collusion and actions that are not too dissimilar to cartels that would certainly lead to legality questions.

So yeah... Not sure what the answer is, but the current state of NIL is not feasible long-term

 

[Grandpa]

I am of the opinion that NIL the way it currently is will be destined for failure, and my major supporting argument is the similarities to the pre-salary cap NHL. 90s hockey was very similar in atmosphere to current NIL in which bidding for players started becoming a runaway train making it only profitable for a small portion of the teams in the league to field a competitive team. Where the "have nots" were basically forced into a decision between going bankrupt trying to maintain a competitive team or to purposely field the least competitive team possible but getting a meager profit. As such, the league was forced to the precipice of bankruptcy and for the team's own good a salary cap was implemented despite it not being popular for the players.

We are currently in the Wild West phase of NIL where prices will continue skyrocketing until the money is no longer there to support it and the separation between haves and have not becomes fully realized. At that point the system will start collapsing.

That said, I think something changes before then. The question is what. I don't believe collective bargaining will be feasible here as insurance/disability needed to cover players will probably be cost prohibitive for colleges as all college athletes regardless of sport would be able to similarly challenge they're university employees. And since almost all NCAA sports operate in the red as it is, this would be a massive cost. Such a massive cost in fact it would likely be the end of most college sports.

I still think the answer is multi-year legal contracts with NIL clearing houses that includes insurance, money management, vested salary that's backloaded, and has buyout clauses to get around that issue. And I do think that's the direction things are trending. That said, for everyone to play by the same rules there, that would likely require collusion and actions that are not too dissimilar to cartels that would certainly lead to legality questions.

So yeah... Not sure what the answer is, but the current state of NIL is not feasible long-term

"If you come here, we will do all of that AND give you a million cash off the books."

 

[ptgrd23]

Disagree. Only way to get it under control is collective bargaining agreement. Admit that college is now a pro league and get salary cap like NFL and NBA.

Big schools like Alabama, Texas, Ohio State always paid their players. Now it is in the open and everybody can do it legally its an arms race. No idea why it would collapse. Spending may peak and go back down. Nothing wrong with that - just free market at work. Insurance is easy - collective bargaining limits expense to wh you negotiate.

No way the NIL police CSC commission is going to hold up in court. Its impossible to say that Arch Manning is not worth $4M in advertising.

The NCAA killed the golden goose by refusing to pay student athletes what they were worth ($10k stipend for $6M QB $6M is a joke). Can't put the genie in back in the bottle.

Assuming TV revenue holds up B10 and SEC at $60M per year plus the biggest $NIL donors are going to buy the best teams in football and basketball. There may be exceptions like ACC Duke basketball, B12 Texas Tech football and basketball, B12 Brigham Young football and basketball where individual donors giving $10m plus in NIL may keep them competitive but they will be few and far between.

JMO - Illinois basketball and football are doing very well under NIL and transfer portal so I am OK with status quo.

 

[Curbelo Fanboy]

I think you're failing to consider just how much money these boosters have. For example, Mark Cuban, a major Indiana booster, has a net worth of $6 billion. Let's say he foolishly liquidated his assets and put that entire $6 billion into a low yield savings account returning 1% interest. Let's say he also wanted to spend $50 million on NIL just to make Indiana's football team the highest paid in the country. It would take him approximately 3 days to recoup that investment from his 1% interest.

Using your prostitution example, a transfer QB "stealing" $4 million from Mark Cuban would be equivalent to the prostitute taking $133 from a median net worth guy. At that point, isn't that just the cost of doing business? The guy that doesn't think the service is worth $133 is going to stop, but there probably is a guy out there who thinks $133 is worth it, so the oldest profession continues to get older.

I guess I'm suspecting the ones who "get burned" so to speak by failed investments into NIL will rapidly outnumber the successes. There will be winners & losers. I just suspect it is leading to a day where the losers far far outnumber the winners & the pool of people still contributing to NIL declines.

Part of the reason people give to programs is they feel a connection to the program, the coaches & the players. When 1 aspect of that (the players) becomes a constantly revolving door whereby the hat gets passed for a new band of mercenaries each year, the value that the donor derives from that decreases IMO. Over time the donor base shrinks.

I fully realize the cats out of the bag & I'm not one of those guys that doesn't think the players should be paid. That ship sailed when the NCAA started getting Billions with a B for the March Madness contract & coaches started getting W-2's that have 8 digits in the gross wage box. Just in true NCAA fashion a system was established that had no real guardrails & made no sense in a lot of ways.

Fortunately, Illinois is a fairly big institution in a big conference & will most likely stay on the right side of the money bubble no matter how it all shakes out. But a college sports environment where only the BIG & SEC really compete for anything meaningful takes a whole lot of the fun out of college sports. I love Illinois but some of the best fun as a sports fan is what happens for a few days in March where Podunk State goes toe to toe with the big boys & sometimes takes em out or Boise State takes out Oklahoma. Sport in it's purest form. Gone forever it seems.

 

[BashCtIllini]

One of the biggest problems is, how much are our competitors spending? If we are able to acquire $20 M in funds for a year but OSU, Michigan, Penn State, Indiana, Oregon, and USC are spending even more, what is all of that money going to get us? Is 9-4, 7th in conference, and finishing outside of the top 25?

It's basically you spend the most, or at least in the top 10-15, or you should have minimal expectation to be a top team. So then, is every penny spent at Purdue, Boston College, Colorado, Arkansas, etc just being completely wasted? I think the answer has to be yes. The kids like it, but the people providing it certainly can't be happy with their purchase.

 

[Curbelo Fanboy]

I believe that transfer limitations and a monetary cap would be two positive steps.

My thought has been multi year deals should be allowed with a caveat. If the player breaks the "contract" he has to sit a year. If school breaks it they lose that slot for a year. It would be a player by player decision. Multi year brings more certainty but with it comes more responsibility. If you want absolute freedom just do the year to year deal.

 

[lstewart53x3]

I am of the opinion that NIL the way it currently is will be destined for failure, and my major supporting argument is the similarities to the pre-salary cap NHL. 90s hockey was very similar in atmosphere to current NIL in which bidding for players started becoming a runaway train making it only profitable for a small portion of the teams in the league to field a competitive team. Where the "have nots" were basically forced into a decision between going bankrupt trying to maintain a competitive team or to purposely field the least competitive team possible but getting a meager profit. As such, the league was forced to the precipice of bankruptcy and for the team's own good a salary cap was implemented despite it not being popular for the players.

We are currently in the Wild West phase of NIL where prices will continue skyrocketing until the money is no longer there to support it and the separation between haves and have not becomes fully realized. At that point the system will start collapsing.

That said, I think something changes before then. The question is what. I don't believe collective bargaining will be feasible here as insurance/disability needed to cover players will probably be cost prohibitive for colleges as all college athletes regardless of sport would be able to similarly challenge they're university employees. And since almost all NCAA sports operate in the red as it is, this would be a massive cost. Such a massive cost in fact it would likely be the end of most college sports.

I still think the answer is multi-year legal contracts with NIL clearing houses that includes insurance, money management, vested salary that's backloaded, and has buyout clauses to get around that issue. And I do think that's the direction things are trending. That said, for everyone to play by the same rules there, that would likely require collusion and actions that are not too dissimilar to cartels that would certainly lead to legality questions.

So yeah... Not sure what the answer is, but the current state of NIL is not feasible long-term.

To the bolded, isn’t one of the big differences that the schools themselves are only responsible for ~20% of the revenue sharing. The remaining is paid by boosters who aren’t necessarily doing it to profit, but more so out of loyalty to the program/just for fun?

 

[and 69 others]

would be kind of an intimidating time to be a parent of one of these high profile athletes. a lot of promises being made, a lot of money being thrown around, a lot of new grifter positions being created trying to get a piece of that money. how do you keep your kid safe? who can you trust?

And how do you teach them right, wrong, morals, ethics, etc.? Imagine Demond Williams’ parents: “Son, you made a commitment, you signed on the dotted line, in life we have to do what’s right even when we want to go against our word. If we don’t stand by our word then we … I’m sorry … how much more? 2 million? Son, sometimes you gotta do what’s best for you.”